U.S. Select-Service and Extended-Stay Hotel Outlook 2025

Since 2020, the U.S. select-service and extended-stay hotel sector has transformed into a unified market, offering a blend of amenities to meet evolved traveler preferences, with recent positive trends reinforcing its appeal as an investment opportunity.

• Select-service hotels have demonstrated robust growth and resilience, with record-breaking RevPAR, near-full demand recovery, superior operational efficiency compared to full-service hotels, and inflation-resistant profitability.
• The proliferation of brands and strategic moves such as M&A and conversions indicate a dynamic and competitive landscape, with major hotel groups adapting to market conditions and seeking net unit growth.
• The sector's consistently higher yields and lower yield volatility compared to other main property sectors continue to attract diverse investors, from owner-operators to HNWIs and private equity firms.
• While portfolio transactions have seen a temporary decline due to high interest rates, this trend is expected to reverse given recent reductions in rates and credit spreads.
• The lending landscape remains favorable, with a growing diversity of lenders showing confidence in the sector driven by a smaller cheque size and debt market clarity.