Report: hotel prices create buyer opportunity.

The average hotel sales price per room was 15.1 percent lower during the first three quarters of 1991 than in all of 1990, reports Coopers & Lybrand, the international accounting, tax and management consulting firm, in its quarterly research journal Coopers & Lybrand Hospitality Directions.

Since a peak in 1988, sales price per room has declined by almost one third (31.8 percent) in real terms, according to statistics provided to Coopers & Lybrand Hospitality Directions by the Hotel and Motel Brokers of America (HMBA), which maintains a comprehensive database on hotel sales.

These figures are based on an analysis of 612 hotel sales transactions and reflect mostly smaller properties.

Perceived bargains in today's market produced sharp increases in activity for these properties in 1991, according to Dr. Bjorn Hanson, a Coopers & Lybrand partner and the firm's hospitality industry consulting industry chairman.

"Cash flows have bottomed out, but values haven't," says Hanson. "There are fewer buyers relative to the number of hotels for sale, and it's becoming even more difficult to secure financing."

In another measure of property values, the report also states that the ratio of sales price to gross room revenue, called the gross room revenue multiplier, dropped from 3.63 in 1988 to 2.59 in the first three quarters of 1991. The capitalization rate, the ratio of net operating income to sales price, remained high relative to other yield measures. The median cap rate was 12.9 percent for the first three quarters of 1991, well above the 9.5 percent average cap rate reported for all commercial real estate by the American Council of Life Insurance (ACLI) for September 1991.

Cap rates have also risen above the 10.0 percent average long-term mortgage interest rate the ACLI reports for all commercial real estate, un unusual situation that reflects depressed values, according to Coopers & Lybrand Hospitality Directions.