hotel for Sale

RevPAR (occupancy × average daily rate) is the single most-watched metric in hotel valuation. Industry RevPAR averages around $100/night in 2026, varying widely by segment: economy hotels run $40-60, midscale $60-90, upscale $100-200, upper upscale $200+. Two hotels with identical occupancy can have wildly different RevPAR because ADR differs. Two hotels with identical ADR can have very different RevPAR because occupancy differs. Buyers should look at RevPAR trended over 24-36 months against the comp set (Smith Travel Research provides this for branded properties). A hotel maintaining or growing RevPAR Index against its competitive set is the strongest signal of operational health.

A branded hotel's value sits in the operating performance and the brand affiliation and both must transfer cleanly. Franchise approval is required for any change of ownership; the franchisor reviews the buyer's financial capacity, hospitality experience, and willingness to commit to PIP requirements. Approval is not automatic, especially for first-time hotel buyers. Buyers should engage the franchisor early, ideally before making an offer, to understand approval likelihood, current PIP scope, and any required brand-standard upgrades. Deals where the buyer assumes franchise approval and discovers a $1.5M PIP late in escrow routinely collapse.

Property Improvement Plans typically run $5,000-$25,000 per key for limited-service hotels and $25,000-$100,000+ per key for upscale full-service. A 100-key midscale hotel may face a $1M-$2M PIP after a change of ownership. The PIP is enforceable and the franchisor can revoke brand affiliation if the new owner doesn't complete it on schedule, which would destroy most of the hotel's value. Hotel business buyers must request the PIP estimate from the franchisor before closing, secure financing that includes PIP capital, and build PIP execution into the operating plan for years 1-2.

A hotel's revenue mix determines how it performs through economic cycles. Hotels with strong corporate demand (business-park locations, near airports, near conference centers) outperform in expansions but suffer in downturns. Leisure-dominated hotels (resort destinations, drive-to markets) held up better through 2020-2022 disruptions and remain stable. Group business (weddings, conferences, weddings) provides advance-booking visibility but requires sales infrastructure. Buyers should ask for the revenue mix by segment, the pace of forward bookings (group revenue typically booked 6-18 months out), and the comp-set comparison by segment.

The 2024-2025 hotel transaction market has been recovering from a slow 2023. Bid-ask spreads narrowed through 2025, and transaction volume is rising. Cap rates remain 100-200 basis points wide of 2021 lows. PE firms and REITs have been selectively buying upscale assets; individual SBA buyers and family operators dominate the limited-service segment. For an individual buyer, the current market offers more inventory and more reasonable pricing than 2021-2022, but financing costs are higher. The buyers winning deals today have pre-qualified financing, identified PIP capital sources, and brand pre-approval in hand before bidding.