Hotel Sales Decline Amid Economic Headwinds and Uncertainty in H1

The first half of 2025 witnessed a complex interplay of geopolitical shifts, natural disasters, and continuing global challenges that led to significant whiplash in the U.S. stock market and unusual swings in the bond market. The return of Donald J. Trump to the U.S. Presidency has led to a reigniting of trade tensions, particularly with China, that are impacting global commerce. Furthermore, with peace talks proving unsuccessful thus far, wars in Ukraine, Gaza, and Sudan are each entering their third or fourth year. In May, India and Pakistan engaged in a brief but intense military conflict, marking their most serious escalation in decades. During June, the Iran–Israel War, also referred to as the Twelve-Day War, was an armed conflict during which Israel launched surprise attacks on key military and nuclear facilities in Iran, culminating with the U.S. taking offensive action by bombing three Iranian nuclear sites. Finally, during the first half of 2025, the U.S. experienced a record...

The first half of 2025 witnessed a complex interplay of geopolitical shifts, natural disasters, and continuing global challenges that led to significant whiplash in the U.S. stock market and unusual swings in the bond market. The return of Donald J. Trump to the U.S. Presidency has led to a reigniting of trade tensions, particularly with China, that are impacting global commerce. Furthermore, with peace talks proving unsuccessful thus far, wars in Ukraine, Gaza, and Sudan are each entering their third or fourth year. In May, India and Pakistan engaged in a brief but intense military conflict, marking their most serious escalation in decades. During June, the Iran–Israel War, also referred to as the Twelve-Day War, was an armed conflict during which Israel launched surprise attacks on key military and nuclear facilities in Iran, culminating with the U.S. taking offensive action by bombing three Iranian nuclear sites. Finally, during the first half of 2025, the U.S. experienced a record $126 billion in losses from natural disasters, including California wildfires, Midwest tornadoes, and Mississippi River floods.

Largely due to the current administration’s policy initiatives tied to federal government layoffs and fears surrounding the implications of planned tariffs, U.S. Real Gross Domestic Product (GDP) decreased at an annual rate of 0.5 percent in the first quarter of 2025, the first decline in quarterly real GDP levels in three years. Based on data through mid-July, economic growth has bounced back to approximately 2.4% for Q2 2025.

Heightened structural uncertainty tied to policy initiatives and the implications on unemployment levels and inflation have caused the middle class and below U.S. consumers to grow increasingly wary. While recent perception is improving and inflation expectations continue to decline, consumer sentiment is substantially below year-end, and well below its historical average, as American households still perceive substantial risk of price pressures increasing in the future. Overall, the outlook for the U.S. economy has improved as President Trump has delayed and modified his planned tariffs on trading partners and Congress passed a major tax bill at the beginning of July 2025. Barring any black swan event(s) and assuming key factors, including a reduction of interest rates, ongoing trade negotiations lowering tariff rates and short-term boosts from tax reforms and deregulation, the outlook is for Real GDP to accelerate through 2026.

Macroeconomic and capital market factors, including an uncertain tariff environment, an influx of immigration policy, an elevated interest rate environment, and potentially higher inflation, are headwinds challenging the U.S. lodging industry. Now, five years removed from the advent of the COVID-19 pandemic and the subsequent vibrant rebound of demand for transient accommodations, the hotel industry overall is currently navigating a period of stagnation as top-line metrics nationally remain mostly steady. With this said, Revenue Per Available (RevPAR) within the luxury sector is outperforming the economy segment as the upper middle class and upper class U.S. consumer remains economically healthy.

The LWHA Q2 2025 Major U.S. Hotel Sales Survey includes 89 single asset sale transactions over $10 million, which totaled nearly $3.3 billion and included approximately 14,500 hotel rooms with an average deal size of $36.7 million and an average sale price per room of $225,000.

