Execs expect hotel values to grow under Trump administration

The U.S. hotel industry has seen hotel transactions pick up in 2024 after a slowdown in recent years.

Part of that drop in deals volume was due to the bid-ask spread in which buyers and sellers couldn't come to an agreement over a hotel's actual value.

That spread has started to narrow as owners and investors have a clearer view of valuations, due in part to reductions in interest rates, and the general expectation is that hotel values will increase in the coming years.

JLL's analysis indicates hotel values have broadly gone through a reset over the past few years, with some exceptions in specific markets, said Dan Peek, president of JLL Hotels & Hospitality Group by email. Discussions with major domestic and international hotel investors highlight an optimistic outlook. Hotel valuations are anticipated to rise in 2025 and into 2026, driven by expectations of economic expansion and further interest rate reductions.

"These factors will likely support increased transaction volumes and some positive movement in overall valuations," he said. "Overall, transaction volume also appears to be shifting toward the major urban markets that are benefiting from a recovery in corporate transient and group segments."

As hoteliers look ahead to 2025, many believe the upcoming second term of President-elect Donald Trump will further boost values.

During a recent meeting of the Lodging Industry Investment Council held before the presidential election, attendees participated in an informal poll gauging their expectations of hotel values if Donald Trump won a second, non-consecutive term.

The results of the poll found that 65% of the attendees thought values would increase. Another 15% thought values would decrease, while 20% expected no change in values.

Here are some comments from the hotel executives during that LIIC meeting on their expectations and reasons why:

“I think generally the GOP and their policies will be positive, not just with the tax side, but regulation, which has really impacted us the last few years. But I'm also worried, because the current tariffs and so forth will add to the debt, which is probably, in my mind, the biggest threat for the country right now. $35 trillion, $36 trillion — it's obscene, and it's really out of control, and no political will to do anything about it.”

“I do think it will increase values. So, the reasons given were taxes, regulations, but the other one is the [National Labor Relations Board]. The president controlling and appointing to the NLRB is critical to this industry, to the cost of labor. And four years with a Democratic president will cause that arm to become even more aggressive than they are right now. So, that will impact labor costs, which will decline values, because it impacts [net operating income], then values go down.”

“I honestly believe it's a wash. I think the nuance of that is a little I agree with [DeNicola]. The NLRB, I think is a real problem, and the labor movement is going to be a real problem for hotel values. The countervailing balance of why I think it's probably a wash is the inflationary pressure that will likely result if we go through tariff madness, and all these things will actually drive interest rates up again. We all remember that as a component of cap rate, and I think that takes back some of the value accretion you might have had from the labor market for the capital market cap rate issue.”

"As far as the policies go, I err toward thinking slightly up. The policy differentials probably are in favor of the industry. The tax provisions are likely to go away if he’s not in office."

“So, Trump victory, I will just isolate it to one factor and say values will go up. I think there are a lot of competing factors here, and that is because Trump will press the [Federal Reserve] to cut rates and overstimulate the economy. Done. That means values are up.”

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