With a career honed in the dynamic worlds of travel, tourism, and large-scale events, Katarina Railko has become a key voice in hospitality investment. Her expertise, particularly in analyzing the impact of expos and conferences, gives her a unique lens on the market forces shaping the industry. As the sector celebrates a remarkable year of growth, we sit down with her to unpack the trends driving this momentum.
Our conversation explores the strategies fueling a $24 billion investment surge, particularly the role of private equity and shifting debt markets. We delve into why major urban centers like New York and Phoenix are attracting such concentrated capital and examine the growing appeal of hotels for foreign investors and high-net-worth individuals. We also address the widening performance gap between luxury and economy segments and look ahead to how landmark events like the 2026 FIFA World Cup will create transformative opportunities for the U.S. hotel market.
With US hotel investment climbing 17.5% to $24 billion, what specific strategies are private equity firms using to win deals, and how has the nearly 300-basis-point drop in debt costs changed their underwriting calculus on new acquisitions?
It’s been a complete game-changer. For months, the high cost of borrowing put a freeze on so many deals. Now, with debt costs plummeting by nearly 300 basis points, the math just works again. Private equity firms are now able to secure positive leverage, meaning the return on their investment is higher than the cost of the debt used to acquire it. This shift has unlocked a tremendous amount of pent-up capital. Instead of just looking for distressed assets, the strategy is now about aggressively pursuing quality properties in prime locations, knowing that the financing environment is finally on their side. We saw this dynamic really catch fire in the second half of 2025, and it’s what provided the fuel for that impressive $24 billion figure.
New York, Phoenix, and D.C. led transaction volume. Beyond their market size, what specific asset types or submarket dynamics are drawing such concentrated capital, and what does this focus tell us about long-term investor confidence in urban centers versus other locations?
The focus on these cities, which accounted for a combined $6.4 billion in transactions, signals a powerful flight to quality and a deep-seated belief in the long-term resilience of major urban cores. Investors aren’t just throwing money at these markets; they are strategically targeting large-scale, high-quality assets that are difficult to replicate. Think about it: in a city like New York, with its high barriers to entry for new construction, an existing, well-located hotel is incredibly valuable. This heavy concentration, where urban markets made up 43% of total volume, shows that sophisticated investors are betting on the enduring appeal of these hubs for business, leisure, and group travel, confident that these assets will outperform over the long haul.
We’re seeing more foreign capital and high-net-worth individuals enter the hotel space. What makes hotels a compelling value right now compared to other property sectors, and how do their investment goals differ from traditional institutional players?
Hotels are shining brightly compared to other real estate sectors right now for a few key reasons. First, there’s a significant discount to replacement cost. It’s simply cheaper to buy an existing hotel than to build a new one from the ground up, which is a very powerful motivator. Second, hotels offer very attractive yield profiles, especially when compared to the uncertainty lingering over sectors like office or retail. For foreign capital and high-net-worth individuals, this isn’t just a quick flip. They are often seeking stable, income-generating assets to preserve wealth and achieve long-term growth, making the tangible nature and dynamic revenue potential of a hotel very appealing.
In 2025, luxury hotel RevPAR grew 3% while midscale and economy segments declined. What underlying consumer trends are driving this bifurcation, and how should investors in budget-friendly properties adapt their strategies to remain competitive and attract capital?
This performance gap is a clear reflection of the “wealth bifurcation” we’re seeing across the wider economy. The high-end consumer has remained largely insulated from economic pressures and continues to spend on premium travel experiences, driving that 3% RevPAR growth in the luxury tier. Conversely, the budget-conscious traveler is feeling the pinch, leading to pullbacks that resulted in RevPAR declines of 2.8% for midscale and a concerning 4.4% for economy hotels. For investors in these budget-friendly segments, the path forward is challenging. They must focus relentlessly on operational efficiency to protect margins while investing in targeted renovations or tech upgrades that enhance the guest experience without breaking the bank. Proving they can maintain occupancy and a stable rate in a tough environment will be crucial to attracting new capital.
Looking toward 2026, events like the FIFA World Cup are expected to be a boon for hotels. What operational steps should properties in host cities be taking now to maximize this opportunity, and what does a “mid-double-digit RevPAR growth” look like in real numbers?
The FIFA World Cup, coupled with America’s 250th anniversary, isn’t just another event; it’s a transformational opportunity. A “mid-double-digit RevPAR growth” means we could be looking at increases of 15% or more, which is a massive surge. To capitalize, hotels in host cities need to be planning now. This means optimizing their revenue management strategies to account for extended stays, as the tournament’s format encourages longer visits. It also involves staffing up smartly to handle the influx without compromising service, and curating unique packages or on-site experiences that appeal to international fans. This is a watershed moment, and the hotels that prepare their operations today will be the ones that see those exceptional returns in 2026.
Given that new hotel supply is projected to remain below the long-term average, how does this constrained environment impact valuations for existing assets, and what are the most significant challenges, like labor costs or shifting preferences, that could still hinder profitability?
This constrained supply pipeline is a huge tailwind for owners of existing hotels. With new supply growth staying well below the 1.7% long-term average, there’s very little new competition coming online. This scarcity fundamentally increases the value and pricing power of established properties, a fact that investors have clearly recognized, given the surge in transaction volume. However, profitability isn’t guaranteed. The industry is still grappling with significant headwinds. Persistently high labor costs and ongoing shortages are squeezing margins from one side, while the need to constantly adapt to shifting traveler preferences and new booking technologies demands continuous investment and strategic agility on the other.
What is your forecast for US hotel investment in 2026?
Based on the momentum we saw building in late 2025, I am very optimistic. The combination of stabilized borrowing costs, a constrained supply pipeline, and the massive demand drivers from events like the World Cup creates a nearly perfect storm for the hotel sector. With positive leverage now achievable, I expect the transaction activity we saw last year not only to continue but to accelerate. Investors’ confidence in urban centers is strong, and the compelling value of hotels relative to other asset classes will keep attracting diverse sources of capital. I predict 2026 will be another year of robust growth, likely surpassing the $24 billion mark as more high-quality assets come to market to meet this energized buyer demand.
