STUDY
Source: JLL Research; Notes: Includes all select-service & extended-stay transactions $ 5M + excluding casinos. Entity-level deals are included only if underlying real estate was traded. Figures above the bars represent the portion of total U. S. hotel liqu idity.
Source: JLL Research; Notes:“ Other *” buyer type includes corporates, banks, and institutional investors. Post-Covid,“ Other *” has increasingly been comprised of government and / or nonprofit agencies buying hotels to redevelop into subsidized housing. Transactions data includes all deals $ 5M + excluding casinos. Percentages that are 2 % or below, are not shown on the bar chart.
yield of 8.3 %, outperforming industrial, multi-housing, office and retail properties by 230 basis points.
As investors navigate capital market fluctuations, this consistency has proven invaluable, attracting a diverse mix of owner-operators, HNWIs and private equity firms. Owner / operators represented 29 % of the sector’ s liquidity in 2024, while private equity and HNWIs represented 28 % and 17 % respectively.
PORTFOLIO DEALS RETURN The sector’ s portfolio transaction volume plummeted to a historic low of $ 848.6 million in 2024, down 49 % yearover-year, as elevated debt costs made large-scale acquisitions challenging. Historically, select-service and extendedstay portfolios commanded a premium of 17 %, but this advantage has dwindled in the past two years due to rising interest rates. However, as the Federal Reserve implements rate cuts, beginning with a reduction in September 2024, portfolio activity is expected to rebound in 2025, JLL said.
The lending environment is also evolving, with insurance companies, CMBS lenders and investor-driven funding sources increasing their stake in the sector. Loan origination volume climbed 6.4 % in 2024, reaching $ 18.2 billion, exceeding the longterm average annual growth rate since 2012 by 10.7 %.
The sector’ s relatively modest average deal size of $ 17 million makes it an attractive option for lenders seeking lower-risk investments.
LOOKING AHEAD Despite macroeconomic challenges, the select-service and extended-stay hotel sector is well-positioned for continued success. In 2025, demand is expected to surpass prepandemic levels, while strategic investments in brand expansion and operational efficiency ensure long-term profitability, according to JLL’ s projections.
With RevPAR at record highs and investment liquidity reaching unprecedented levels, the sector remains a key player in the evolving hospitality landscape. As high interest rates stabilize and lender confidence grows, portfolio transactions will regain momentum, offering investors lucrative opportunities in an already thriving market.
The adaptability of selectservice and extended-stay hotels to changing consumer trends, along with their robust financial performance, cements their status as a premier investment choice for the years ahead.
30 hotelsmag. com May / June 2025