Hospitality Real Estate Outlook: A Q&A with Anthony Falor of Crexi Auctions

Anthony Falor, Senior Managing Director of Hospitality at Crexi Auctions, shares his perspective on where the hospitality market is headed in 2026 and what investors and brokers need to know.

What are you seeing in terms of hospitality transaction activity heading into 2026?

We've certainly seen transaction volumes starting to pick up now, particularly in the last quarter of 2025. For 2026, we think you're going to see a better trend for a couple of reasons. One, bid-ask spreads are starting to shrink and align close enough to consummate a contract. As a result, transactions should pick up.

But there's another factor at play: brand directed renovations. The costs and material cash outlays are a huge consideration for owners today. Faced with the options of either investing/spending additional capital renovating properties then holding them for years while they can show a payback/return, many are opting to sell—foregoing maximizing pricing—in order to recycle and reinvest the capital.

How is the buyer pool changing?

Publicly traded hospitality REITs as well as many private equity groups have really been on the sidelines in 2024 and for most of 2025 due to bid/ask spreads as earlier mentioned as well as uncertainty with regard to financial, economic environment. 2026 is the year many get off the sidelines and start placing capital and transacting. 

This will be a better consumer-demand environment, given massive events like the FIFA World Cup positively affecting 11 major MSA, as well as more regulating and even halting of AirBNB or other rentals. These factors, as well as a better economy, will be the catalysts where you'll start to see private equity come back in.

You're seeing more investment from family offices or groups formerly outside of hospitality as a result of not having to compete with private equity or publicly traded companies who could pay more because their cost of capital was less. It's created an interesting environment going forward.

What's driving the timing of these sales?

Timing is going to create that, right? We've had record pricing per keys as far as new construction and what people paid for in 2019-2021. There are certain hold periods that exist, whether they're institutional groups or other companies, and some are approaching that hold period threshold.

In addition to that, you are seeing debt maturities now come up. Where you had an interest rate that was very favorable, perhaps in 2021, you now have to realize the fact that it could potentially double as a result of a refinance or a call. As a result of seeing that, that's going to force people to sell or to just hand over the keys.

Which property segments will be most impacted?

From a sales perspective, you're going to see more select service, mid-scale select service, economy properties, or properties that are large full-service properties and older but they need renovation.

Typically, I think the luxury markets have kind of been—I don't necessarily want to say immune to the economic downturn, but they've weathered it a lot better because substantial demand is still there for the segment. Extended stay products continue to perform well. Everybody else is kind of duking it out a little bit, as it's been hand to hand the last two years.

What you're going to continue to see, I think, with regard to segmentation—a lot of the maturities that are coming up with loans were either full service or select service properties. And candidly, there's a reset that is probably going to occur with pricing as a result of the revenues that are being derived from the properties. Those are the areas that I think you'll see the most impact.

What's the outlook for demand fundamentals?

The good news is international travel. When you start looking at properties that sit in areas where international travel may have an impact, as mentioned 2026 should be good with obviously the FIFA World Cup coming in, and then in a couple years, the Olympics. So if you're in those 11-12 markets, I think international travel becomes a boon to you. Leisure and discretionary travel will be bases that hoteliers can count on, although booking windows are continuing to compress.

If you are relying still on them, corporate group levels have not come back, unfortunately, to pre-pandemic levels, and the booking windows there are also shorter. People aren't all back to the office yet, although many companies have issued edicts that they want people back in the offices. If that dynamic continues, maybe corporate travel gets a little bit of a pickup. But I wouldn't anticipate a huge pickup in 2026 to where it moves the needle significantly.

How will institutional investors affect the market in 2026?

Private equity and publicly traded hospitality REITs in particular haven't been net buyers the last couple years. As a result, you've had a lot of private individuals and groups in different commercial silos participating in transactions because they haven't had to compete with groups that can pay more or whose cost of capital is less.

Next year that'll change a little bit. I think private equity gets more involved in transactions. Hotel industry REITs will kind of stabilize with their pricing and hopefully they'll see some gains. They'll be using their powder to hopefully make transactions.

Also, there are going to be a plentiful number of properties on the market next year. And I think the good news is that many of those properties fit what particularly private equity and hospitality REITs really are looking for as far as quality and location.

What about supply concerns?

There are some markets that are really overbuilt at this point—or maybe under demolished—but there's a lot of inventory in some of those markets where they haven't recovered to pre-pandemic levels.

The good news is there were a record number of properties in the supply planning pipeline, and if you look at year over year, that's dropped. That means that properties that were on the docket initially for planning have basically fallen off due to the economics. So I think having more stability with regard to inventory in a predictable manner is actually going to be very good for the hospitality industry

What operational challenges are hotel owners facing?

Labor costs just continue to weigh on the hospitality industry. That's going to be a very difficult problem to solve in the short term, especially with continued rising wages. Unfortunately, our industry is a people industry. In other industries, you're looking at AI and technology replacing some of those functions. That won't be as prevalent in hospitality.

Where AI and some technology advancements are going to be helpful is really on the marketing, RevPAR management side, some of the guest amenity sides—but not really replacing people. But again, labor's your largest controllable cost in the hospitality industry, and that's still going to weigh pretty heavy on balance sheets. Insurance Premiums and Property taxes continue upward which affects NOI.

Why are auctions becoming more popular for hospitality transactions?

With auctions, it's been a proven process now. I've been involved with auctions, particularly in the hospitality space since 2011. The good news is three things that we commonly hear: the certainty of close, the democracy that an auction brings where everybody gets the last look, and then lastly, you get the market pricing. The market speaks through the bidding process and Sellers have a confidence level that the market has spoken.

From a buyer perspective, I think the biggest reason that buyers participate is the fact that they know they're going to get the last look. Just because they're not Blackstone or a big private equity fund, they don't necessarily get the attention in traditional processes. In an auction, the bid screens don't differentiate between you and a publicly traded company or a big private equity fund. That level playing field is the biggest benefit.

For sellers, the certainty of close is the most compelling reason to look at an auction. You're signing a non-negotiable contract. Your due diligence is already done prior to the auction, and at the end of the day, whatever the winning bid is, that is the number. There are no re-trades. There's a significant amount of money in the form of an earnest money deposit—typically 10% or a million dollars depending on the size of the assets.

What should investors be focusing on as we head into 2026?

For investors not traditionally in hospitality, like family offices or those from different commercial silos, this is a good window before private equity fully comes back in force. You're not having to compete with groups that have lower cost of capital, at least not yet at the same levels.

If you're looking at specific markets, pay attention to MSAs where international travel will have an impact. With the FIFA World Cup being hosted in the various areas in the United States, if you're in those markets, international/ leisure should pick up.

The key is understanding that there's going to be a pricing reset occurring, particularly for select service, mid-scale, and older full-service properties that need renovation. That reset is based on the revenues being derived from the actual properties, not 2019-2021 pricing or cost of construction.

Any final advice for sellers?

If you're an owner facing debt maturities or renovation requirements, now is the time to make strategic decisions. Waiting could mean facing even more challenging refinancing terms or watching your property continue to underperform. Control your own destiny!

Ready to invest? Check out hospitality properties available for auction and register to bid today.