• In comparison, the LWHA Q1 2025 Major U.S. Hotel Sales Survey included 83 sales that totaled nearly $2.8 billion and included approximately 13,900 hotel rooms with an average deal size of $33.7 million and an average sale price per room of $202,000.
• Comparing Q2 2025 with Q1 2025, the number of trades increased approximately 7 percent while total dollar volume grew roughly 17 percent, average deal size increased nearly 9 percent, and sale price per room rose roughly 12 percent.
• By further comparison, the LWHA Q2 2024 Major U.S. Hotel Sales Survey included 90 single asset sale transactions over $10 million, which totaled $4.0 billion and included approximately 14,350 hotel rooms with an average deal size of $44.5 million and an average sale price per room of $279,000.
• Comparing Q2 2025 with Q2 2024, the number of trades declined approximately one percent while total dollar volume decreased roughly 18 percent, average deal size dropped nearly 18 percent, and sale price per room fell by roughly 19 percent.

Newsworthy Q2 2025 observations include:

• Twenty-four trades, or roughly 24 percent of the national Q2 2025 total, occurred in California and Florida. These transactions total over $583 million in investment activity, or 18 percent of the national Q2 2025 aggregate.
• Fourteen major hotel sale transactions in the State of California represented nearly $400 million in investment activity or 12 percent of the national Q2 2025 aggregate. Ten major hotel sale transactions in the State of Florida represented $187 million of investment activity, or 6 percent of the national Q2 2025 aggregate.
• Seven major hotel sale transactions in the State of Colorado represented roughly $397 million of investment activity, or 12 percent of the national Q2 2025 aggregate.
• Seven major hotel sale transactions in the State of Texas represented roughly $222 million in investment activity, or 7 percent of the national Q2 2025 aggregate.
• Seven major hotel sale transactions in the State of Tennessee represented roughly $213 million of investment activity, or 7 percent of the national Q2 2025 aggregate.
• Trinity Investments sold the JW Marriott Phoenix Desert Ridge Resort & Spa, a 950- room hotel and the largest resort in Phoenix, AZ, for $865 million or $910,000 per key to Ryman Hospitality Properties, Inc. (NYSE: RHP). Trinity Investments acquired the asset in 2019 for $602 million and completed a nearly $100 million renovation project for the property, which included adding a water park complex.
• Through a $400 million bond offering, The Stanley Hotel in Estes Park, CO, a historic 196 key asset situated on 41 acres, was acquired for just over $163 million, or $839,000 per unit by The Stanley Partnership for Art Culture and Education, LLC (SPACE), a public-private partnership that includes Colorado Educational and Cultural Facilities Authority (CECFA) and private investors. The financing will allow the hotel, which is famous for serving as the inspiration for Stephen King’s novel The Shining, to expand the lodging buildings to add 65 keys and construct a new 65,000 square foot event center.
• Hawkins Way Capital acquired from Apollo Global Management the former 492-room Holiday Inn Manhattan-Financial District in New York, NY, for $154.5 million or $314,000 per unit. The property, which paused traditional hotel operations during the COVID-19 pandemic and most recently served as a temporary migrant shelter, is slated to be converted to a 650-bed student housing facility.
• High Street Real Estate Partners sold to Elevated Returns the 254-unit Viewline Resort Snowmass, an Autograph Collection Hotel, the 151-room Wildwood Snowmass Lodge and the 8,000 square foot Snowmass Conference Center in Snowmass, CO for $144 million or roughly $356,000 per key.
• Xenia Hotels & Resorts, Inc. (NYSE: XHR) sold the 545-room Fairmont Dallas, TX to Sixth Street Partners for $111 million, or approximately $203,670 per key.
• The recent sale of the 1950s-era 56-room Silver Sands Beach Resort in Key Biscayne, FL, for $205 million ($3.7 million per unit) reportedly represents a record land sale price for the area and is therefore not included in the LWHA survey. The improvements are slated to be razed to allow for the development of a 56-residence ultra-luxury boutique branded condominium community.

Institutional investment platforms, several of which are lodging-centric, were active in the Q2 2025 hotel transaction arena.

