With the spike in interest rates subsiding and transactions increasing toward the end of 2025, the climate for hotel buyers and sellers appears promising going forward. In the discussion that follows, brokers representing top firms overview the factors behind this positive shift in the market and the hotel segments seeing the most activity. Participants also discuss the importance of branding to hotel valuation, seller strategies around timing and renovations, and what to consider before revising the price on a listing.
2025 Transaction Trends
Ed James, principal, Mumford Company: Transaction volume for mid-market and economy hotels began to slow in the second half of 2024 in anticipation of the presidential election and potential for uncertainty resulting from it. That uncertainty did negatively impact the transaction market for most of Q1 and Q2 of 2025. Activity began to pick up somewhat in Q3, and the resulting moderately upward trend continued into the end of 2025.
Teague Hunter, president and chief executive officer, Hunter Hotel Advisors: 2025 was a selective but productive year. Industrywide deal volume remained tempered, but qualified buyers stayed active, and capital continued to flow toward assets with strong fundamentals. While the broader market wasn’t chasing deals, good assets still attracted good capital, and investors focused more on strategy and positioning than price alone. … We saw consistent appetite for extended stay, premium select service, upper upscale, and lifestyle hotels, especially those with clear demand drivers and resilient operating performance. Activity was broad-based across markets, with strength in both secondary and primary cities where fundamentals have recalibrated. Our Q3 alone illustrated that balance, with closings ranging from AC San Diego Gaslamp to Crowne Plaza Knoxville and Hyatt Place Athens Downtown.
Ed James: Demand for mid-market hotels and especially extended-stay properties remained fairly strong through 2025, but the slowdown in activity was primarily caused by a lack of inventory of properties for sale. Uncertainty in the economy along with fewer options for tax exchange candidates kept many sellers on the sidelines.
David Greenberg, vice chair for the Southeast hospitality investment sales team, Cushman & Wakefield: A common theme [of our 2025 hotel sales is] $25 million or less. The sub $25 million category of hotels tends to attract a lot of private capital, family offices, regional players, someone who’s historically owned shopping centers and apartment buildings, etc. So, the private capital space is absolutely alive and well. The institutional acquisitions departments are open for business, but they’re a lot more selective.
Interest Rates Restabilizing
Teague Hunter: Rates continued to influence underwriting and the bid-ask spread, but the impact softened as debt markets stabilized and rates began to ease. We saw capital re-engage meaningfully in the second half of the year, creating a more attractive transaction environment even while buyers remained disciplined.
Ed James: The shock over rising interest rates is no longer a factor for many buyers. Rates are now relatively stable, and few expect a return to COVID-era “free money” with rates in the 4 percent range. Acquisition capital is readily available today for reasonably underwritten projects.
David Greenberg: We’re in a downward-trending interest rate environment. It depends on the location, of course, but based on what we’re hearing from our equity and debt structured finance team, we expect continued interest rate cuts, and we should be at sub 7 percent interest rates.
2026 Transaction Outlook
Teague Hunter: We expect 2026 to bring continued momentum as confidence improves and capital searches for well-positioned opportunities. With more clarity around interest rates and more strategic buyers in the market, the environment appears primed for a healthier, more sustainable cycle—one where fundamentals and execution matter more than sheer volume.
Ed James: We anticipate very modest growth in the pace of transactions in 2026 as more sellers find their way back to market and the inevitable unwinding of bad CMBS [commercial mortgage-backed securities] and conventional debt begins in earnest. Property-level operating results in the mid-market and economy sectors should remain flat or increase only slightly in 2026.
David Greenberg: We’re very positive and optimistic in terms of transactions as we head into 2026. For one, the interest rate environment is getting better. And there has been a lot less construction going on, especially in the hotel space. That’s something else that gives me encouragement as we head into 2026—it’s translating into making current hotels that much more valuable because you don’t have as much new supply coming online. And then economically, I feel like we’re in a very upmarket right now, and people are feeling, for the most part, optimistic about travel.
