Dive Brief:
- Sentiment among U.S. hotel investors is increasingly positive, according to CBRE’s 2025 U.S. Hotel Investor Intentions Survey, published last week. According to the report, 94% of respondents expect to maintain or increase their hotel investments in 2025, compared with 85% in last year’s survey.
- Respondents cited a more optimistic outlook for total returns and distressed investment opportunities as the key reasons for their anticipated investment this year, per the report.
- Investors will target central business districts and resort markets over other locations to allocate funds, with these markets expected to show strong RevPAR growth in 2025, the report detailed. However, some challenges, including the rising cost of labor and insurance, could deter some investors.
Dive Insight:
The most favored location type by U.S. investors in 2025 will be urban areas, which are expected to see RevPAR growth of 2.2% this year, driven by increased group, business transient and international travel, according to CBRE.
Additionally, investors will gravitate toward resort markets, which are expected to see modest ADR gains leading to 1.5% RevPAR growth, as leisure demand continues to normalize, the report detailed.
Findings from the CBRE report align with sentiments that Global Head of JLL Hotels Research Zach Demuth shared with Hotel Dive in January.
Demuth said that urban markets are “exceptionally strong,” pointing to New York City, Chicago, New Orleans and Nashville, Tennessee, which are experiencing a resurgence of group, corporate and international travel.
According to JLL’s Global Hotel Investment Outlook 2025, also published last week, urban cities and high-barrier-to-entry markets are expected to attract the most investor interest this year.
Respondents to the CBRE report cited New York City as the most attractive investment market in the U.S., followed by San Francisco and Dallas.
The luxury and select-service sectors will be most favored by hotel investors, both JLL and CBRE reported. Upper-tier segments — expected to see the highest RevPAR gains in 2025 — will continue to drive industry performance this year, CoStar and Tourism Econometrics reported last week.
Among U.S. investors who plan to decrease their capital allocations this year, decelerating RevPAR growth was cited as the biggest reason, according to the CBRE report. And investors said that labor, insurance and capital costs are still their top concerns for 2025, though the severity of these challenges is less than last year, per CBRE.
On a global scale, investors are “increasingly gravitating to the hotels sector evidenced by near historic levels of first-time capital invested in 2024,” Demuth said in a release obtained by Hotel Dive.
In the third quarter of 2024, global hotel transaction volume reached $42.1 billion, up 13.6% year over year, JLL reported in November.
“We expect this dynamic to continue throughout 2025 as hotels emerge as a preferred asset class driven by outsized yields, robust operating performance and favorable supply dynamics,” Demuth said.
