The U.S. hotel transaction market this year has mostly built on the momentum it clawed together in the second half of 2025.
Buyers and sellers are still working together, slowly narrowing the bid-ask gap and finding ways to close, even if the path forward has its stops and starts.
LW Hospitality Advisors’ latest records of individual transactions priced at $10 million at above shows 107 transactions during the second quarter, down from 110 in the first quarter. Total sales volume for this second quarter was nearly $3.8 billion, down from $4.6 billion the quarter before, and price per key decreased from $263,000 to $229,000. The average sales prices also dropped from $41.8 million to $35.3 million.
Even so, the numbers mostly surpass figures from a year ago. During the second quarter of 2025, there were 89 individual deals of more than $10 million in price for a total value of $3.3 billion, amounting to an average sales price of $37.1 million and a price per key of $225,000.
In a written assessment of these figures, LWHA Co-Founder, President and CEO Daniel Lesser said the market has shown “remarkable resilience” in light of macro volatility, namely the escalating Middle East war, a bifurcated domestic economy and persistent elevated borrowing costs.
“A comprehensive analysis of nearly 10 years of U.S. hotel single-sale transaction data indicates that activity has not materially declined,” he wrote. “Rather, it has shifted in structure, composition and pricing dynamics.”
Overall, it feels more like a market-selling environment, said Dustin Fisher, principal and head of acquisitions for institutional real estate investment manager Noble Investments Group. That’s primarily due to fund or partnership resolution issues, mandated sales or capital expenditure needs.
“That being said, I think we came into the year with as bleak of a set of full-year outlooks as you could ask for and could not have been more wrong,” he said. “So, I do think you're finding sellers recalibrate in real time on better-than-expected results.”
Noble invests in hotels throughout the industry cycle, but Fisher said he’s not sure when the company's leadership team has been more bullish on the sector than it is currently.
There are several secular tailwinds helping the industry, and many continue to be overlooked as a major catalyst compared with other real estate categories, he said. For one, there’s the supply backdrop along with the increase in business travel, a yet-to-be realized stimulus spending package and an unprecedented wealth transfer that’s coming into the largest traveling demographic.
A look at the market
There’s an atypical number of luxury hotels on the market, and that is somewhat attributable to the segment’s performance, Fisher said. The tailwinds associated with luxury is attracting a preponderance of the capital, but there have also been two “somewhat abnormal portfolio sellers” who are providing a solid amount of luxury hotels to meet the capital demand.
There’s also a lot of upscale and upper-upscale legacy product that’s mostly from the unwinding of institutional portfolios from the prior cycle that are coming to the point of resolving themselves, he said.
The portfolio opportunities seen immediately after the pandemic and the then-capital markets tailwinds have not re-emerged, he said.
When looking over what deals closed in the second quarter, Lesser said in an interview that along with some headline-grabbing sales, there were many transactions between $10 million and $50 million.
“There's no shortage of trades at $100 million-plus, but there is also a lot of trades at the $10 million to $50 million range,” he said.
While there’s a lot of interest right now in luxury deals because of the segment’s performance, the contrarian bet would be to pursue hotels at the lower end of the chain scale, he said.
“The price per unit for the middle down is more suppressed than it is for anything above that,” he said.
In terms of what’s on the market, there’s a good deal of value-add, basis and yield opportunities out there, and they’re across a fairly broad spectrum of the chain scales, Fisher said. What’s different about the transaction market now is that in the past few years, there has been a lot of direct engagement between sellers and buyers for bespoke, off-the-market transactions.
Partly because of the overall performance as well as the macro backdrop for hotels have led to environment for more broadly marketing properties for sale, he said. Sellers want to make sure they’re capturing the newer entrants to the market, the generalists investors who have been out for a bit.
Also, owner/operators who have focused more on development are now focusing more on deals because of the cost to develop, he said.
“So, disposition processes are benefiting from a more broad marketing approach versus what we’d characterize as an off-market, bespoke approach last year — probably the last 24 months.”
Pricing of deals
Pricing is still a constant because investors are still looking for the same yield profile in place, Fisher said. Because performance has gone up, they’re re-evaluating.
“Yield is up, is that sustainable going forward?” he asked. “Which I don’t think is different than underwriting at any other time during the cycle, but I don’t think cap rates have necessarily compressed but for luxury.”
Distress is an entry point for deals and always has been, said Mike Ross, U.S. consumer markets deal leader at PwC. However, the hoped-for wave of distressed deals is still unlikely to materialize.
There are opportunistic investors out there evaluating the market to find their preferred deal types, he said. They believe in the long-term durability of some unique assets, and many of those marquee deals have made big headlines this year.
It’s more economic to buy than build, he said. Buyers know they can acquire a hotel and reposition it faster and at a better price point than pursuing a new development project.
“I can reposition them in a way that aligns with these consumer trends,” he said. “I can reposition for luxury. I can reposition for experience.”
Any distress that exists in the hospitality sector is for the most part not driven by operational distress, Lesser said. Instead, it is capital structure distress, such as a mortgage coming due and interest rates being higher now than when the debt originated. These owners likely also need to inject fresh capital into the property.
These factors will force sponsors who may not want to sell to sell, he said. However, there’s a lot of capital in search of properties that have a good story going forward.
“Those assets that have good stories going forward, eventually they're going to get bid up in terms of pricing,” he said.. “So, it may be a distressed-induced transaction — doesn't mean it's going to sell at distressed pricing.”
2026 outlook
Lesser said he wouldn’t be surprised if the total number of deals and total dollar volume for this year exceeds 2025.
“Irrespective of the fact that the numbers show that [the second quarter] is lagging [the first quarter], the back of the year I think is going to rock and roll,” he said.
One of the biggest drivers for deals this year will be that many owners are getting to the point where they have to sell, he said. Fund-life requirements, debt maturities, higher refinancing costs, capital investment needs — all of these factors mean they don’t have much of a choice.
On the other side, there’s an enormous amount of capital around the world chasing yield in U.S. commercial real estate, he said.
“Then you drill down further, and hotels are perceived as extremely desirable assets today,” he said.
In his 45 years in the hotel industry, Lesser said he’s never seen a time before when hotels were seen as more desirable than offices, which were considered a steady investment.
“[Hotels are] a significant investment class that investors have come to realize you’ve got to know what you’re doing, but if you do, you can generate superior risk-adjusted returns with hotels as opposed to other potential investments,” he said.
Ross said there are two things he’s keeping an eye on this year. The first is whether the existing investments geared toward luxury are leading to things like pricing power. The RevPAR metrics will tell a story here that seems positive in 2026 compared to 2025.
The second thing is it’s hard to say that investment in luxury is an indefinite trend, he said. Nothing is indefinite, so there may be adjustments to the definition of luxury.
“Think approachable luxury,” he said. “How are investors and operators adapting to this notion here that it can’t all be high-end, especially as we see renewed interest across the generations in different types of experiences.”
If that definition expands, it will be interesting to see how that plays out with investments, not just in assets but in experiences and partnerships to reach that broader demographic, he said.