U.S. Select-Service and Extended-Stay Hotel Outlook 2025
Entering 2025 and beyond, select-service & extended-stay hotels are poised to remain a focal point for investors seeking durable returns in a volatile market
- Zachariah Demuth
- Ophelia Makis
Since 2020, the U.S. select-service and extended-stay hotel sector has transformed into a unified market, offering a blend of amenities to meet evolved traveler preferences, with recent positive trends reinforcing its appeal as an investment opportunity.
Key Takeaways:
Select-service hotels have demonstrated robust growth and resilience, with record-breaking RevPAR, near-full demand recovery, superior operational efficiency compared to full-service hotels, and inflation-resistant profitability.
The proliferation of brands and strategic moves such as M&A and conversions indicate a dynamic and competitive landscape, with major hotel groups adapting to market conditions and seeking net unit growth.
The sector's consistently higher yields and lower yield volatility compared to other main property sectors continue to attract diverse investors, from owner-operators to HNWIs and private equity firms.
While portfolio transactions have seen a temporary decline due to high interest rates, this trend is expected to reverse given recent reductions in rates and credit spreads.
The lending landscape remains favorable, with a growing diversity of lenders showing confidence in the sector driven by a smaller cheque size and debt market clarity.
