With the spike in rates of interest subsiding and transactions growing towards the tip of 2025, the local weather for lodge patrons and sellers seems promising going ahead. Within the dialogue that follows, brokers representing high corporations overview the components behind this optimistic shift out there and the lodge segments seeing essentially the most exercise. Members additionally focus on the significance of branding to lodge valuation, vendor methods round timing and renovations, and what to contemplate earlier than revising the value on an inventory.
David Greenberg, Vice Chair for the Southeast Hospitality Funding Gross sales Group, Cushman & Wakefield
Teague Hunter, President and Chief Government Officer, Hunter Resort Advisors
Ed James, Principal, Mumford Firm
2025 Transaction Tendencies
Ed James: Transaction quantity for mid-market and financial system resorts started to sluggish within the second half of 2024 in anticipation of the presidential election and potential for uncertainty ensuing from it. That uncertainty did negatively influence the transaction marketplace for most of Q1 and Q2 of 2025. Exercise started to choose up considerably in Q3, and the ensuing reasonably upward pattern continued into the tip of 2025.
Teague Hunter: 2025 was a selective however productive 12 months. Industrywide deal quantity remained tempered, however certified patrons stayed lively, and capital continued to stream towards belongings with robust fundamentals. Whereas the broader market wasn’t chasing offers, good belongings nonetheless attracted good capital, and traders centered extra on technique and positioning than value alone. … We noticed constant urge for food for prolonged keep, premium choose service, higher upscale, and way of life resorts, particularly these with clear demand drivers and resilient working efficiency. Exercise was broad-based throughout markets, with energy in each secondary and first cities the place fundamentals have recalibrated. Our Q3 alone illustrated that steadiness, with closings starting from AC San Diego Gaslamp to Crowne Plaza Knoxville and Hyatt Place Athens Downtown.
Ed James: Demand for mid-market resorts and particularly extended-stay properties remained pretty robust by 2025, however the slowdown in exercise was primarily attributable to a scarcity of stock of properties on the market. Uncertainty within the financial system together with fewer choices for tax alternate candidates stored many sellers on the sidelines.
David Greenberg: A standard theme [of our 2025 hotel sales is] $25 million or much less. The sub $25 million class of resorts tends to draw a variety of non-public capital, household workplaces, regional gamers, somebody who’s traditionally owned procuring facilities and condo buildings, and so forth. So, the non-public capital area is completely alive and effectively. The institutional acquisitions departments are open for enterprise, however they’re much more selective.
Curiosity Charges Restabilizing
Teague Hunter: Charges continued to affect underwriting and the bid-ask unfold, however the influence softened as debt markets stabilized and charges started to ease. We noticed capital re-engage meaningfully within the second half of the 12 months, making a extra enticing transaction atmosphere even whereas patrons remained disciplined.
Ed James: The shock over rising rates of interest is not an element for a lot of patrons. Charges are actually comparatively secure, and few count on a return to COVID-era “free cash” with charges within the 4 % vary. Acquisition capital is available at present for moderately underwritten tasks.
David Greenberg: We’re in a downward-trending rate of interest atmosphere. It is determined by the situation, after all, however primarily based on what we’re listening to from our fairness and debt structured finance crew, we count on continued rate of interest cuts, and we ought to be at sub 7 % rates of interest.
2026 Transaction Outlook
Teague Hunter: We count on 2026 to convey continued momentum as confidence improves and capital searches for well-positioned alternatives. With extra readability round rates of interest and extra strategic patrons out there, the atmosphere seems primed for a more healthy, extra sustainable cycle—one the place fundamentals and execution matter greater than sheer quantity.
Ed James: We anticipate very modest progress within the tempo of transactions in 2026 as extra sellers discover their method again to market and the inevitable unwinding of dangerous CMBS [commercial mortgage-backed securities] and traditional debt begins in earnest. Property-level working ends in the mid-market and financial system sectors ought to stay flat or improve solely barely in 2026.
David Greenberg: We’re very optimistic and optimistic by way of transactions as we head into 2026. For one, the rate of interest atmosphere is getting higher. And there was lots much less development occurring, particularly within the lodge area. That’s one thing else that provides me encouragement as we head into 2026—it’s translating into making present resorts that rather more precious since you don’t have as a lot new provide coming on-line. After which economically, I really feel like we’re in a really upmarket proper now, and persons are feeling, for essentially the most half, optimistic about journey.
