U.S. Hotel Transaction Volume Rises 3.9% in H1 2025 Amid Luxury Segment Strength

In H1 2025, US hotel transaction volume increased 3.9% YoY to $9.7 billion, with Phoenix having the largest transaction volume ($1 billion) and New York City and Washington, D.C. following with $687 million and $565 million, respectively. The average price per key for a US hotel sale was $204,000, up 3.5% YoY. The total number of US hotel transactions declined 6.7% YoY. Despite moderate growth, investors struggled to underwrite portfolios and large deals due to lingering capital market uncertainty and changing travel demand, with the luxury hotel segment and urban markets being standout opportunities.

In the first half of 2025, the U.S. hotel transaction volume increased by 3.9% year over year (YoY) to $9.7 billion, according to JLL’s H1 2025 U.S. Hotel Investment Trends report [1]. This growth, while modest, was notable for its divergence from global trends, where transaction volume decreased by 17.5% YoY [1].

Phoenix led the way in terms of transaction volume, with $1 billion in deals, a 4% YoY increase. New York City and Washington, D.C. followed with $687 million and $565 million, respectively. The average price per key for a U.S. hotel sale in H1 2025 was $204,000, up 3.5% YoY. However, the total number of U.S. hotel transactions declined by 6.7% YoY [1].

Despite the growth in transaction volume, investors faced significant hurdles. Lingering capital market uncertainty and changing travel demand posed challenges to underwriting portfolios and large deals. Slowing RevPAR growth due to contracting consumer savings and discretionary spending also impacted the market [1]. High interest rates and tariff policies further complicated investment decisions.

The luxury hotel segment and urban markets emerged as standout opportunities. Urban markets, driven by increasing group and business travel, attracted investors. The luxury hotel segment, benefiting from steady growth in high-end consumer travel, also proved attractive. The average discount-to-replacement cost for full-service urban hotels in the U.S. was 71% higher than acquisition costs due to rising construction costs [1].

In the second half of 2025, investors are expected to focus on these opportunities, along with loan maturities and property improvement plan requirements. The luxury hotel segment, in particular, is poised to benefit from the growing wealth of high-net-worth individuals [1].

References:
[1] https://finance.yahoo.com/news/hotel-investment-trends-watch-second-091254278.html