Not long ago, the hospitality sector struggled to attract investors. The economic downturn caused by the COVID-19 pandemic led to higher vacancies and slower growth in revenue per available room (RevPAR).
Fast forward to 2025, and the landscape has shifted dramatically. According to CBRE’s 2025 U.S. Hotel Investor Intentions Survey, a remarkable 94% of surveyed participants intend to maintain or increase their investments in the hotel sector. This represents a notable rise from the 85% recorded the previous year. The report attributes this trend to a more optimistic outlook on total returns and an increase in distressed investment opportunities.
### Key Areas of Focus
The survey highlights that investors are predominantly drawn to value-add and opportunistic hotel investments. Interestingly, while fewer respondents mentioned an interest in distressed assets overall, a quarter of those planning to boost their hotel investments cited distressed opportunities as their primary motivation.
### Motivations for Increased Allocations
Respondents offered a variety of reasons for their anticipated increase in hotel-related investments in 2025:
– 24.8% pointed to more distressed opportunities.
– 19.0% expressed optimism about future hotel returns.
– 19.0% cited price adjustments as a driving factor.
– 17.6% noted decreasing debt costs.
– 15.0% highlighted the expectation of outperformance compared to other commercial real estate (CRE) assets.
### Investment Hotspots
The survey also sheds light on the types of properties investors are targeting. Resorts and central business district (CBD) hotels are expected to attract the most interest, thanks to recovering international travel and the resurgence of meetings and group events. On the other hand, airport and suburban hospitality assets are considered the least appealing investment options for the year ahead.
### Challenges Ahead
Despite the optimistic investment outlook, the hospitality sector still faces notable challenges. Rising labor and capital costs, increased insurance expenses, and concerns about weakening demand are top issues for investors. Sixty-five percent of respondents cited weakening demand as a concern, a noticeable increase from the prior year.
### Conclusion
While the hospitality sector stands on firmer footing compared to recent years, it must navigate rising costs and demand uncertainty. The sector’s sustained recovery and growth remain contingent on addressing these headwinds effectively.
About the Publisher:
Steve Griffin is a based in sunny Palm Harbor, Florida. He is an accountant by trade, and owner of GRIFFIN Tax (www.griffintax.com) and REVVED Up Accounting (www.revvedupaccounting.com). Steve is also the founder of Madison Avenue Technology (www.madisonave.tech). He carries a deep passion for commercial real estate and is actively involved in bringing you the daily beat.