• Examples of buyers include AJ Capital Partners, Apple Hospitality REIT, Inc., Certares Management, EOS Investors, Hawkins Way Capital, HRI Properties, KHP Capital Partners, MCR Investors LLC, McKibbon Equities, Peachtree Hotel Group, Ryman Hospitality Properties, Inc., and Westmont Hospitality Group.
• Examples of sellers include AD1 Global, Arbor Lodging Partners, Ashford Hospitality Trust, Inc., Blackstone, Highgate, Driftwood Hospitality Management, KSL Capital Partners, OTO Development, Peachtree Hotel Group, Magna Hospitality, Park Hotels & Resorts Inc., Pyramid Global Hospitality, Starwood Capital Group, Sunstone Hotel Investors Inc., Trinity Investments, and Xenia Hotels & Resorts, Inc.

Debt continues to be widely available for the lodging sector as evidenced by numerous recently announced acquisition financings, property refinancings, and new construction financing, including:

• W&L Group secures a $14.9 million refinancing loan for the Wingate by Wyndham New York Midtown South/5th Ave in New York, NY.
• Summit Hotel Properties (NYSE: INN) obtained a $275 million senior unsecured term loan that will primarily be used to repay the company's outstanding $287.5 million 1.50% Convertible Senior Notes due in February 2026.
• Prime Finance provided InterGroup Corporation and its subsidiary, Portsmouth Square, a $67 million loan to refinance the 544-room Hilton San Francisco Financial District in San Francisco, CA.
• Elliott Investment Management and the Chartres Lodging Group obtained a $300 million from Goldman Sachs Bank USA and JPMorgan Chase Bank to refinance the 1,841-room Sheraton Dallas Hotel in Dallas, TX.
• BLDG Management and Metrovest Equities were obtained from a joint venture comprised of Smith Hill Capital and Bain Capital. a $235 million loan to refinance the 158-key Gurney’s Montauk Resort & Seawater Spa in Montauk, NY.
• Ashford Hospitality Trust (NYSE: AHT) successfully extended its Morgan Stanley Pool mortgage loan secured by 17 hotels. The loan had an original final maturity date of November 2024, and the extension provides for an initial maturity in March 2026 and two one-year extension options, with a final maturity date in March 2028.
• Peachtree Group originated a $36.1MM three-year, floating-rate loan with two 12- month extension options for Development Service Group’s (DSG, Inc.) 255-room Le Méridien Houston Downtown in Houston, TX.
• Chartwell Hospitality secured $100 million of permanent financing (five-year, interest only CMBS) from Citigroup for the newly completed 362-room Marriott New York JFK Airport Hotel in Jamaica, NY.
• Nexera Capital obtained a $68.15 million loan (three-year, floating-rate, first-mortgage loan with two 12-month extension options) from Peachtree Group to refinance a newly opened 200-room AC Hotel Seattle Downtown.
• Driftwood Capital closed a $1.2 billion recapitalization for an 18-property hotel (4,203 keys) portfolio consolidation deal with institutional support from Wells Fargo and ACORE Capital.
• Yellowstone Real Estate Investments secured $113 million in refinancing proceeds with BHI, the U.S. arm of Bank Hapoalim, in connection with its recent acquisition of the shuttered former 697-room Maxwell Hotel in New York, NY.
• Peachtree Group originated a floating-rate bridge loan (two-year initial term with three 12-month extension options) for 4G Ventures’ 151-key Courtyard by Marriott and 130- key Residence Inn by Marriott hotels, located adjacent to each other in Palm Desert, CA.
• Driftwood Capital, through its lending fund Driftwood Lending Partners, LP, provided Cerberus Capital Management and The Berger Company with a $21.65 million mezzanine loan for the refinancing of the 462-key Westin New Orleans in New Orleans, LA.
• Driftwood Capital, through its lending fund Driftwood Lending Partners, LP, also provided an $18.5 million mezzanine loan to Cerberus and Highgate for a five-property 594-key Northeast Select Service Portfolio.
• Andrew and Sarah Wetenhall, owners of the 83-unit Colony Hotel in Palm Beach, FL, secured $25 million in refinancing proceeds from City National Bank of Florida.
• Witkoff Group and Access Real Estate obtained $100 million from Apollo Global Management to refinance the 150-room Belgrove Resort & Spa and the Dutchman’s Pipe Golf Club, both in West Palm Beach, FL.
• Cathay Bank provided Midtown West Hotel LLC, $27.5 million in refinancing proceeds for the 110-room Fairfield Inn & Suites New York Manhattan/Chelsea in New York, NY.
• A joint venture between Innisfree Hotels and RREAF Holdings obtained $23.6 million of refinancing in connection with the 206-room Holiday Inn Resort Oceanfront at Surfside Beach in Surfside Beach, SC.
• Caliber (NASDAQ: CWD) closed a $22.5 million refinance with Citi for the 170-room DoubleTree by Hilton Tucson Downtown Convention Center in Tucson, Arizona.
• Blackstone Real Estate Debt Strategies led a consortium that provided a joint venture between Gencom and Fortune International Group, $300 million of refinancing proceeds in connection with the 420-key Ritz-Carlton Key Biscayne, Miami and the nearby Grand Bay Club located in Key Biscayne, FL.
• Altitude Capital Management refinanced with New York Life Insurance Company, the 273-room Courtyard New York Manhattan/Chelsea with a $60 million loan.
