Can you visualize investors paying more than $1 million per room to buy a single hotel? For high-end hotels and resorts, it is not just easy to visualize—it is almost becoming expected.
There is a recent trend of sales of luxury hotels that have been valued at over $1 million per room, led by these four high-profile sales.
- Malibu Beach Inn, CA – Recording and movie studio mogul David Geffen received $80 million (approximately $1.7 million per room) from the Mani brothers of the Mani Brothers Real Estate Group for the scenic Malibu Beach Inn.
The most recent of the $1 million-plus per room sales features 47 rooms with private balconies and a beautiful private white sand stretch of “Billionaires Beach.” Other amenities include a gourmet beachfront dining experience with an executive chef and spa services, along with private customized workouts with beachfront yoga and fitness classes.
- Montage Laguna Beach, CA – The real estate investment trust (REIT) Strategic Hotels and Resorts, Inc. (NYSE:BEE) purchased this Forbes Five-Star resort for $360 million ($1.4 million per room).
The Montage Laguna Beach sits on a bluff that provides 250 guest rooms with a spectacular view of the Pacific Ocean. The 30–acre property includes a 20,000 square foot spa, 60 suites, 37 beach bungalows, well-known dining and drinking establishments, and approximately 16,000 square feet of meeting space. Bring Fido if you like—as long as Fido is below 45 pounds.
- Baccarat Hotel, NY – Located in midtown Manhattan, the Baccarat tops this group for the per-room price paid. The Sunshine Insurance Group from China purchased the Baccarat from Starwood Capital for approximately $230 million, which just tops the $2 million per room mark.
The Baccarat is located on 53rd Street, across the road from the Museum of Modern Art (MOMA) and near Central Park, Radio City Music Hall, and Rockefeller Center. Beautiful crystal chandeliers and features from the French crystal company Baccarat are prominent throughout the hotel. Guest services include full fitness and spa amenities, and chauffeured car service anywhere within 15 blocks of the hotel.
- Waldorf Astoria – Hilton Worldwide Holdings, Inc. (NYSE:HLT) sold the iconic New York City hotel for $1.95 billion to Anbang Insurance Group, another Chinese insurance company. This figure represents an all-time high in overall dollar value for a single U.S. hotel, topping the sale of the Cosmopolitan in Las Vegas for $1.73 billion (not included in this list because the casino was included in the purchase). It does not top the per-room price, however, coming in at $1.4 million per room.
The Park Avenue legend features a midtown Manhattan site, customized spa treatments for men and women, 24-hours fitness facilities, and the Towers suites with 26 Presidential-style suites and 4 historic suites.
Notice the common thread of investment-based purchasers, especially the foreign buyers of the New York hotels. Foreign capital is pouring into real estate investments, especially large and iconic hotel properties in metropolitan areas. CEO Daniel Lesser of LW Hospitality Advisers notes that U.S. hotels are quite attractive investments across many foreign countries because of their steady incomes and returns on investment.
Would you like to see what a $1 million room looks like? Most luxury hotels allow room views on their website, but why not consider splurging on a luxury hotel for a day? Do not assume that the purchase prices put all of these hotels completely out of your reach. None of them are inexpensive, but given their locations and services, they are not unreasonable. For a day or two of indulgence, they are certainly worth consideration.