The hospitality investment cycle entering 2026 is defined less by volatility and more by dispersion.
Consensus forecasts suggest modest growth in U.S. hotel performance. RevPAR is expected to increase approximately 1 to 1.5%. Cap rates appear relatively stable. The broader economy remains steady.
Yet beneath those averages, structural divergence is widening across segments and markets.
In a recent episode of Peachtree Point of View, Greg Friedman, CEO of Peachtree Group, spoke with Mark Woodworth of Woodworth Core Group and Jack Corgel, Professor Emeritus at Cornell’s Nolan School of Hotel Administration, about how to interpret current market signals and where risk may be mispriced in today’s lodging sector.
Their analysis reframes how investors should approach hotel real estate in 2026.
What Does the 2026 Hotel Investment Outlook Really Signal?
Headline forecasts suggest stability.
But as Jack Corgel noted, aggregate projections can obscure structural differences: “These numbers that Mark and I were talking about, the one and a half percent, those are gross aggregate numbers.”
Luxury and upper upscale assets continue to outperform, supported by long-term wealth creation and resilient high-income travel demand.At the same time, many midscale and economy properties face margin pressure, slower rate growth, and increased operating costs.
Mark Woodworth described the divergence clearly: “The disparity in performance across the chain scales has got to be greater than I’ve ever seen in my 40-plus years of doing this stuff.”
For investors, this means sector-level exposure is insufficient. Market selection, asset quality, and segment positioning now drive outcomes more than broad hospitality allocation. The 2026 outlook is not about a uniform recovery. It is about widening spreads.
Why Real ADR Growth Matters More Than RevPAR
One of the most actionable insights from the discussion centered on real ADR growth. Average Daily Rate growth is often cited as a positive indicator. However, in an environment where CPI inflation remains near 2.7%, nominal ADR growth does not automatically translate into real income expansion.
Corgel was direct: “If we’re tracking along on that path, I want to see ADR growth north of that number to be excited about making an investment in a hotel space.”
What Is Real ADR Growth?
Real ADR growth equals nominal ADR growth minus inflation. If ADR grows at 2% while inflation runs at 2.7%, pricing power is negative in real terms.
This distinction matters because:
• Occupancy has natural ceilings
• Expense growth remains persistent
• NOI expansion depends disproportionately on rate growth
Sustained real ADR growth above inflation is a leading indicator of durable demand and long-term stability of asset values. Without it, underwriting assumptions must be conservative. For hotel investors evaluating opportunities in 2026, real pricing power is a more reliable signal than aggregate RevPAR growth.
Have Hotel Cap Rates Fully Repriced?
Interest rates have reset meaningfully compared to the prior decade. The 10-year Treasury yield remains materially higher than the sub-2% environment that defined much of the 2010s. Yet hotel cap rates have remained relatively stable.
Why?
Cap rates reflect three primary drivers:
• The risk-free rate
• The risk premium
• Expected income growth
In today’s market, modest income growth expectations and stable risk premiums are offsetting higher Treasury yields. The result is relative equilibrium.
However, equilibrium does not necessarily imply attractive equity upside when
• NOI growth remains moderate
• Cap rate compression is limited
• Financing costs remain elevated
Then, total return expectations must be recalibrated.This is particularly relevant for investors underwriting hotel acquisitions in 2026.
Where Is Risk Mispriced in the Hospitality Capital Stack?
Against this backdrop, both Woodworth and Corgel expressed greater conviction in credit positioning than in aggressive equity deployment. “If you can get an eight, eight and a half percent coupon on a mortgage debt investment, that looks pretty good,” Corgel observed. In a cycle characterized by modest aggregate growth and widening dispersion, capital stack discipline becomes critical.
Senior debt can provide:
• Contractual yield
• Priority position in the capital structure
• Downside protection
• Exposure to improving fundamentals through enhanced credit quality
This does not eliminate equity opportunities. Certain markets, particularly those with strong employment growth, in-migration, and favorable tax environments, may generate outsized returns. But dispersion increases underwriting risk. For investors assessing hotel real estate allocations in 2026, the central question becomes:
Are you adequately compensated for last-dollar risk?
In many cases, senior credit may offer more compelling risk-adjusted returns than equity.
Signals to Monitor in the Current Hotel Cycle
As the hospitality cycle progresses, several structural indicators deserve attention:
• Real ADR growth relative to CPI
• Segment-level RevPAR dispersion
• Employment expansion in key Sunbelt markets
• Long-term Treasury yield stability
• Senior debt pricing and availability
Cycles rarely reverse on headlines. They shift gradually through pricing power, capital flows, and employment trends. Woodworth expressed optimism that the latter half of the decade could produce stronger income growth as demographic and wealth trends continue to support travel demand. Whether that scenario materializes depends on sustained pricing power and disciplined capital allocation.
A Structural, Not Sentimental, Market
The 2026 hospitality investment environment is not defined by crisis. It is defined by selectivity. Dispersion across segments, muted real pricing growth, and relatively stable cap rates require disciplined underwriting and thoughtful capital stack positioning. For investors navigating hotel real estate today, structure matters more than sentiment.
