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By McKenna Luke, MAI, Managing Director, National Hospitality Practice Lead
Coming out of this year’s Americas Lodging Investment Summit conference, industry leaders aligned on a shared view: the hospitality sector remains structurally strong long term, even as 2026 is shaping up to be a more nuanced, mixed signal environment. The current outlook ranges from a modest ~1.5% decline to a slight 0.5% gain, reflecting softer consumer confidence, reduced international travel, and ongoing economic pressures in select markets. At the same time, World Cup-related demand should provide targeted lift in host cities, particularly for rate growth. Furthermore, supply remains below long-term averages in most locations with the highest growth.
Luxury and extended-stay remain the darlings of the industry with a “K”-shaped demand pattern driving growth within luxury. Experiential and authentic hospitality are essential to the continued pricing power and demand within the luxury and ultra-luxury. Spending from the affluent remains strong, especially for irreplaceable hotels and destinations with an emotional connection and strong repeat business. Additionally, the luxury and wellness segments remain in the growth cycle, while other segments and chain scales are reaching maturity.
On the expense side, inflationary cost of goods increases, and labor pressures persist. However, gains in efficiency and diversified revenue streams are showing up in performance, reinforcing the industry’s long-term value proposition. For investors, hotel assets remain a space where market dynamics reward operational skill and create durable returns.
Debt availability remains competitive for solid deals, with between 50 and 100 bps decline to the cost of debt throughout the bidding process noted and spreads in the 200s over SOFR. The bidding environment for quality assets is well-supported, and underwriting standards appear less restrictive as confidence builds around internal forecasts. Diligence in the underwriting process is essential given the lack of above inflationary RevPAR seen during the recovery in most markets. As most market participants align on the outlook, the buyer-seller gap has begun to close and unlock more transactable opportunities.
Although 2025 was a softer than normal transaction year, activity still improved meaningfully over 2024, with a reported double-digit increase and a particularly strong Q4. The lower overall volume reflects the absence of major portfolio trades and a market dominated instead by several large single asset deals. Transaction activity continues to be muted, the outlook is positive given the industry is still benefiting from long-term tailwinds.
