Why 2026 may be the right time to sell a New England hotel - by Earle Wason

“It is 2026 and the time is flying by” exactly how I started my 2026 NEREJ Forecast article in January. The Fed just announced this week that they are holding on interest rates. I am in favor of this as I have stated in the past, these rates are lower than I have seen them in much of my 50+ year career. Currently commercial loan rates for the sale of hotels have varied between 6 and 6.5%. These are very reasonable interest rates and will help to stabilize the values in the hotel industry.

I do not see much of a change in the inventory of hotels for sale throughout New England, there is little for sale. At the same time, much buyer demand. The biggest issue is the lack of good, quality limited-service and select-service hotels available for sale and that is where the demand is the greatest. A good example of this is my recent sale of the Holiday Inn Express and Green Granite Inn and Conference Center both in North Conway, N.H. I put them on the market on a Thursday in November and had multiple offers and signed Letters of Intent by the following Tuesday, one sale closed in December and the other in March both at the price agreed upon in the Letter of Intent.

The asking cap rates are in the 7.5% to 8% range and for sales that are taking place varies between 8% and 9% capitalization rates. Many sales are franchised hotels that are in the 15-year to 20-year franchise agreement and require substantial PIP’s (Property Improvement Program). Most buyers are looking at the value as calculated by the current cash flow and then reducing the offering price by the PIP. This often is negotiated as some of the PIP improvements may benefit the property as in increased room rates or revenue enhancement.

Many sellers are waiting for the interest rates to drop further hoping for a better price. I believe if a hotel owner is considering selling this may be the best time. Interest rates are very reasonable. Buyer demand is strong and lenders will finance good borrowers, hotels with good historical financials, and properties that are well located with a good redevelopment plan. Some selling prices are under $100,000 a key and fit ups on average around $25,000 to $50,000 a key. This compares very favorably with new construction where costs continue to be high and over $200,000.

“This worth repeating” many hotel owners when they do plan to sell require that it be offered on a “confidential basis.” As you can imagine, that is very difficult for the broker. It limits his efforts to contacting those he knows well and has a good relationship. Confidentiality agreements are executed but still it is easy for the word to “get out.” We have had some good luck in selling confidential offerings for well-positioned hotels and resort inns. I do not recommend it as it does limit the visibility and can limit the eventual selling price. I have taken a number of confidential offerings and at some point, if they do not sell, recommend giving it full-market exposure. There is then a point where the seller tells some or all his staff. Interestingly I have seen very little turnover in staff upon sales. The process requires the seller to terminate the staff on the day of transfer of title and the buyer rehiring usually all or most of the staff. Often the employee benefits brought in by the owner are better than what existed at the time. I have had closings on the day of the sale and that is the date the staff is notified, and I do not recommend that either.

Hotel Operations: In general, there was a slight decline in average daily rate and in occupancy in 2024, and that decline continued in 2025. It does appear the occupancy rate has settled but in some cases the average daily rate has not been holding. The bright light was New England’s ski resorts where the weather, after January, was very favorable and skiing should still be available well into April. The shortage of staffing continues, payroll has become a higher percentage of revenue and insurance costs are increasing dramatically, all of which require the need for close attention to room rates. I just read an article where hotels in Los Angeles have eliminated 650 positions. The minimum wage there is $30 per hour. This will have a negative effect on hotel values.

This has caused hoteliers to sharpen their management skills and put in place better employee retention programs and pay very close attention to customer service. Actually, just being nice, smile and attentive to customers is common sense. 

The huge consolidation of ownership in the industry should allow hotel owners to be better prepared for the “ups and downs” of the hotel business. The consolidation since the early 1990s has resulted in at least a 60% drop in the number of owners in New England as the owner operator model has shifted to just smaller motels.

I look forward to a very steady and successful summer-fall in New England. Gasoline prices and the instability of the rest of the world will keep many vacationers in New England, and therefore our coastal cities and resorts, the mountains and lakes regions resorts should all benefit.

Earle Wason, CCIM, is president and owner of Wason Associates Hospitality Real Estate Brokerage Group, Portsmouth, N.H.