Why Hospitality Remains One of the Most Resilient CRE Segments in 2025
Commercial real estate has faced its share of volatility in recent years. Office vacancies remain elevated, retail continues to battle e-commerce, and multifamily is tightening under rising interest rates. For investors, the question persists: Where can capital work hardest while still weathering economic uncertainty?
Many sectors have struggled to regain pre-pandemic momentum. Office occupancy in the U.S. is still hovering around 50% of pre-2020 levels, and regional banks are tightening lending criteria for retail and mixed-use developments. Even industrial, a pandemic-era darling, is seeing normalization in rent growth.
But amid these shifts, one sector has quietly, and consistently, outperformed expectations: hospitality.
Hospitality saw one of the steepest declines during COVID-19, but it has also led the recovery. According to CBRE’s U.S. Real Estate Market Outlook 2025, RevPAR (Revenue Per Available Room) is projected to grow another 5.8% year-over-year, following strong gains in 2023 and 2024. In fact, hospitality was the only major CRE segment to exceed 2019 NOI levels by Q2 2024, according to STR and CoStar data.
Here’s why:
Leisure and “bleisure” travel remain strong: Americans are traveling more than ever, and work-from-anywhere flexibility has given rise to hybrid travel habits.
Extended stay and select-service outperforming full-service: With leaner operations and higher margins, these segments have become investor favorites.
Institutional capital is flowing in: In 2024, institutional investment in hospitality assets grew 14% year-over-year, per Real Capital Analytics.
Higher cap rates = better entry points: While multifamily and industrial cap rates have compressed, hospitality offers attractive spreads and faster value-add potential.
In 2025, hospitality remains one of the most resilient and dynamic commercial real estate segments, not in spite of market changes, but because of them.
Here's why investors continue to lean in:
1. Revenue agility
Unlike other asset classes with long-term leases, hotels can adjust pricing daily. In inflationary environments, this provides a built-in hedge. According to Kalibri Labs, ADR (Average Daily Rate) grew 4.2% in Q1 2025, showing hotels' ability to keep pace with costs.
2. Operational levers for value creation
From digital key systems to flexible staffing models, hotel operators have embraced technology and cost efficiency. This is especially true in select-service hotels, where the lack of F&B operations streamlines margins.
3. Brand diversification & lifestyle trends
Global brands like Marriott and Hilton are rapidly expanding into new subcategories—boutique, extended stay, and soft brands, offering developers and investors more tools to target evolving traveler preferences.
4. Urban reuse and mixed-use integration
Hospitality is playing a larger role in mixed-use redevelopments and adaptive reuse projects, especially in secondary markets. Hotel-branded apartments, rooftop bars, and integrated coworking spaces are transforming traditional CRE playbooks.
5. Favorable fundamentals
Despite new supply lagging due to construction costs and tighter lending, demand remains high. CBRE expects hotel occupancy to reach 65.4% in 2025, just shy of the 66% pre-pandemic high.
Bottom Line
Hospitality is no longer a niche or cyclical bet. It’s a smart, strategic play for CRE investors seeking both resilience and upside in 2025. With flexible pricing power, operational innovation, and strong travel demand, hospitality is proving to be the comeback story, and the staying power, in commercial real estate.
Sources:
CBRE U.S. Real Estate Market Outlook 2025
STR & CoStar Hospitality Market Reports, Q2 2025
Real Capital Analytics, Hospitality Investment Trends 2024
Kalibri Labs, Q1 2025 Performance Review
JLL Hotels & Hospitality Group, Global Trends 2025