Summary:

International travel now exceeds pre-COVID 19 levels, which creates new investment, development, and redevelopment opportunities. In fact, key indicators of the U.S. hotel investment sales market are positive: when comparing the first half of 2026 to the same period in 2025, the total volume of hospitality property sales was up 38%, and the price paid per hotel room was up 12%.

Global Travel Returns to Growth, With the Hospitality Sector’s Recovery Broadening

Global travel returned to pre-COVID 19 levels in 2024, and travel spending hit a record in 2025, so for all intents and purposes the pandemic travel trough is in the rearview mirror. The narrative (and the reality) coming out of COVID-19 was that the hotel industry was experiencing a so-called K-shaped recovery, with luxury hotels performing well and other segments just getting by.

At mid-year 2026, the story is different. Using RevPAR (revenue per available hotel room) as the benchmark, every single segment of the hospitality market in the U.S. is expected to experience positive growth in 2026. That includes luxury, upscale, midscale, and economy hotels and motels. Stated simply, the hospitality sector’s recovery is broadening in a testament to the industry’s resilience through market cycles.

Bleisure, Digital Nomads, and Corporate Travel Among Key Demand Drivers

What’s driving growth in the hospitality sector? It’s a confluence of factors. Rebounding corporate travel, including in-person meetings and conventions, certainly is a catalyst, as is the corresponding rise of “bleisure” travel. The bleisure traveler combines company-paid business travel with personal vacation time to make the most of the overall experience. To some extent the practice of blending business and leisure travel has always occurred, but post-pandemic it’s gotten a serious boost fueled by pent-up demand for travel in general.

The rise of “digital nomads” — tech-enabled workers who can operate from anywhere — is also driving travel including hotel stays. Hotels now cater more than ever to remote workers with digitally equipped guest rooms and common areas that increasingly resemble workspaces with abundant power outlets, more functional seating, surfaces, and lighting, and expanded amenities including coffee bars and restaurants.

With hotels becoming more widely used by business and leisure travelers for different purposes, they often can and do serve as hubs within neighborhoods and districts. Think of the hotel that’s in close proximity to sizable swaths of corporate offices, multifamily residences, and recreational tourist attractions. The hotel can be the hub that connects various spokes — the place where people converge for overnight stays, formal and informal meetings, drinks and dining, and gatherings of all kinds in a hotel’s public and private spaces.

Millennials and Gen Z Members Are the Most Active Travelers

According to Deloitte, millennials (born in the 1980s and mid-1990s) and members of Generation Z (born in the late 1990s and early 2000s), now “dominate” U.S. travel demand among distinct consumer segments based on age. During the holiday season in 2025, for example, more than half of all travelers were millennials or members of Generation Z versus older travelers. Among other things, millennials view luxury travel as being associated with family (including traveling with children) and food, including on-property dining and the availability of appealing restaurants nearby. Gen Z members, on the other hand, highly value spa and pool amenities.

Notably, millennials have higher incomes, while Gen Z members are younger with less disposable income. Baby boomers — the older cohort born from the mid-1940s through the mid-1960s — rank hotel brand and location among their primary considerations for deciding where to stay.

Renovating Existing Hotel Properties to Increase Appeal, Optimize Performance

The variety of favorable market conditions has prompted many hotel property owners to renovate and redevelop existing assets to meet market demand, or reposition assets to appeal to more or different consumer segments within the geographic areas in which they’re located. The benefit of improving an existing asset versus developing a new one, of course, is that new capacity is not added to a geographic market.

As is the case with most income-producing properties, improvement opportunities are best evaluated on a market-by-market, asset-by-asset basis. Some properties warrant wholesale transformations; others, a more modest level of investment. Especially well-located assets doing business under the banners of highly regarded brands often have the most potential to benefit from value-added improvements. That said, sometimes rebranding an asset altogether is the most effective way to telegraph that a property has been improved or repositioned to cater to a different market segment.

Property improvements can take many forms: room renovations; common-area redesigns; meeting-space enhancements; new amenities such as pools, spas, and wellness areas; food and beverage upgrades; and the implementation of new technologies to heighten guests’ experience and optimize hotels’ operational performance. Typically, improvements are made with the intent to maximize a hotel’s value including by increasing a property’s average daily rates, or ADRs as they are known in the industry.

A Healthier Investment Market for Hospitality Properties

At mid-year 2026, the investment market for U.S. hospitality properties is healthy. The relative lack of new development across the sector supports the performance of existing properties. Demand is strong for selective new development, particularly in the luxury segments. Equity and debt capital is generally available to market participants, which supports investment activity and liquidity within the sector.

Key indicators of the U.S. hotel investment sales market are positive. The total volume of major hospitality property sales was up 38% in the first half of 2026 compared to the same period in 2025, and the price paid per hotel room was up 12% for the same period year-over-year.