U.S. Hotel Investors Poised to Allocate More Capital to Sector in 2025: CBRE Survey

Investors are preparing to allocate additional capital to the U.S. hotel sector in 2025, driven by expectations of higher returns, distressed asset opportunities and favorable pricing, according to the findings of CBRE's latest U.S. Hotels Investor Intentions Survey.

The survey highlights a growing sense of optimism among investors, with 94% intending to maintain or expand their hotel portfolios this year, up from 85% in 2024. At the same time, only 6% of investors anticipate reducing their allocations, marking a significant improvement from 16% last year.

“We anticipate an acceleration in hotel investment activity in 2025, as investors are eager to seize new buying opportunities amid increasingly favorable economic conditions,” said Bill Grice, President of CBRE Hotels in the Americas. “With ample liquidity accessible through the debt capital markets, investors are targeting assets that offer substantial in-place cash flows and are actively seeking value-add properties that can be repositioned to yield above-market returns.”

Top Markets for Hotel Investment

• New York City remains the most attractive market for hotel investment for the second consecutive year, driven by limited supply growth, attractive relative yields and robust consumer demand.
• San Francisco secures the second spot, benefiting from distressed pricing and strong upside potential.
• Dallas ranks third, appealing to investors with its business-friendly environment and low regulatory hurdles.

Preferred Investment Strategies

• Investors continue to prioritize value-add and opportunistic strategies, with over 75% seeking opportunities to reposition assets through renovations, adding rooms, redesigning spaces or incorporating new amenities to enhance returns.
• Resorts and central business districts (CBDs) are the most favored location types for hotel investments.
• By chain scale, upper-upscale (52%) and luxury hotels (30%) are the most sought-after segments in 2025, reflecting a strong investor appetite for high-end assets in prime locations.
• Full-service hotels are the top asset choice, favored by 58% of investors, followed by limited-service hotels (21%).
• Despite the heightened interest in extended-stay hotels during the pandemic and expansions in this segment by major brand families, only 14% of investors plan to prioritize them in 2025, indicating a shift back to traditional hotel types.

Challenges and Opportunities

• The high cost of both capital and labor remains the most significant challenge to hotel investors in 2025, followed by rising renovation costs.
• While alternative lodging options, such as cruise lines, short-term rentals and outdoor accommodation, continue to impact hotel demand, only 3% of investors view this competition as their most significant challenge.