- Investor confidence is rising, with 94% of surveyed respondents planning to maintain or increase hotel investment in 2025, up from 85% in 2024.
- CBD and resort hotels remain the most attractive. RevPAR growth is expected to be 2.2% for urban hotels and 1.5% for resorts.
- High-end chain scales are preferred, with luxury hotels receiving the most interest from investors.
- New York City is the top investment market, followed by San Francisco and Dallas.
Investors are growing more optimistic about the US hotel market, according to CBRE’s 2025 US Hotel Investor Intentions Survey.
Survey Says…
A significant 94% of respondents expect to either maintain or increase their hotel investment this year, marking a notable rise from 85% in 2024.
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The improved outlook is fueled by 2 key factors: anticipated total return growth and distressed investment opportunities. While investor interest in distressed assets declined overall (only 11% are targeting hotels, down from 18% last year), nearly 25% of investors increasing their allocations cited distressed opportunities as the main driver.
Why Investors Are Eyeing Hotels
While some investors remain cautious, others see strong upside potential in the hotel sector. Among those increasing their capital allocations to hotels this year, 19% cited improving total return prospects, while another 19% pointed to price adjustments creating new buying opportunities.
At the same time, a smaller but notable share (25%) of investors expanding their hotel portfolios said distressed opportunities were the main reason for their increased allocations. Although fewer investors are targeting distressed assets overall compared to last year, those who are see them as a compelling opportunity in 2025.
Where’s The Opportunity?
Investors are showing a strong preference for urban and resort locations in 2025. 41% of respondents ranked central business district (CBD) hotels as their top investment target, followed by 33% choosing resorts.
RevPAR growth is projected to be 2.2% for urban hotels this year, driven by a rise in group, business transient, and international travel. Meanwhile, resort RevPAR is expected to grow by 1.5%, with leisure travel demand continuing to normalize.
Luxury Hotels on Top
Higher-end chain scales remain the most attractive to investors. 53% of respondents favor upper-upscale hotels, while 30% are targeting luxury properties. This marks a shift from last year when upper-midscale hotels were among the top investment choices.
Investor interest in economy and midscale hotels is declining due to weakening RevPAR growth, with 27% of respondents citing them as the least attractive investment option.
Top Hotel Markets
For the second consecutive year, New York City remains the most attractive market for hotel investment. Limited new supply, strong consumer demand, and attractive yields continue to drive investor interest.
San Francisco ranks as the second-most favored market, buoyed by distressed pricing and upside potential, while Dallas takes third place, benefiting from lower regulations.
What to Watch in 2025
Although investors remain concerned about labor, insurance, and capital costs, sentiment has improved compared to last year. CBRE projects the federal funds rate to end 2025 between 3.5% and 3.75%, which many investors see as a necessary catalyst for increased deal activity.
With limited new hotel supply and short-term rental restrictions in key markets, demand for well-located, high-end assets is expected to stay strong throughout the year.
Look for continued interest in CBD and resort locations, with luxury and upper-upscale hotels leading investment strategies in 2025.
