Hospitality
Premium hotel properties anchored by global hospitality brands generating strong RevPAR and occupancy.
Average Cap Rate
7.85%
+0.82%
Occupancy Rate
67.0%
+1.3%
RevPAR
$98.50
+4.1%
ADR (Avg Daily Rate)
$147.00
+2.9%
Tenant Credit Avg
BBB
Stable
Travel Recovery
92%
+2.8%
Data as of Q4 2025 · Sources: CoStar, CBRE Research, Moody's Analytics
Market Overview
The hospitality sector offers compelling investment opportunities for NNN investors seeking exposure to travel recovery and leisure demand with brand-backed operational support. Properties anchored by global hospitality brands like Marriott, Hilton, and IHG combine the stability of national brands with diversified revenue streams from rooms, F&B, and ancillary services. Modern hospitality NNN leases typically feature franchise relationships with performance-based management fees, creating alignment between owner and operator interests. Current market dynamics reflect strong travel recovery from pandemic impacts, with occupancy rates exceeding 65% and RevPAR growth of 3-5% annually in most markets. Top-tier hospitality brands maintain investment-grade or strong speculative-grade credit ratings and demonstrate financial sophistication and brand loyalty supporting long-term lease performance. The sector's higher cap rates (7.50-8.50%) reflect operational complexity and cyclical demand patterns but offer attractive yields compared to other NNN categories. Properties in strategic locations (gateway cities, leisure destinations) command premium pricing and support higher occupancy.
Top Tenants by Portfolio Size
| Tenant | Credit Rating | Lease Type | Units |
|---|---|---|---|
| Marriott International | BBB+ | Master Franchise NNN | 847 |
| Hilton Worldwide | BBB | Master Franchise NNN | 624 |
| IHG Hotels & Resorts | BB+ | Franchise NNN | 458 |
| Choice Hotels | BB | Franchise NNN | 356 |
Recent Market Deals
| Tenant | Location | Cap Rate | Price | Square Feet |
|---|---|---|---|---|
| Marriott | Miami, FL | 7.50% | $42,500,000 | 280,000 |
| Hilton | Las Vegas, NV | 8.25% | $58,300,000 | 350,000 |
| IHG Hotels | Orlando, FL | 8.00% | $35,800,000 | 240,000 |
| Choice Hotels | Phoenix, AZ | 8.50% | $24,500,000 | 165,000 |
Market Outlook
The hospitality market outlook through 2026 reflects sustained travel recovery and consumer propensity to allocate discretionary spending toward experiences. Business travel continues normalizing post-pandemic with hybrid work models supporting consistent corporate travel demand. Leisure travel demand remains strong, particularly in resort destinations and experiential markets. RevPAR growth of 2-4% annually is supported by limited new supply development and pricing power of well-branded properties. Convention and group travel are recovering, supporting occupancy rates and rate premiums for properties with adequate meeting space. International travel continues rebounding, benefiting gateway markets and leisure destinations. However, economic uncertainty and potential interest rate volatility may moderate demand growth. Capital availability for hospitality properties has improved, with institutional investors recognizing value in branded properties with strong management partners.
Key Investor Tips
Prioritize properties managed by top-tier chains (Marriott, Hilton, IHG) with BBB or better credit ratings to ensure brand marketing, reservations system, and operational support.
Focus on locations with strategic advantages: gateway cities with business demand, leisure destinations with tourism infrastructure, or markets with limited new supply.
Analyze RevPAR trends and historical occupancy; properties with recent positive momentum and operating above market averages offer lower downside risk and appreciation potential.
Evaluate lease structure including management fee arrangements, incentive fees, and performance thresholds; well-aligned economics support operator motivation and revenue maximization.
Consider capital expenditure requirements and reserve funds for renovations; older properties (15+ years) may require significant refurbishment to maintain competitive positioning.
Assess market cycle positioning; while current market conditions are favorable, cyclical demand should be factored into underwriting with conservative occupancy and rate assumptions.
Data and analysis on this page are for informational purposes only and do not constitute investment, financial, or tax advice. Statistics may be estimated from publicly available sources and should be verified with primary data providers before use in investment decisions. Tenant information is sourced from public filings and may not reflect current conditions. Past performance does not guarantee future results.