CHICAGO — The U.S. hotel investment market gained significant momentum in 2025, with transaction volume climbing 17.5% year over year to $24 billion, according to JLL’s newly released 2025 U.S. Hotel Investment Trends Report. The increase highlights the sector’s resilience amid shifting capital markets and positions hotels for continued growth heading into 2026.
JLL’s Hotels & Hospitality Group attributed the uptick in activity to robust private equity participation and a strengthening debt environment, which together improved pricing and deal feasibility. Investors increasingly capitalized on favorable borrowing conditions and discounted asset values relative to replacement costs, driving renewed confidence across the sector.
Transaction activity was particularly strong in high-growth and gateway markets. New York led the nation with $3.7 billion in hotel trades across 29 transactions, followed by Phoenix with $1.5 billion from 22 trades and Washington, D.C., which recorded $1.2 billion across 22 deals. Several large-scale transactions in these markets helped propel overall volume, underscoring investor focus on urban centers and growth markets with long-term performance potential.
The report also points to a notable shift in buyer composition. While private equity firms remained active, high-net-worth individuals and foreign investors played an increasingly prominent role in 2025. This diversification of capital sources reflects the hotel sector’s attractive yield profile compared to other commercial property types, as well as its current valuation discount to replacement cost.
Improving debt markets are expected to sustain investment momentum in 2026. Kevin Davis, Americas CEO of JLL’s Hotels & Hospitality Group, noted that interest rate reductions have materially changed acquisition economics.
“Since September 2024, when the Fed started lowering interest rates, the overall cost of debt has decreased by almost 300 basis points,” Davis said. “This has enabled investors to achieve positive leverage when acquiring assets, which fueled transaction activity in the second half of 2025 and will continue to drive transactions in 2026.”
Hotel operating performance in 2025 reflected a K-shaped recovery across segments. Revenue per available room (RevPAR) for luxury hotels increased 3% compared to 2024, while midscale and economy properties saw declines of 2.8% and 4.4%, respectively. The divergence highlights continued strength in high-end travel demand, supported by higher-income consumers, alongside softer performance in more price-sensitive segments.
Looking ahead, JLL identified major upside potential tied to global events in 2026, particularly in FIFA World Cup host cities. Based on historical data showing Super Bowl events contribute an average of 2.8 percentage points to annual market RevPAR, the extended 39-day World Cup—featuring more than 70 matches—could deliver mid-double-digit RevPAR growth in select U.S. markets.
“The World Cup represents a transformational opportunity for U.S. hotel markets,” said Dan Peek, Americas president of JLL’s Hotels & Hospitality Group. “Combined with America’s 250th anniversary celebrations, select cities are positioned for exceptional performance in 2026. This could mark a watershed moment for the hospitality sector.”
The supply outlook further supports the investment thesis. New hotel supply growth is expected to remain well below the long-term annual average of 1.7%, limiting competitive pressures. With urban markets accounting for 43% of total transaction volume in 2025, investors appear increasingly confident that existing assets will benefit from constrained new development and improving demand fundamentals.
