Tariffs Slow Hotel-Sales Revival in H1
Large hotel sales dropped 21% in the first half of the year as the Trump Administration’s tariff policies derailed a slew of transactions, delaying the sector’s long-awaited recovery.
The volume of hotel sales worth $25 million or more totaled $4.36 billion from January to June, down from $5.51 billion in the prior-year period, according to Green Street’s Sales Comps Database. Aside from 2020, when the pandemic halted travel, it was the sector’s weakest start to a year since 2012.
Eastdil Secured held on to first place at midyear, with a 48.7% market share, and was the only brokerage to crack $1 billion of sales activity. CBRE came in a distant second with a 12.6% share, followed by JLL (12.0%). Hodges Ward Elliott (8.5%) and Newmark (5.3%) rounded out the top five.
The sales market had started the year strongly, with first-quarter activity more than doubling year over year to $2.66 billion. A full pipeline of large listings, a cooperative debt market and a resurgence of buyer interest all signaled smoother sailing ahead after three years of declining volume.
But President Donald Trump’s Liberation Day tariff announcement on April 2 introduced new uncertainty around hotel demand and operating costs, upending valuation assumptions. Buyers largely went pencils down, and owners that needed to sell found a viable alternative in the debt market. As a result, the number of pending sales and listings thinned, dragging down sales volume.
“Many deals that probably would have closed [in the] second quarter either … paused, or they converted to financing,” said Dan Peek, president of JLL’s hotel and hospitality team.
Still, he noted that most buyers have since adjusted and are more comfortable underwriting again.
“Most of the big private equity players that withdrew from the market post-Liberation Day … are back,” Peek said. “They are seeing [capitalization rates] in the upper single digits for high quality assets, and as a result, they are gaining conviction.”
It remains to be seen when that may translate to higher sales volume, but brokers broadly expect more trades in the second half.
“We will end up in a more traditional growth cycle starting in the third and fourth quarters, and that will feed into a more traditional hotel-transactions market in 2026,” said Louis Stervinou, a managing director at Eastdil. But he also cautioned that the lag time between listings and sales could stretch out.
“Deals take longer [to close],” Stervinou said. “If you are going out to market in September, I don’t know if you can get it closed by yearend.”
Buyers also will have to continue competing with the debt market, which remains eager to provide financing on high-quality, income-producing assets. Case in point: Eastdil’s hotel financing assignments are more than double sales assignments currently, Stervinou said.
Another drag on overall volume: smaller deal sizes. “Volume is made based on larger deals getting done,” said Adam Etra, a vice chair and co-head of lodging at Newmark. “It generally has not been a large deal market as smaller and midsize deals have been closing with more consistency, but we are starting to see a slight shift with larger transactions increasing.”
Of the 66 large hotel trades in the first half tracked by the Sales Comps Database, 66% were priced below $75 million. Only 3% were valued above $200 million.
As the market works to regain its footing, brokers note that hotel owners already are showing a growing willingness to list their properties.
“There is more motivation to transact on the seller side, and this is likely an arbiter of the second half of the year and looking ahead to 2026,” Etra said.
But investors are unlikely to budge much on pricing — at least for now. “None of the data inputs that affect the buy-side are changing materially, so pricing … is not likely to move materially from the current baseline,” said Bob Webster, a CBRE vice chair and co-head of its hotel practice.
To be sure, there are some bright spots, he added. A thin construction pipeline likely means that supply will hold steady, which could prop up values. And expectations for additional interest-rate cuts, potentially by yearend, could make underwriting more attractive.
Additionally, the hotel deals that are crossing the finish line are doing so “at attractive yields,” Webster noted. “You don’t need significant growth in net income to satisfy your return thresholds.”
Pricing on a per-key basis dipped again in the first half, averaging $339,000/room versus the $392,000/room average for full-year 2024.
In the brokerage race, Eastdil tallied $1.43 billion of hotel trades during the first half. That was down 24% from the year ago period, but the firm’s market share still improved by nearly 9 percentage points against a 38% decline in the volume of overall brokered deals.
CBRE also lifted its market share thanks to a 64% jump in its volume, to $369.2 million.
The rest of the top five, however, all saw sharp year-over year drops in sales volume. JLL took in $353.6 million (down 51%), Hodges Ward Elliott had $248.6 million (down 71%), and Newmark booked $155.2 million (down 59%). The rankings don’t include deals recapitalized with preferred equity, which tend to be more common when the market is down.
Broker rankings are based on property transactions that closed from January through June and involved full or partial stakes valued at $25 million or more. When multiple brokers shared a listing, the dollar credit was divided evenly, but each broker was credited with one transaction. Only brokers for sellers were given credit. Portfolio transactions were included if the package price was at least $25 million.
