As we all continue to find our footing in today’s market, we remain encouraged by the level of interest we have seen from offshore capital looking to invest in U.S. hotel assets, with the driving factors being their search for yield, stability, and growth.

In the hunt for high yielding investments, hotels remain the preferred asset class – over the past ten years in the U.S., hotel assets generated an average going-in yield of 8.8%, which represents a 310 basis point premium to multifamily (5.7%), a 180 basis point premium to retail (7.0%), a 130 basis point premium to office (7.5%), and a 180 basis point premium to industrial (7.0%). This high yielding profile, coupled with the growth, durability, and relative strength of the U.S. market, is what ultimately makes the U.S. hotel sector a very compelling risk-adjusted investment to offshore investors.

While international capital into the sector has been muted over the last few years, with property-level investment dropping from 35% of transaction volume pre-pandemic to just 12% in 2023 globally. The vast majority of this international transaction volume over the last two years was targeted to Europe, and investment volume into the U.S. is down meaningfully to historic norms. CBRE forecasts this will return to pre-pandemic levels by 2025-2026.

The international buyer pool is also evolving – while sovereign wealth funds remain active, we are seeing a proliferation of international family offices as significant players, representing 28% of international hotel acquisitions in 2023. CBRE expects investors from all global regions, particularly the Middle East, to increase their U.S. hotel allocations in the coming years.