Hotels occupy a distinct place within real estate and while they share the fundamental characteristics of other property types, their performance is shaped by the dynamics of an operating business as much as the underlying real asset.

Like other forms of real estate, hotels provide current income, potential for asset appreciation and meaningful portfolio diversification. What sets them apart is the range of operational and strategic levers available to experienced owners.

Daily pricing, revenue management, capital investment and operating discipline can influence performance in ways that passive ownership of traditional real estate generally cannot.

Hospitality also gives investors direct exposure to what we believe is one of the most durable secular growth themes in the global economy: travel. Travel demand has experienced periodic disruptions, but has consistently recovered to exceed prior peaks, and continues to capture a growing share of consumer spending.

This trend is particularly pronounced in the upperupscale and luxury segments, where favorable demographics, rising global wealth and continued preference for premium experiences continue to support long-term demand. Hotels positioned to serve that demand are well placed to benefit.

We believe the current environment for hospitality investing is attractive for three reasons:

• Secular trends are driving travel demand, particularly in the upper-tiered chain scales (Upper-Upscale – Luxury)
• New supply is growing at a slower pace than demand
• Dislocation and stressed capital structures are creating compelling acquisition opportunities for experienced operators

The sections that follow examine why hotels behave differently from other real estate asset classes, how active ownership and strategic capital deployment can create value throughout the investment lifecycle, and why the current market environment may favor experienced hospitality investors.

What does the current environment look like for hospitality?

Secular trends are driving travel demand, especially in the upper-tiered chain scales (Upper-Upscale – Luxury). The top 10% of Americans now generate more than half of all consumer spending, and consumer spending on experiences continues to outpace goods and services broadly.

Both leisure and business travel have demonstrated resilience, supporting occupancy and rate performance across quality tiers. Over the next few years, STR is projecting growing demand and average daily rates (ADR), with the growth primarily concentrated in the upper-tiered chain scales.

2026 & 2027 U.S. Hotel Forecast by Chain Scale (RevPAR YoY)

New supply is growing at a slower pace than demand. The supply-demand imbalance in luxury hospitality is particularly compelling at the Luxury and Upper Upscale tier.

Global wealth and the high-net-worth population have grown significantly faster than Luxury and Upper Upscale hotel supply over the past decade, with RevPAR growth outpacing new supply additions by a wide margin.

The result is a structural gap between the pool of potential luxury travelers and the inventory available to accommodate them.

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