Not long ago, investing in hospitality properties was not a priority for most investors. The economic downturn caused by COVID-19 resulted in higher vacancies and slowed RevPAR growth, making the sector less attractive.
What a difference a few years can make. According to CBRE’s 2025 U.S. Hotel Investor Intentions Survey, 94% of participants expect to maintain or increase their hotel investments next year. This marks a significant jump from 85% reported the previous year. “A more optimistic outlook for total returns and distressed investment opportunities were the key reasons cited for increased allocations,” the survey stated.
### Investor Preferences
The survey highlighted that value-add and opportunistic hotel investments were the most favored asset types among respondents. However, interest in distressed opportunities was lower, despite 25% of those planning to boost their capital allocations citing distressed opportunities as a primary driver.
Investors also shared reasons for increasing their hotel allocations in 2025, including:
– 24.8% citing more distressed opportunities
– 19.0% optimistic about hotel return prospects
– 19.0% noting price adjustments
– 17.6% anticipating decreasing debt costs
– 15.0% expecting outperformance relative to other commercial real estate assets
### Investment Trends by Location
Resorts and central business district (CBD) hospitality assets stood out as the most appealing to investors. The report noted that ongoing recovery in international travel and improving group events and meetings are driving this trend. “We expect RevPAR growth for urban locations to outperform in 2025,” the survey stated. Conversely, airports and suburban hospitality assets were seen as the least attractive.
### Challenges Ahead
Despite the optimistic outlook, investors highlighted several challenges facing the hospitality sector. Rising labor and capital costs, along with higher insurance expenses, were significant concerns. Furthermore, 65% of respondents expressed increased worry about weakening demand this year, compared to last year’s sentiment.
While the sector still has hurdles to overcome, the survey’s insights point to a brighter future for hospitality investments in 2025.
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.
