JLL releases its U.S. Select-Service and Extended-Stay Hotel Outlook 2025

CHICAGO, Feb. 20, 2025 – JLL's Hotels & Hospitality Group has released its U.S. Select-Service and Extended-Stay Hotel Outlook 2025 report, providing an assessment of recent market trends, the sector’s investment appeal and evaluating its potential to remain a strong and attractive investment option in the coming years.

The report highlights the sector's impressive growth, with RevPAR reaching a record high of $78 in 2024, 14% above 2019 levels, as well as demand surging by 232,000 room nights year-over-year, nearly fully recovered from 2019. This surge in performance is attributed to the sector's transformation into a unified market, offering a blend of amenities to meet evolved traveler preferences.

The sector’s lean operating model and superior profit margins, relative to full-service hotels, make it an attractive option for investors seeking strong, consistent returns even in challenging economic conditions. The sector’s ability to outpace inflation in profitability growth further enhances its appeal.

Brand proliferation has been another key trend identified in the report. The number of brands in this sector has grown from 184 in 2000 to 214 today, now representing 74% of the sector’s total room supply. However, with limited organic supply growth in today’s market, brand companies are adopting alternative strategies such as mergers, acquisitions, and conversions to drive net unit growth.

Since 2021, the sector has generated $62.6 billion in liquidity, representing nearly 50% of total U.S. hotel investment volume. This surge in interest is driven by the sector's robust fundamental performance, lean operating model and outsized yields relative to other commercial real estate sectors. Moreover, the sector exhibits a strong durability in its returns exemplified by having the lowest level of yield volatility over the past 16 years relative to other main property sectors.

Lastly, the lending landscape for select-service and extended-stay hotels is diversifying. While banks remain dominant, there's increased participation from investor-driven lenders, insurance companies and CMBS. This trend indicates growing confidence in the sector despite broader market challenges.

"The select-service and extended-stay hotel sector remains a focal point for investors seeking durable returns in a volatile market," said Ophelia Makis, Research Manager for JLL’s Hotels & Hospitality Group. "The sector's adaptability, operational efficiency and consistent yields position it well for continued success in 2025 and beyond."

"In the post-pandemic era, select-service and extended-stay assets have been a dominate force in hotel investment market, primarily on a single-asset transaction basis more recently," added Dan Peek, Americas President for JLL’s Hotels & Hospitality Group. "Given the positive momentum in the financing markets and the rising tide of available equity, it's likely we will see a return of substantial portfolio transactions in 2025 and 2026."

JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totaling $83 billion worldwide. The group’s 370-strong global team in over 20 countries also closed more than 7,350 advisory, valuation and asset management assignments. Our hotel valuation, brokerage, asset management and consultancy services have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world.

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