Branding, Valuation, and Financing
Ed James: Branding is one of the biggest (next to location) factors in the valuation of hotels. The ability to keep an existing franchise, to upgrade to a higher flag, or be required to downgrade can have a huge impact on what a buyer is willing to pay for an asset and should be an integral part of pricing and marketing the hotel. The stronger the brand, the higher investment returns are expected and thus higher demand for the property.
Teague Hunter: We start with fundamentals: market demand drivers, occupancy/rate penetration, and the strength of the asset relative to its competitive set. A brand change only adds value if it creates real revenue upside or strengthens buyer demand. Our role is to help owners look beyond the brand itself and understand how brand strategy impacts long-term positioning.
David Greenberg: Financing-wise, it’s generally true that the lenders would like to see a flag on the property. With that said, in any given year, we’re selling a number of independent hotels—a number of hotels that are not affiliated with a national franchise—and there are plenty of lenders available for those as well. But there are certain lenders that only have a comfort level if the property is affiliated with a national franchise.
Timing Considerations for Sellers
Teague Hunter: The biggest mistake is misreading the moment—either rushing to market when performance hasn’t stabilized or holding too long waiting for conditions to “peak.” Today’s investors are strategic; they respond best when a seller brings a clear story on performance, upside, and timing, not just pricing expectation.
Ed James: Trying to time the market as it relates to the calendar each year doesn’t have much of a “net” impact to the seller. In some destination markets, however, such as beach or university towns, it may be wise to plan marketing and sales schedules around the high season if that benefits the seller. An ideal schedule to entice buyers to pay a higher price might be to go to contract in December or January and close in April or May with the seller having carried the property through the slower winter months, if that is the case locally.
David Greenberg: Back in the day, there was a seasonal time to bring a hotel on the market. But we’re in such a connected world now—you could be on your African safari and still be in touch with David and team in the United States and behind your Hilton Garden Inn [listing] in the United States. But I will say that when we do bring a hotel on the market, and operationally it’s in an upward-trending performance [phase], that makes for a more marketable property
To Renovate or Not to Renovate Pre-Sale
Ed James: Both options can work; however, the decision should be based on the goals of the seller. A higher price may be realized by renovating before a sale; however, if, post renovation, sales do not improve as a result, then that renovation may actually work against a seller. Careful consultation with a “trusted hotel advisor” about specific markets and the specific goals of the seller is always the best plan.
Teague Hunter: It comes down to whether the capex meaningfully changes your buyer profile or the investment thesis. If a renovation unlocks demonstrable performance upside, it may justify the spend. In most cases, however, especially in today’s strategic environment, buyers prefer to take on the value-add themselves—allowing sellers to transact more quickly and letting the next owner capture the upside.
David Greenberg: I typically think it’s better for a seller to let the buyer do the renovation. One of many reasons is that if it’s a very significant renovation, it’s going to impact daily performance. And there’s a big focus placed on the last three to four years of performance, with an uber-focus on the past 12-24 months. So, we have to explain [to the potential buyer], “Yes, you’re noticing a downward trend over the past 12 to 24 months, but that’s because the seller just executed on an $8 million renovation.” That explanation holds weight, and a buyer understands it, but it’s just something else that has to be [discussed] in the process.
When to Drop the Price on a Listing
Ed James: Each situation is different, and the best plan of action should be determined by the specifics of the deal and the goals of the seller. Should a quick closing be a high priority for the seller, it may be best to discount early; however, the opposite will be true if the seller needs to achieve a higher price and is willing to wait for it.
Teague Hunter: If an asset is properly priced and positioned, we expect strong engagement in the first 30-60 days. Beyond that, we reassess the story, pricing, or buyer pool. Today’s market rewards strategic adjustments vs. reactive price cuts, but waiting too long can send the wrong message. A thoughtful evaluation period is always better than chasing the market downward.
David Greenberg: We like to ensure we’re bringing no less than six to seven offers in the first 60-90 days of marketing, and if we’re not doing that, we are figuring out why and [discuss] different things that we can be doing. We show the seller that we’ve done all this proactive marketing. And only then we’ll have a conversation about a price reduction, which many times will encourage more activity.
