Just a few years ago, investing in hospitality properties seemed unappealing to most investors. The COVID-19 economic downturn brought about higher vacancies and slower growth in Revenue Per Available Room (RevPAR), leaving the sector struggling.
Fast forward to 2025, and the landscape looks significantly brighter. According to CBRE’s 2025 U.S. Hotel Investor Intentions Survey, 94% of survey participants plan to either maintain or increase their hotel investments this year. This marks a notable improvement from 85% in the previous year. The report attributes this surge in interest to a more optimistic outlook on total returns and potential opportunities in distressed assets.
### Investment Preferences
The survey also shed light on the types of hotel assets investors are prioritizing. Value-add and opportunistic properties topped the list, while fewer respondents expressed an interest in distressed opportunities. Interestingly, 25% of those planning to increase their hotel investments cited distressed opportunities as a primary motivator.
As for specific reasons driving higher hotel allocations in 2025, respondents noted the following:
– **24.8%** cited more distressed opportunities.
– **19.0%** were optimistic about improved hotel return prospects.
– **19.0%** pointed to favorable price adjustments.
– **17.6%** mentioned reduced debt costs.
– **15.0%** highlighted anticipated outperformance compared to other commercial real estate (CRE) assets.
### Targeted Locations
When it comes to location, resorts and central business district (CBD) hotels are expected to attract the most interest from investors. The ongoing recovery of inbound international travel and a resurgence in meetings and group events are driving projections for stronger RevPAR growth in urban areas by 2025. Conversely, airports and suburban hospitality assets appear to be the least appealing targets for investment in the coming year.
### Industry Challenges
Despite the optimistic outlook, challenges remain. Rising labor and capital costs, as well as escalating insurance expenses, continue to weigh on the sector. The survey revealed that weakening demand is an increasing concern, with 65% of respondents identifying it as a challenge, compared to previous years.
While hurdles persist, the hotel investment market appears to be regaining momentum, signaling good news for the hospitality sector as it heads into a more promising future.
About the Publisher:
Steve Griffin is based in sunny Palm Harbor, Florida. He’s an accountant by profession and the owner of GRIFFIN Tax (www.griffintax.com) and REVVED Up Accounting (www.revvedupaccounting.com). In addition, Steve founded Madison Avenue Technology (www.madisonave.tech). With a strong passion for commercial real estate, he’s also dedicated to keeping you up to date with the latest industry news.
