Here’s what the industry can expect in transactions, loan and rate.

The handshake deal was in place: Buyers were going to purchase the debt that a New York City hotel owed its lender, and the deal was supposed to close in the first quarter of 2011.

Mitchell Hochberg, Principal at Madden Real Estate Ventures, was drafting a detailed letter of intent when a funny thing happened: The economy started to improve.

“The bank decided since numbers coming back were very encouraging, they would take another shot,” he said.

No deal.

Such is the weird world of hotel financing these days. The industry can expect a roller coaster of a year, with transactions finally expected to increase but lingering fears of a “double dip” recession.

“One of the reasons there hasn’t been as much activity as people thought is the market recovered a lot faster than people thought it would,” said Hochberg, who specializes in the luxury and boutique segments. “Lenders decided to work with existing borrowers/owners than go through a protracted foreclosure procedure.”

He predicted that capital would finally get off the sidelines and into the market.

“You’re starting to see capital jump in at the end of [last] year with deals getting done,” he said. “You’re going to see a lot more activity.”

CB Richard Ellis Hotels New York City office reported this week that it closed 17 transactions totaling nearly $300 million in the second half of 2010.

Ron Danko, executive vice president, attributed the sales to improving fundamentals that finally pushed investors to spend, especially for quality assets.

“Almost overnight the market shifted and we witnessed multiple aggressive bids for assets providing meaningful pricing and certainty of transacting,” Danko said in a statement.

The group also reported that it has six assets under agreement expected to close in the first quarter of 2011.

Hochberg also predicted robust lending in 2011, with some strings attached.

“If it’s a good property in a good market, it will require more equity to get developed,” he said. “Most financiers are reticent for new development because you can buy hotels below replacement cost. To the extent someone can show there is opportunity for a specific product and a specific product that works, you will see more lending.”

Isaac Collazo, IHG’s vice president of performance strategy and planning for the Americas, pointed out positive signs in RevPAR growth, rising occupancy and increasing ADR. Still, he noted during a talk at IHG’s conference, the industry is still looking to recover ground its lost since 2007. Occupancy may continue to look soft because of the growth in supply, he said.

Most hotels that closed in the past year were unaffiliated with brands, so Collazo said investing in brands was one strategy for success.

Hochberg shared that opinion.

“Owners, investors are going to continue to be attracted to quality brands, which is obviously a critical way to differentiate a product,” he said. “Frequently it adds significantly to the distribution ability. The quality brands will still do well. It’s questionable whether new independent brands, particularly in the boutique segment, will be able to survive.”

Individual markets no doubt will play a role. Not surprisingly, gateway cities will lead the way to recovery. New York, Miami and Los Angeles have been the superstars, Hochberg said, as have Chicago, Boston and Dallas.

The weakest market, Hochberg concluded, is Las Vegas.

“It’s hard to see how Las Vegas is going to come out of this in less than five or 10 years,” he said. “The market soft before all the new supply came on. When you look at the significant supply from City Center and Cosmopolitan, it will be very difficult for Las Vegas to recover in the near term. This has also been exacerbated by companies being reluctant to do business on a grand scale.”

When it comes to rates, only the top markets — again, New York and Los Angeles — truly have pricing power, according to Peter Yesawich, chairman and CEO of Ypartnership.

His firm’s research, along with the Harrison Group, Portrait of American Travelers, showed that Americans remain cautious about spending on travel services in the year ahead.

“We think suppliers — with the exception of airlines — who attempt to meet fares and rates are going to meet resistance. For the most part there isn’t pricing power in lodging.”

The buying psychology of the traveler has changed, he said, calling the phenomenon “the new frugal.”

“Even though occupancies are increasing slightly, the consumer, because of their new frugal attitude, is resisting paying more. That will be the case across the board, whether large corporate contracts, or individual business travelers. Even though many in lodging industry believe the window is starting to open, our view is the consumer will push back on paying more.”

The good news, though, is that it appears that luxury and upscale clientele are willing to travel more this year. For households with incomes of more than 125,000 — the top 10 percent of US households — about 20 percent said they would take more trips this year, as opposed to 9 percent who said fewer. That’s a net positive of 11 percent, compared to a net positive of 2 percent of households whose annual income is $50,000.

“As a consequence of the buying power, it is the more affluent households who will lead us out of the recession,” Yesawich said. “People for the past couple of years have felt they made the appropriate sacrifice. There was clearly a trading down phenomenon, but they’re clearly ready to reinstate buying behavior.”