The hospitality sector was once considered a risky investment due to the COVID-19 economic downturn, resulting in high vacancies and low RevPAR growth. However, according to CBRE’s 2025 U.S. Hotel Investor Intentions Survey, there has been a significant shift in investor interest.
In fact, the survey found that 94% of participants plan to maintain or increase their hotel investments by 2025 – a notable increase from the previous year’s reported figure of 85%. This change can be attributed to more positive outlooks on total returns and opportunities for distressed investments.
When it comes to preferred asset types among respondents, value-add and opportunistic hotel investments were at the top of the list. While fewer investors expressed interest in distressed opportunities compared to last year’s survey results, some still cited them as their primary reason for increasing capital allocations towards hotels.
As for reasons behind this increased focus on hotels by investors:
– Approximately one-quarter (24.8%) pointed towards more available distressed opportunities
– Another quarter (19%) expressed optimism about return prospects
– The same percentage also noted price adjustments as an influencing factor
– Decreasing debt costs (17.6%) and expected outperformance relative other commercial real estate assets (15%) were also mentioned as key drivers.
In terms of location preferences within the hospitality sector:
Resorts and central business district properties are currently seen as most attractive due partly because international travel is rebounding along with improvements in meetings/events demand leading up until next year when RevPAR growth is expected accelerate further.
Meanwhile airports/suburban locations are viewed less favorably right now given current market conditions.
Despite these positive trends overall however there are still challenges facing this industry such rising labor/capital costs plus higher insurance expenses which could impact future performance if not addressed properly going forward according those surveyed who identified weakening demand over time being another potential headwind they’re keeping close eye on moving ahead into next year.
