Hotel recovery isn't waiting on rate cuts as demand drives performance
In a guest commentary, AWH Partners co-founder Russ Flicker argues that U.S. hotel performance in the first half of 2026 has run well ahead of cautious early-year forecasts. CoStar and Tourism Economics upgraded their full-year 2026 U.S. RevPAR growth forecast to 2.8% after national RevPAR rose 4% year over year through the first four months, with Q1 marking the highest RevPAR on record. That upgrade came without any Fed rate cut, with the benchmark rate held at 3.5% to 3.75%. Flicker attributes the gains to resilient leisure demand, an improving group and event calendar, the summer's World Cup, and historically constrained new supply, while transaction activity remains constrained by the c…
Impact and considerations
The piece distinguishes operating fundamentals from transaction fundamentals: hotel operations are indifferent to the Fed funds rate, but deal execution is highly sensitive to the cost of debt. Nearly 70% of the $18.7 billion in hotel CMBS loans maturing in 2026 carry floating rates, which explains why fundamentally s…
Key points
- CoStar and Tourism Economics upgraded their full-year 2026 U.S. RevPAR growth forecast to 2.8%, after national RevPAR rose 4% year over year through the first four months and Q1 set a record high.
- The Fed held its benchmark rate at 3.5% to 3.75% through the first half, and in June the committee's median projection moved higher to 3.8% by year-end, with no rate cuts.
- Markets now price roughly a three-in-four chance of zero Fed rate cuts in 2026, and Goldman Sachs pushed its first-cut expectation out to 2027.
- Stabilized hotel cap rates are in the 8.0% to 8.5% range, with upscale and upper-midscale closer to 9.5%, both multiyear highs.
- Nearly 70% of the $18.7 billion in hotel CMBS loans maturing in 2026 carry floating rates originated in a very different cost-of-capital environment.
- The author argues quality assets need high barriers, diversified-demand markets and supply constraints; capital-structure problems are solvable, while structurally impaired demand or oversupply is not.
Sources and time
- Primary source
- Hotel Dive
- Other sources
- 0
- First source publication
- 22 Sept 2026, 08:00
- Page published
- 22 Sept 2026, 22:16
- Last updated
- 22 Sept 2026, 08:00
- Original links
- Hotel Dive Feed：Why hotel recovery isn’t waiting on rate cuts (opens in a new tab)Primary source · en · Published 22 Sept 2026, 08:00