When Kevin Davis, Americas CEO at JLL Hotels & Hospitality, looks into his crystal ball — powered by the recently released U.S. Hotel Investment Trends report — he sees hotel transaction activity increasing in the coming months.
"I do think that you could see a pickup in transaction volume in the second half of the year, but I can almost certainly guarantee that there will be a substantial pickup in 2026 relative to 2025," Davis said, pointing to an increase in bid activity.
The bid-ask spread is narrowing — with concessions being made by both buyers and sellers — and there's a buildup of deals in the pipeline expected to close in the second half of this year, Davis said.
"As I look into my crystal ball, that's what I see. And I think there are a couple of reasons for this dynamic," he added.
A big reason for an increase in transaction activity is just the passage of time, Davis said. The U.S. Federal Reserve started tightening in 2022, so investors have been in on deals for a substantial amount of time and need to trade out, which will drive renovations and debt refinancing — both of which will spark deals. Davis also pointed to historic low per-key prices in current hotel deals.
"You put those factors together, coupled with the fact that there are expectations that you'll see rate cuts from the Fed later this year and into 2026, and it creates a perfect recipe for enhanced transaction activity in late '25 and early '26," Davis said.
Per JLL's report, the top U.S. transaction markets in the first half of 2025 were Phoenix, New York City and Washington, D.C. But Davis said that this data doesn't paint the full picture, as it can be skewed by one big deal: the sale of the JW Marriott Phoenix Desert Ridge Resort & Spa, which represented 85% of Phoenix's transaction volume.
And it's still the U.S. urban markets — which have higher barriers to entry — that are performing well, Davis said.
"Some markets, frankly, that have been out of favor, like Chicago, like San Francisco — you're seeing a significant improvement in operating performance, and we're starting to see investors take note of markets that had previously been redlined," he said. "I think that's one of the trends that we're definitely going to keep an eye on."
Meanwhile, investors are taking note that there's a union contract negotiation coming up in 2026 in New York.
"A lot of investors are really focused on what that looks like. And I think they may go slow on New York until we get on the other side of that. But look, we're still seeing good deal activity in New York City that notwithstanding," Davis said.
It's not just where the deals will happen, but also who will make them, Davis said. High-net-worth investors and family offices made up less than 1% of the hotel buyer pool in 2015. Since 2021, HNWI/family office investors have grown from 7% to 14% of the buyer pool, according to the first-half transaction data from JLL.
And while private equity still represents the largest share of investors, they aren't transacting as much, Davis said.
"The fact that private equity is on the sidelines in terms of just the amount of capital being deployed in the space is a primary reason why total investment volumes are down compared to 2019," Davis said. "I think the most important stat is the fact that high-net-worth [individuals] have become a significant share of the investor universe at 14%."
This and other post-pandemic trends continue to hold — hotel deals are smaller, select-service hotels remain a popular asset class, etc. But a new cycle is incoming, Davis said.
"The end of 2025 is the beginning of the next cycle, from a transactions market perspective," he said. "So, we expect that the dynamics that are at play today that are driving the transaction market will continue to exist over the course of 2026."