To hear the full discussion on hospitality cycle timing, real ADR growth, and where risk may be mispriced, listen to this episode of Peachtree Point of View.
ATLANTA(Feb. 4, 2026) - Peachtree Group (“Peachtree”) announced that its development platform was recognized withtwo of the lodging industry’s most respected honors. The firm received the 2026 CONNECT Developer of the Year Award from Marriott International, and its Hampton Inn & Suites Maui North Shore property was named Development of theYear (Select/Limited Service) at the Americas Lodging Investment Summit (ALIS).
“Recognition from Marriott is particularly meaningful given the rigor of its development standards and the trust required to grow alongside its U.S. portfolio over time,” said Greg Friedman, managing principal and CEO of Peachtree. “To pair that firm-level honor with peer recognition from ALIS for one of our developments underscores both the strength of our platform and our ability to deliver high-quality projects that performin complex markets.”
Peachtree has partnered with leading hotel brands for nearly 20 years to develop hotels across the United States, and today its hotel development portfolio and pipeline exceed $2 billion nationwide, underscoring the firm’s scale, execution capabilities and abilityto advance projects and build on its legacy as a leading hospitality developer.
At ALIS, Hampton Inn & Suites Maui NorthShore was named Development of the Year in the Select/Limited Service category. The 136-room upper midscale beachfront hotel opened in April 2025, marking the first newly built branded select-service hotel on Maui’s North Shore.
Developed by Peachtree in partnership with Blackridge Group and Argosy Real Estate Partners, the project navigated aseven-year entitlement process and significant logistical complexity in one ofthe most supply-constrained hotel markets in the United States. The propertydelivers a rare, accessible Hilton-branded lodging option for the region.
This marks the second award-winning propertydeveloped in partnership between Peachtree and Blackridge Group, following the AC Hotel Sacramento, which earned the 2025 CoStar Impact Award.
“Together, these recognitions highlightPeachtree’s disciplined development approach and its ability to deliverhigh-quality hospitality assets,” Friedman said.
ATLANTA and DALLAS (Jan. 22, 2026) Peachtree Group (“Peachtree”) today announced it has completed the acquisition of First Western SBLC, LLC (formerly known as First Western SBLC, Inc.), which operates as PMC Commercial Trust (“PMC”), a Dallas-based nationwide direct lender specializing in Small Business Administration (“SBA”) 7(a) loans. PMC will continue operating under its existing name following the transaction, which received approval from the U.S. Small Business Administration and closed effective today.
“This marks an important step forward for our credit business,” said Greg Friedman, Peachtree’s CEO and managing principal. “Founded more than four decades ago by my grandfather, Dr. Fred Rosemore, PMC brings a strong legacy into Peachtree that strengthens our ability to deliver fast, flexible SBA financing while maintaining the disciplined underwriting that defines our platform.”
Joining Peachtree is Barry Berlin, who will oversee the integration of PMC’s lending business and serve as senior advisor for government-regulated lending. In this role, he will support the firm’s broader credit platform by providing strategic guidance, regulatory expertise and deep institutional knowledge. Berlin previously served as CEO of PMC, managing director of finance at CIM Group, and CFO and secretary of Creative Media & Community Trust Corporation, PMC’s parent company.
Also joining Peachtree is Laurie Ivy, who has served as president of PMC since 2020, overseeing day-to-day SBA operations. She will continue in that role while assisting Berlin with platform integration.
“Laurie brings deep operational expertise and continuity to the PMC platform,” Friedman said. “Barry adds decades of experience across government-regulated lending and credit oversight. Together, their complementary roles will support a thoughtful integration and disciplined growth strategy.”
With the acquisition complete, Peachtree will offer SBA 7(a) loans ranging from $50,000 to $5,000,000 to support business acquisitions, real estate purchases, equipment financing, working capital and refinancing.
“Demand for SBA financing continues to accelerate as small business owners seek certainty, speed and trusted execution,” Ivy said. “Becoming part of Peachtree gives us the capital resources, infrastructure and long-term commitment needed to responsibly scale the platform while continuing to support entrepreneurs who rely on SBA loans to grow.”
PMC is one of only 12 Small Business Lending Companies licensed by the SBA to originate 7(a) loans and holds Preferred Lender Program status, enabling delegated authority and expedited closings.
“Peachtree has built a differentiated investment platform with the scale discipline and entrepreneurial mindset to grow through changing market cycles,” Berlin said. “We are fortunate to be joining a firm with such a strong culture, a long-term vision and a proven ability to expand thoughtfully into new strategies. This platform creates meaningful opportunities for continued growth while staying true to the values that have driven Peachtree’s success.”
CoStar | The hotel financing environment is shaping up to be a "tale of two cities" for borrowers this year.
Speaking on the latest episode of the CoStar News Hotels podcast, Jared Schlosser, head of originations and C-PACE at Peachtree Group, said 2026 will be a good year for well-positioned borrowers.
"I think for well-thought-out acquisition, business plan deals, for solid cash flow, for performing deals, for strong borrowers who continue to do what they say they're going to do, there's ton of liquidity," he said, noting that "on the flip side of that, you're seeing a lot of deals that are struggling."