• KSL Capital Partners arranged a $270 million refinancing (two-year loan with three 1- year extension options) with Morgan Stanley for the historic 138-year-old 388-room Grand Hotel and the 84-room Bicycle Street Inn on Mackinac Island, MI.
• HCW Development obtained an $86 million loan to refinance the 265-key Caesars Republic Scottsdale in Scottsdale, AZ.
• Mirae Asset Global Investments secured a $136 million refinancing package from New York Life for the 540-unit Fairmont Orchid – Hawaii in Waimea, HI.
• Starwood Capital Group refinanced two adjacent hotels, namely the 418-key Westin San Francisco Airport and 298-key Aloft San Francisco Airport, with a $92.2 million loan that has a two-year initial term and three one-year extension options.
• Newbond Holdings secured a five-year, floating-rate loan provided by Fortress Investment Group in connection with refinancing the 130-key Aloft Tampa Downtown in Tampa, FL.
• BridgeInvest provided Fortuna Realty Group with a $52-million loan to refinance the 122-room Hotel Hugo in New York, NY.
• Magna Hospitality Group obtained from KSL Capital Partners a $150 million loan to refinance the Hyatt Place New York City / Times Square in New York, NY.
• Driftwood Capital, through its lending fund Driftwood Lending Partners, provided a joint venture sponsored by Chartres Lodging Group. $35 million in mezzanine financing for the refinancing of the 1,841-key Sheraton Dallas Hotel in Dallas, TX.
• Mack Real Estate Group secured a $235 million CMBS loan from Wells Fargo Bank for a portfolio of seven Manhattan select service hotels with a total of 1,087 keys in New York, NY.
• Wells Fargo Bank and Goldman Sachs Bank originated a $340 million CMBS loan to Atrium Hospitality to refinance the 1,307-room Waikiki Beach Marriott Resort & Spa in Honolulu, HI. According to bond rating firm KBRA, the floating-rate loan has a two-year initial term with three 12-month extension options and requires monthly interest-only payments.
• Sun Development & Management Corporation obtained from Peachtree Group $67.5 million of bridge financing for the recapitalization of the newly opened 187-room Printing House Hotel – Tapestry Collection by Hilton in Nashville, TN.
• Blackstone refinanced the 794-room Grand Wailea, A Waldorf Astoria Resort, with a floating-rate rate interest-only $1 billion Single Asset Single Borrower (SASB) CMBS loan from Citi and Deutsche Bank that has an initial two-year term with three one-year extension options. Future mezzanine financing is permittable up to $100 million and the loan is also assumable, which allows Blackstone to continue to explore a sale of the property.
• A $11.3 million five-year loan was funded by a community bank at a rate of 7.25% with a loan-to-cost of 70% and 25-year amortization for the acquisition of the Courtyard by Marriott Indianapolis Airport in Indianapolis, IN.
• Highline Hospitality Partners secured a nearly $67 million loan from Equitable Financial Life Insurance Co. for the $111.3 million acquisition of the 510-room Hilton Atlanta Airport in Hapeville, GA.
• Mesa West Capital provided a joint venture of Reade Hotel Capital and Westport Capital Partners with $45.36 million in first mortgage debt for the $57.5 million acquisition of the 208-room Embassy Suites by Hilton Nashville at Vanderbilt in Nashville, TN.
• A regional bank provided $13.25 million to a joint venture between Sage Lane Partners and ARK Holdings in connection with an acquisition of the leasehold interest and a change of ownership PIP for the 101-room Hampton Inn & Suites in Prattville, Alabama.
• Tyko Capital provided a joint venture between Terra Group and Turnberry a $392 million construction loan to develop a 17-story, 800-room Grand Hyatt hotel next to the Miami Beach Convention Center in Miami Beach, FL.
• HALL Structured Finance closed on a first lien construction loan totaling $41.13 million for Uphoff Ventures, LLC to develop the 208-room Dellshire Resort in Wisconsin Dells, Wisconsin. Nuveen Green Capital provided an additional $27.77 million in C-PACE financing.
• McSam Hotel Group secured a $48 million construction loan from Webster Bank to develop a 351-room Hyatt Place and Hyatt House hotel in South Ozone Park, Queens, near JFK International Airport in New York City.
• Tidal Real Estate Partners obtained a $230 million construction loan from Mavik Capital and Lionheart Strategic Management for the development of a hospitality mixed-use development that is slated to include a 312-key Marriott Hotel in Nashville, TN. The capital stack includes a $180 million senior loan from Lionheart and a $50 million preferred equity loan from Mavik.
• HALL Structured Finance closed on a first-lien construction loan totaling $53.5 million for Gray’s Crossing Hospitality to develop the 129-room MTN Scout Hotel, a Tribute Portfolio hotel in Truckee, CA, which is anticipated to open in August 2027.
• Voyage Capital Group obtained from Peachtree Group a loan for the acquisition and construction completion of the 146-key AC Hotel by Marriott at Denver Gateway Park in Denver, CO.
• Portman Holdings secured a $50 million loan from the City of Cincinnati to close a financing gap for the $536 million development of a 700-room Marriott convention headquarters hotel in Cincinnati, OH.

