How to Spot Opportunity When Others Step Back
Uncertainty has a way of clearing the playing field. In hospitality real estate, where deals are complex and capital is cautious, times of volatility often scare off casual investors. But for those with operational insight and long-term conviction, moments like these are when the real opportunities emerge.
The key isn’t about having the biggest checkbook. It’s about knowing what to look for and where. Here's how seasoned hospitality investors are identifying upside in a market where many are sitting on the sidelines.
1. Motivation Creates Movement
When interest rates are high and market sentiment is tepid, transaction volume tends to fall. But that doesn’t mean good assets aren’t available, it means they aren’t always widely marketed.
Watch for Motivated Sellers:
Owners facing debt maturities, underperformance, or fund life constraints may need to move quickly.
Look for signs of pressure: loan extensions, capital calls, or operational underinvestment.
Where to Find It:
Off-market conversations
Relationships with brokers and lenders
Distressed asset alerts
Stat: U.S. hotel transactions dropped 30% YoY in 2023, but distressed sales rose by 18% (source: LW Hospitality Advisors, 2024).
2. Read Between the Comps
Cap rates alone don’t tell the whole story, especially in hospitality, where revenue levers vary widely. Instead, seek assets where value can be unlocked through operations, branding, or repositioning.
Red Flags Can Be Green Lights:
Low occupancy in a strong market? Maybe it’s poor management.
Outdated branding? A flag change could immediately boost ADR.
Weak F&B? Consider rethinking underused spaces.
The more you understand hotel operations, the more you can see potential others miss.
3. Embrace the Complexity
Institutional capital often avoids deals that are “hairy.” But with the right team and experience, complexity becomes an edge.
Look for Opportunities With:
Brand conversions or reflagging potential
Multi-asset portfolios with one underperformer
Assets with deferred CapEx but solid bones
Example: In 2024, multiple buyers of former bank-owned hotels reported 20–25% NOI improvement within 12 months through modest capital and better management (source: CBRE Hotels Americas).
4. Partner Where Others Won’t
Tough markets create room for unconventional structures. Mezzanine debt, preferred equity, or JV partnerships with local operators can create access to otherwise untouchable deals.
Creative Structures to Watch For:
Recapitalizations instead of straight acquisitions
GP buyouts of institutional partners
Rescue capital for well-located assets
5. Zoom Out: Demographic & Demand Trends
Hospitality is driven by both macroeconomics and micro-location dynamics. If others are narrowly focused on short-term turbulence, now’s the time to zoom out.
Watch for:
Population and job growth (e.g. Austin, Nashville, Columbus)
Infrastructure and convention center investments
RevPAR recovery in tertiary markets
Stat: Extended-stay and lifestyle hotels outperformed full-service peers in ADR growth for 7 straight quarters through Q1 2025 (source: STR).
In a market where many investors are “waiting for the dust to settle,” the real winners are the ones with the vision and conviction to lean in. Hospitality, more than most asset classes, rewards operational excellence, local knowledge, and long-term thinking.
Opportunities aren’t gone. They’ve just gotten quieter.
Sources:
LW Hospitality Advisors, “U.S. Hotel Transactions Review,” 2024
STR, “Performance Trends by Segment,” Q1 2025
CBRE Hotels Americas, “Hotel Investor Sentiment Survey,” 2024
Real Capital Analytics, “Distressed Hospitality Assets Overview,” 2024