Branding, Valuation, and Financing
Ed James: Branding is likely one of the largest (subsequent to location) components within the valuation of resorts. The flexibility to maintain an present franchise, to improve to a better flag, or be required to downgrade can have a big impact on what a purchaser is keen to pay for an asset and ought to be an integral a part of pricing and advertising the lodge. The stronger the model, the upper funding returns are anticipated and thus increased demand for the property.
Teague Hunter: We begin with fundamentals: market demand drivers, occupancy/fee penetration, and the energy of the asset relative to its aggressive set. A model change solely provides worth if it creates actual income upside or strengthens purchaser demand. Our position is to assist house owners look past the model itself and perceive how model technique impacts long-term positioning.
David Greenberg: Financing-wise, it’s usually true that the lenders wish to see a flag on the property. With that stated, in any given 12 months, we’re promoting various unbiased resorts—various resorts that aren’t affiliated with a nationwide franchise—and there are many lenders out there for these as effectively. However there are particular lenders that solely have a consolation stage if the property is affiliated with a nationwide franchise.
Timing Issues for Sellers
Teague Hunter: The largest mistake is misreading the second—both dashing to market when efficiency hasn’t stabilized or holding too lengthy ready for circumstances to “peak.” Immediately’s traders are strategic; they reply finest when a vendor brings a transparent story on efficiency, upside, and timing, not simply pricing expectation.
Ed James: Making an attempt to time the market because it pertains to the calendar annually doesn’t have a lot of a “internet” influence to the vendor. In some vacation spot markets, nevertheless, reminiscent of seashore or college cities, it might be smart to plan advertising and gross sales schedules across the excessive season if that advantages the vendor. An excellent schedule to entice patrons to pay a better value is perhaps to go to contract in December or January and shut in April or Might with the vendor having carried the property by the slower winter months, if that’s the case domestically.
David Greenberg: Again within the day, there was a seasonal time to convey a lodge in the marketplace. However we’re in such a linked world now—you can be in your African safari and nonetheless be in contact with David and crew in the US and behind your Hilton Backyard Inn [listing] in the US. However I’ll say that once we do convey a lodge in the marketplace, and operationally it’s in an upward-trending efficiency [phase], that makes for a extra marketable property
To Renovate or To not Renovate Pre-Sale
Ed James: Each choices can work; nevertheless, the choice ought to be primarily based on the targets of the vendor. The next value could also be realized by renovating earlier than a sale; nevertheless, if, publish renovation, gross sales don’t enhance consequently, then that renovation may very well work towards a vendor. Cautious session with a “trusted lodge advisor” about particular markets and the particular targets of the vendor is at all times one of the best plan.
Teague Hunter: It comes down as to if the capex meaningfully modifications your purchaser profile or the funding thesis. If a renovation unlocks demonstrable efficiency upside, it might justify the spend. Typically, nevertheless, particularly in at present’s strategic atmosphere, patrons favor to tackle the value-add themselves—permitting sellers to transact extra shortly and letting the subsequent proprietor seize the upside.
David Greenberg: I sometimes assume it’s higher for a vendor to let the client do the renovation. Certainly one of many causes is that if it’s a really vital renovation, it’s going to influence each day efficiency. And there’s an enormous focus positioned on the final three to 4 years of efficiency, with an uber-focus on the previous 12-24 months. So, now we have to elucidate [to the potential buyer], “Sure, you’re noticing a downward pattern over the previous 12 to 24 months, however that’s as a result of the vendor simply executed on an $8 million renovation.” That rationalization holds weight, and a purchaser understands it, however it’s simply one thing else that needs to be [discussed] within the course of.
When to Drop the Worth on a Itemizing
Ed James: Every scenario is completely different, and one of the best plan of motion ought to be decided by the specifics of the deal and the targets of the vendor. Ought to a fast closing be a excessive precedence for the vendor, it might be finest to low cost early; nevertheless, the alternative can be true if the vendor wants to attain a better value and is keen to attend for it.
Teague Hunter: If an asset is correctly priced and positioned, we count on robust engagement within the first 30-60 days. Past that, we reassess the story, pricing, or purchaser pool. Immediately’s market rewards strategic changes vs. reactive value cuts, however ready too lengthy can ship the mistaken message. A considerate analysis interval is at all times higher than chasing the market downward.
David Greenberg: We like to make sure we’re bringing at least six to seven gives within the first 60-90 days of selling, and if we’re not doing that, we’re determining why and [discuss] various things that we will be doing. We present the vendor that we’ve finished all this proactive advertising. And solely then we’ll have a dialog a couple of value discount, which many occasions will encourage extra exercise.
