1. FROM CAUTION TO OPPORTUNITY

Hospitality entered 2026 as one of the most cautiously approached sectors, held back by rising operating costs and buyer-seller pricing gaps. By late summer, deal activity is picking up and capital is moving beyond trophy assets, though unevenly.

2. HOTELS ARE UNDERWRITTEN LIKE BUSINESSES

Without long-term leases, hotel value follows operating performance, measured through ADR, occupancy, and RevPAR
rather than rent rolls.

Flagged hotels must meet brand standards and renovation cycles and fund FF&E reserves, so a property that looks
attractively priced can carry a large capital requirement.

3. PERFORMANCE IS SPLITTING BY CHAIN SCALE

The PwC and ULI Emerging Trends 2026 report found the luxury-economy divide accelerated. Through August 2026,
luxury RevPAR grew 5.3% year-to-date while economy hotels declined 1.8%.
Luxury offers stronger near-term performance but premium pricing and heavy competition. Economy and midscale
softness can create entry points through rebranding, renovation, or tighter management, often in secondary markets. The
key is separating a fixable problem from lasting demand decline.

4. CAPITAL IS RETURNING, BUT COSTS STILL BITE

CRE Daily reports hotel REITs are seeing increased deal flow, with activity spreading beyond luxury and bidder pools deepening. Narrowing buyer-seller gaps could accelerate acquisitions through 2026 and into 2027.
Nearly three-quarters of Emerging Trends respondents named labor costs and availability a critical 2026 issue, so buyers should stress-test expenses as rigorously as revenue.

5. BEYOND HOTELS: GOLF AND RESORTS

Golf and resort properties follow the same operating-business logic with added layers: memberships, green fees, lodging, dining, events, seasonality, and land and amenity condition.
Supply constraints can support pricing. CRE Daily reports Florida Keys hotel demand rose 4% at the start of 2026, with first-half RevPAR averaging $409. Other leisure markets face overbuilding, so supply analysis comes first.

6. KEY TAKEAWAYS

Deal activity is broadening and the luxury-economy gap creates value-add entry points, but disciplined expense
underwriting is essential. Look for advisors with operational fluency, buyer reach, and dedicated hospitality expertise.

SUMMARY OF SOURCES

(1) https://www.pwc.com/us/en/industries/financial-services/asset-wealth-management/real-estate/emerging-trends-in-real-estate-pwc-uli/property-type-outlook/hospitality.html
(2) https://www.pwc.com/us/en/industries/financial-services/asset-wealth-management/real-estate/emerging-trends-in-real-estate-pwc-uli/trends.html
(3) https://www.credaily.com/briefs/hotel-reit-activity-climbs-as-market-fundamentals-improve/
(4) https://www.credaily.com/briefs/hotel-investors-return-as-florida-keys-rebound-gains-steam/