Lodging Conference Recap

The 2026 Lodging Conference wrapped up in Phoenix earlier this month. HVS called the mood measured optimism: demand is strong, supply is tight, and 2026 has outperformed almost every forecast. Most of the coverage focused on institutional owners and the big brands. I pulled out the three topics that matter most to owners of select-service and limited-service hotels in our markets, and what to do about each.

The debt math just changed

The Federal Reserve raised rates in mid-September, and speakers expect one more hike before year-end. Rob Leven of Procaccianti Companies said hotel sales were finally picking up after several years of a disconnected buyer-seller market, and the hike is a curveball right as pricing was finding equilibrium.

The bigger issue is maturities. HVS reported that several participants are worried about hotel loans coming due over the next year. Many were originated at much lower rates, and where today's revenue cannot carry today's debt service, some owners may be forced to sell. Robert Webster of CBRE Hotels put a finer point on it: inflation and the pandemic-era money supply created a math problem that has already wiped out a significant amount of equity, whether or not it has been recognized yet.

What to do: If you financed or refinanced between 2020 and 2022 and have a reset or maturity before the end of 2027, run the comparison now. What does the hotel service at today's rate? How much equity does a refinance require? What does it sell for? Those three numbers decide the outcome, and the owners who know them before the lender calls keep control of the decision.

RevPAR is up. NOI is not.

HVS expects roughly 5% RevPAR growth for 2026, and STR's Isaac Collazo reported that the 12-month demand trend accelerated through the year. That is the good news, and it is real.

The catch: HVS cited CoStar data through July 2026 showing GOP margins flat year over year despite the 5% RevPAR gain. The growth is being absorbed by undistributed expenses, specifically administrative and general, technology, and utilities. Mitch Patel of Vision Hospitality Group said expenses are growing faster than RevPAR, and that is not sustainable for owners.

This matters for value because buyers price NOI, not revenue. A hotel with a strong top line and a flat bottom line is worth what it was worth last year, and if rates keep moving, possibly less.

What to do: Re-evaluate your undistributed expenses line by line and look for savings that stop the NOI from leaking. Every dollar of expense you take out is a dollar of NOI, and at today's cap rates that is worth real money at sale.

The brand negotiation window is open

This was the most candid discussion of the conference. Owners on multiple panels questioned whether franchise fees, brand standards, mandated technology and PIPs generate incremental profit. Shai Zelering of Brookfield said brand value is diminishing. Craig Smith of Aimbridge said owners are starting to question whether they need a brand at all, and that AI-driven booking will change the distribution math that justifies the fees.

The brands are responding. Justin Knight of Apple Hospitality REIT said they have shown willingness to offer fee concessions and incentives. HVS reported longer renovation cycles tied to strong guest satisfaction scores, conversion-friendly brands, simpler fee structures, and a new emphasis on ROI over the renovation calendar: if a hotel has strong guest scores, competitive product condition, and a RevPAR index above its comp set, deploying capital because a prescribed cycle arrived is the wrong reason.

What to do: If you have a franchise renewal, a PIP, or a sale with a change-of-ownership PIP in the next 24 months, this is leverage. Bring your guest satisfaction scores, your RevPAR index and a specific ask: a longer cycle, a scope reduction, key money, or a fee ramp. On a 15-year-old select-service hotel, a PIP can run $15,000 to $20,000 per key for Choice or Wyndham and closer to $40,000 per key for Marriott or Hilton, so the scope conversation is worth more than almost any other negotiation an owner will have this year.

The bottom line: strong demand, tight supply, flat margins, and a cost of capital moving the wrong way. That combination rewards owners who know what their hotel is worth today and what it will be worth under next year's expense structure.

If you want a confidential look at where your property stands, reach out or call me directly at 832-830-2027.

What a Buyer Wants to Know in the First Ten Minutes

When a serious buyer looks at a hotel I've listed, the first call goes the same way almost every time. Before anything else, they ask four things.

• What's the PIP?
• What are the property taxes?
• What's the insurance?
• What's the ADR?

Three of the four are costs the owner can't do much about. The fourth is the lever that can outrun them.

That's the shift since COVID. Buyers used to underwrite the top line and assume the margin. Now they underwrite the margin and work backward. Insurance in CBRE's national sample rose nearly 20% in 2023 and another 17% in 2024, with property taxes climbing on top of that. Those costs come out of the same NOI whether you ran 55% or 75%.

Here's the part that stings. You can't cut your way out of it. Housekeeping is already lean and labor is what it is. Rate is the lever that moves the bottom line, and in several markets I work in, rate is harder to get than it used to be, and supply is the reason. Some pockets that added a lot of rooms over the last five years have seen rate go down, even at hotels that renovated.

So buyers treat a PIP as an investment they're being asked to make, and their conviction comes from the STR report. If your ADR index is at 90 and the renovated hotels in your set are at 110, they see the runway and underwrite the PIP as a path to it. If you're already at 105 and the PIP is mostly about matching the newest prototype, they see a cost. Same PIP, same dollars, two very different values.

If you're thinking about selling in the next couple of years, it's worth knowing those four answers before a buyer asks. Get a real read on your PIP scope, look at your tax assessment and insurance renewal, and pull your STR report. Owners who walk in with those numbers tend to have a better first conversation, and usually a better outcome.

If it would help to run those four on your property, I'm glad to do it with you.