During the first half of this year, the U.S., under a new presidential administration, has experienced a mix of economic developments and policy changes that have heightened the perception of chaos and uncertainty. Geopolitical tensions and wars in Eastern Europe and the Middle East have enhanced investor sentiment, which can at best be described as reserved. With this said, demand for transient lodging accommodations remains high as Americans continue to prioritize travel, and robust household net worth-to-income ratios remain steady.

While top-line metrics of U.S. hotels are relatively stable, operating expenses led by labor constraints are rising at a faster pace compared with revenues, placing negative pressure on sector profits. Additionally, interest rates, which remain relatively elevated, have contributed to a sluggish sales transaction market. Generally, trades that are occurring are smaller in size and being consummated with financing through debt funds with less restrictive requirements than large banks and regional banks with more favorable spreads. However, so far this year, there have been several large hotel sale transactions of “trophy” properties and/or institutional-grade assets that can be acquired for less than replacement cost. A dramatic representation of this phenomenon is Blackstone’s recently announced $200 million acquisition of the newly opened 785-room Sunseeker Resort Charlotte Harbor, FL. This purchase price is roughly 25 percent of the reported $720 million cost to develop the asset. Finally, construction cost increases are dampening new lodging developments, which are favorable for owners and operators of existing properties.

History has proven that during periods of heightened uncertainty and volatility, compelling investment opportunities evolve, many of which are due to distressed capital structures and not necessarily distressed market fundamentals. A wall of impending debt maturities that originated with relatively low-cost capital, coupled with brand renovation product improvement plan (PIP) requirements, the costs of which are rising, will result in increasing hotel sales and financing transaction activity.

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Daniel Lesser
+1 212 300 6684
LW Hospitality Advisors LLC (LWHA)