The biggest issue is lack of limited service and select service hotels available for sale - by Earle Wason

It is 2026 and the time is flying by. I believe this is my sixth time writing the yearly preview. It has been difficult for over the last three years there is not a great deal of information to pass along that has not been included in past articles. I do not see a significant change in the hotel brokerage business. It does appear that there is a little larger inventory of hotels and resort inns for sale. At the same time, a lot of 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. These hotel types are seeing the best, for the seller, capitalization rates. The asking cap rates are in the 7.5% to 8% range. 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 and better than I have seen in most of my career. 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. For the latter 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.

Many hotel owners when they do plan to sell is that it be done 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 signed 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 but appeared to have some slight improvement near the end of the year, meaning holding both rate and occupancy. This is what I expect to be the case in 2026, slight improvements but not much different than in 2024 and 2025. 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.

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. I heard just today about a Maine hotel where staff brushed the snow from the night before, off all the guests’ cars. How good is that? 

My last paragraph in my 2025 predictions from last year is still very pertinent.

Many of my clients expected a fall in room rates and occupancy. The huge consolidation in the industry should allow hotel owners to be better prepared. 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.

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