Is Your PIP Worth It?

I watched the big tech earnings come through last week and kept thinking about a conversation I have with owners almost every day.

Microsoft and Amazon both spent enormous amounts of money building data centers, and their stock went up. Alphabet and Meta spent enormous amounts of money too, and their stock went down.

At first that looks random, but it isn't. The companies that got rewarded could show the money they invested was already providing a return. The ones that got punished couldn't show it yet.

That's the same test a buyer runs on your hotel.

Values here in the Intermountain West are off the peak, roughly 15% by my read. Buyers aren't paying for potential the way they were two or three years ago. They're paying for what the property actually produces in cash flow.

Which brings me to everyone's favorite subject: PIPs.

When a brand hands you a PIP, the natural first reaction is to figure out how to pay for it. That's the wrong first question. The first question you should be asking is whether this is the most efficient use of your capital.

Sometimes the answer is yes. If you're running below your competitive set, a renovation usually has real value. You can point at the RevPAR index, show what a refreshed product does in your market, and put real math in front of a lender or a buyer. The juice is worth the squeeze, so spend the capital.

But if you're already at or near the top of your index, be careful. There may not be much room left to capture. You'd be putting in $2 or $3 million to hold a position you already have. That happens more than people think, and not enough owners run the numbers before they commit.

If that's where you are, selling ahead of the renovation is a legitimate option. Rooms out of order cost you revenue while the work is happening, and the ADR growth that justifies the spend can take several years to show up in property value. You're paying today for a number that may not arrive until you're ready to sell anyway.

Selling isn't the only path either. Negotiating the scope down works more often than owners expect. So does holding without the PIP if your franchise agreement gives you room.

The mistake is answering the wrong question first. Before you figure out how to pay for a PIP, figure out whether you should. If it's helpful, I'm glad to run the scenarios with you.

Consumers: Watch What They Do, Not How They Feel

Consumers say they feel terrible. They are spending anyway. That gap is the whole story this year, and it favors our markets more than the headlines suggest.

In April, U.S. consumer sentiment hit its lowest point in 75 years, per Tourism Economics. Gas is over $4.50 a gallon and international inbound travel is down 4.3%. Read only the national headlines and you would brace for a rough year.

The numbers say otherwise. CoStar and Tourism Economics just raised their 2026 RevPAR forecast to 2.8% growth, up from 0.6% earlier this year. ADR is projected up 2%, occupancy near 62.8%, and RevPAR is set to grow in every chain scale, including limited-service. The industry already recovered last year's RevPAR decline in the first four months of 2026. The engine is a labor market that keeps holding, so people stay unhappy and keep spending.

Here is why that lands well across the Mountain West and Northern Plains. The demand holding up is domestic, drive-to, and experience-driven, which is exactly what Utah, Idaho, Wyoming, Montana, and the Dakotas run on. The international slowdown hurting gateway cities barely touches a park-gateway town or a secondary business market. One regional watch item: Canadian travel is down sharply again this year, and that lands harder near the northern border than it does nationally. If you operate in the Dakotas or northern Montana, keep an eye on that mix.

So what do you do with it?

If you are tired of the headlines and wondering whether it is the wrong time to sell or refinance, the transaction data says the opposite. I have talked with owners this spring who nearly shelved a sale over the news, only to watch the numbers tell them to move. Pricing power is back and buyers are active. Do not let sentiment talk you out of a sound decision.

If you own select-service or midscale, which is most of our region, know exactly who your guest is. Households earning $150,000 or more drive 51% of leisure lodging spend, so if your guest is rate-sensitive, protect margin through ancillary revenue and operational discipline rather than chasing rate you cannot hold.

And if you are looking to grow, demand is broadening, not narrowing, and limited-service is forecast to grow through year-end. The opportunity is buying the right asset in the right market, not waiting for the mood to lift.

Watch what guests do, not how they say they feel. The spread between the two is where this year's opportunity lives in our markets.

Want to talk through what this means for your property? Reach out and we will run the numbers together.

The Depreciation Conversation Buyers Are Having Before They Close

Sophisticated hotel buyers are increasingly factoring cost segregation into their acquisition underwriting, and it's changing how some deals pencil.

The IRS default depreciates a hotel as a single 39-year structure. Cost segregation reclassifies components into 5, 7, and 15-year categories, accelerating a significant portion of deductions into the early years of ownership. With bonus depreciation at 100% for 2025 and 2026, those reclassified components can be deducted in full in the year of acquisition. On a $5M hotel, that can mean $800K or more in first-year deductions.

For the right buyer, that number matters a lot. Depending on their tax structure, first-year depreciation from a cost seg study can offset a substantial portion of the property's NOI in year one, effectively sheltering early cash flow from federal income tax. For buyers who qualify as real estate professionals, the deductions can go further and offset income beyond the property itself. Either way, the after-tax return in the early years of ownership looks materially better than the before-tax numbers suggest.

I'm currently working with buyers who are acquiring hotels specifically around this strategy, with 2026 tax planning driving their timeline. These are motivated, well-capitalized buyers who are actively looking for the right asset before year-end. A buyer already running this playbook is often more aggressive on price than one who isn't. If you're a seller, that's worth a conversation.

If a sale is on your radar for 2026, I'm happy to walk through current buyer demand, recent comps, and whether your asset fits what these buyers are looking for. Reach out for a confidential conversation.