Buying High and Selling Low in the Lodging-Property Market

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Abstract
An analysis of more than 1,300 hotel transactions recorded between 1985 and 1992 revealed a pattern of consistent overpayment by some types of buyers and underselling by certain classes of sellers. Further comparisons of specific hotel-property types with various combinations of buyers and sellers showed that sale prices are frequently affected by certain combinations of property characteristics with the attributes of buyers and sellers. Individual buyers, for example, regularly overpaid for the properties they bought and were particularly influenced by average daily rate. On the other hand, the Resolution Trust Corporation created considerable market distortion by regularly discounting hotels it sold, because it undervalued its properties' proximity to city centers and their ADRs.

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