Hotel REIT Activity Climbs as Market Fundamentals Improve

Conviction Returns to Hotel Deals

Hotel-focused real estate investment trusts (REITs) are detecting a clear uptick in deal activity, according to recent comments from sector leaders covered by CoStar News. Improved operating fundamentals and a competitive debt environment are luring buyers off the sidelines. Park Hotels & Resorts exemplifies the trend, terminating its ground lease at the Embassy Suites by Hilton Austin Downtown South Congress—exiting with a $6M fee—while other REITs continue to prune non-core assets and scope out acquisitions. These moves indicate more capital recycling and reflect shifting priorities as the transaction pipeline revives in markets across the US.

The renewed energy comes as hotel REITs recalibrate strategies post-pandemic, searching for opportunities where performance momentum and accessible capital make deals pencil. Hotel industry observers note that competition is fierce—particularly for luxury or resort properties—while a diverse base of capital providers and buyers, including family offices and regional operators, are entering the fray.

The Details

Recent quarters saw transaction pipelines build as REITs executed targeted asset sales and selectively explored acquisitions. Park Hotels & Resorts has closed out on 10 of 19 identified non-core asset dispositions since 2025, generating nearly $200M at an average 12.5x EBITDA multiple, per CoStar. The company has also completed over $3B in dispositions since its spinoff, including the May sale of its interest in Embassy Suites Old Town Alexandria for $29M and last month’s Hilton Short Hills deal at $12M.

Deals are not limited to top-tier assets—Sunstone Hotel Investors notes a broadening market with growing activity among $75M–$150M full-service hotels in both primary and secondary cities. The competitive process is, however, keeping price expectations elevated, with spreads on some resort bids exceeding 10%–15%, according to DiamondRock Hospitality Company.

Investor Depth Broadens, Bid-Ask Spreads Narrow

The shift in momentum has been gradual, but several CEOs pointed to more conviction—and better terms—driving larger single-asset deals as well as modest portfolios. According to RLJ Lodging Trust, improved fundamentals are enabling buyers to underwrite more confidently, with a wider pool of capital from family offices and private equity starting to participate.

While transaction volume remains largely driven by single assets, the number of bids and buyer diversity are both on the rise. This follows a broader shift in hotel investing, where buyers have increasingly focused on selective acquisitions and portfolio repositioning as market conditions improve. Analyst commentary and REIT management alike say the confluence of higher operating performance and competitive debt is narrowing bid-ask spreads. Some report that cap rate gaps of 200–300 basis points are finally closing, improving the likelihood of meaningful deal flow by year-end.

Why It Matters

The signal from the latest round of hotel REIT earnings calls is clear: after a muted 2025, the US hotel deals market is moving toward normalization. Park Hotels & Resorts’ disposition program—55 assets and over $3B in proceeds since its spinoff—demonstrates an accelerated push to recycle capital and upgrade portfolios. Pebblebrook and Host, two veteran players, highlight how returns-driven metrics now dictate decision-making, with more capital ready to pursue targets as soon as pricing aligns.

The operational backdrop remains robust, with hotel revenues rebounding and investor confidence buoyed by resilient travel demand. According to STR and CoStar data for mid-2026, US hotel RevPAR (revenue per available room) climbed 6% year-over-year, supporting stronger underwriting and making it easier for buyers and sellers to meet in the middle on value.

Simultaneously, competition from a broader array of capital—from regional operators to family offices—suggests the market is not solely the domain of institutional players. With debt markets remaining accessible and buyers willing to act, transaction velocity is likely to build. However, discipline remains paramount as some CEOs warn of disconnects in pricing, especially for premium assets. The sector’s ability to balance opportunistic moves with value discipline will define ultimate winners as the rebound continues across US lodging markets.

What’s Next

Looking ahead, REIT executives expect the pipeline to further expand as bid-ask spreads continue to narrow and more assets come to market. With less than 5% of Park Hotels & Resorts’ portfolio still classified as non-core, and ongoing marketing of several properties, the coming quarters could see further waves of sales and selective acquisitions.

The final months of 2026 and early 2027 may mark a meaningful inflection point—especially if travel trends remain strong and competitive debt persists. REITs will likely remain disciplined, seeking assets where active management can drive incremental EBITDA, but all signs point toward an increasingly fluid and energetic deal environment for US hotels.