Why 2026 Could Be the Year Buyers Take Back the Transaction Market
After two years of stalled deal flow, widening bid-ask spreads, and operators clinging tightly to assets, the hospitality transaction market is showing its first real signs of reopening. Higher-frequency data from brokers, lenders, and operators all point to one theme: 2026 is shaping up to be the year that buyers step back in with conviction.
For hospitality investors who have been waiting on the sidelines, or repositioning quietly behind the scenes, the next 12–24 months could offer some of the strongest entry points since 2012.
This blog breaks down why the 2026 transaction window is forming, what smart capital will target first, and how buyers can position themselves before the wave hits.
1. The Pricing Reset Is Finally Taking Shape
Over the past 18 months, interest rate volatility pushed sellers into a holding pattern. Cap rates drifted upward, but not fast enough for buyers who needed yields to offset higher borrowing costs. The result was a frozen market.
But three trends are finally shifting pricing into equilibrium:
• Sellers are capitulating on valuation
Owners who financed in 2020–2021 at historically low rates are now rolling into debt maturities they can’t carry. Bridge loans, floating-rate debt, and pandemic-era recapitalizations are creating real pressure. More owners are coming to market willing to meet buyers on price.
• Cap rates are stabilizing instead of rising
CBRE and LW Hospitality Advisors report cap rate flattening across select-service and extended-stay, strong signals that the market is normalizing.
• Underwriting clarity is returning
Buyers can finally underwrite with:
more predictable RevPAR growth,
steadier operating margins,
and clearer expectations on labor costs.
In short: uncertainty is no longer dictating pricing. Fundamentals are.
2. Debt Markets Are Opening and Liquidity Is Moving Toward Hospitality
Borrowers have spent two years navigating tough lending conditions, constrained banks, and cautious CMBS markets. That pressure is easing.
Where the new liquidity is coming from:
Regional banks reentering stabilized select-service and extended-stay
Debt funds pricing more competitively
Life companies showing renewed interest in limited-service assets with strong demand drivers
SBA and HUD channels providing a safety net for certain acquisition strategies
The biggest shift? Predictability.
Forward curves now allow lenders to model risk more confidently, which brings leverage back into deals and unlocks dormant transactions.
Expect leverage ratios to rise modestly, spreads to compress, and more deal structures to pencil in 2026 than at any point since 2021.
3. Operating Performance Remains Strong, Especially in Select-Service and Extended-Stay
Transaction markets don’t recover without strong operations underneath them. And 2025 data confirms what many operators have known: select-service and extended-stay continue to outperform.
Key performance drivers:
Midweek corporate travel strengthening in secondary and tertiary markets
Group business approaching pre-pandemic levels in major metros
F&B-lite models outperforming full-service on margins
Longer average lengths of stay driving consistent occupancy
Buyers entering in 2026 will underwrite into real, not speculative, NOI growth.
4. Distress Is Quietly Building Beneath the Surface
This isn’t a crash scenario, but it is a forced-seller scenario.
Hundreds of hotel loans originated in 2020–2022 mature in the next 18 months. Many borrowers will face:
refinancing gaps,
expensive extension fees,
or the inability to meet DSCR requirements.
That creates an opportunity set where buyers aren’t preying on distress, they are providing solutions.
Expect an uptick in:
note sales
recapitalizations
JV restructures
lender-driven “quiet sales”
off-market select-service opportunities in Midwest and Sunbelt corridors
2026 will reward buyers who can move quickly and bring operational expertise, not just capital, to the table.
5. Institutional Capital Is Reallocating to Hospitality
One of the clearest signals that the market is turning: institutional allocators are overweighting hotels again.
Why institutions are leaning in:
Hospitality continues to outperform other CRE asset classes (office, retail, industrial normalization).
Select-service offers inflation-linked pricing through dynamic ADR strategies.
Hotel valuations reset faster than other real assets, offering better entry points and higher expected IRRs.
Family offices, private equity firms, and non-traded REITs have all signaled increased allocations to hospitality in 2026-2027, further fueling the transaction rebound.
6. Why 2026 Is the Window for Buyers
When you combine easing debt markets, stronger operating visibility, a growing pipeline of motivated sellers, and institutional capital flowing into the sector, you get something rare:
A cyclical opportunity for buyers to acquire high-quality assets at adjusted pricing before pricing reaccelerates.
The last time the market looked like this, in 2011-2013, hospitality delivered some of the strongest returns of the decade.
What smart buyers are preparing now:
Debt relationships lined up early
Operating partners in place
Capital committed and ready to deploy
Clear value-creation strategies (PIPs, revenue management, cost optimization)
Geographic filters that align with demand drivers (Midwest, Southeast, Mountain West)
2026 will reward the buyers who have already built their pipeline, not the ones who start next summer.
The hospitality transaction market has been in a holding pattern since early 2023. But the signals coming from operators, lenders, institutional buyers, and market data are aligning around one conclusion:
2026 is shaping up to be the year buyers regain the advantage.
For investors with capital, clarity, and operational capabilities, the coming year could offer one of the most compelling acquisition environments of the decade.
Now is the moment to prepare.
Sources
CBRE Hotels Research
STR / CoStar 2024-2025 Forecast Reports
LW Hospitality Advisors Transaction Trends
Real Capital Analytics (MSCI) CRE Investment Reports
Marcus & Millichap Hospitality Outlook
JLL Hotel Investment Outlook
Hospitality Investor Insights, 2024-2025