Phoenix, August 26, 2025
News Summary
In the first half of 2025, the U.S. hotel market demonstrated resilience with a 3.9% increase in transaction volume, totaling $9.7 billion. Despite this growth, the volume remains below historical averages, with a 6.7% drop in the number of transactions. Phoenix led the nation in hotel transactions, while New York City experienced a decline. Challenges such as high interest rates and economic uncertainty persist, but optimism remains for future market activity as industry professionals anticipate potential interest rate cuts.
Phoenix – In the first half of 2025, the U.S. hotel market showed resilience amid broader economic challenges, with hotel transaction volume increasing by 3.9% year over year, reaching $9.7 billion, according to industry reports. However, this improvement is noteworthy amidst a backdrop of declining global hotel transaction volumes, which fell by 17.5% in the same period.
While the United States has seen growth in hotel transactions, the current volume is still significantly below historical averages. This trend is accompanied by a 6.7% drop in the number of U.S. hotel transactions, totaling 306 deals. The average price per key increased slightly to $204,000, marking a 3.5% year-over-year rise.
Phoenix led the nation in hotel transaction volumes, hitting $1 billion, which is a 4% increase compared to 2024. The Arizona market reported seven trades, with the notable sale of the JW Marriott Phoenix Desert Ridge Resort & Spa by Trinity Investments for $865 million. New York City, however, experienced a downturn in activity, reporting transactions totaling $687 million, a 14% decline from the previous year. Washington, D.C. saw a significant uptick, with transaction volume rising by 78% to $565 million.
Despite the growth in some areas, challenges remain. Hotel executives have reported general declines in U.S. revenue per available room (RevPAR) during the second quarter of 2025, attributed to reduced consumer savings and spending. This aspect raises concerns about future transactions, especially given the current economic uncertainty fueled by shifting tariff policies which are negatively impacting investor confidence.
High interest rates are also posing significant barriers to hotel investments. Nevertheless, industry professionals express optimism regarding potential Federal Reserve interest rate cuts by the end of the year and into 2026, which could spark renewed transaction activity.
Urban markets are emerging as key areas for investment due to rising group and business travel, particularly in cities with substantial corporate gatherings. Increased demand for luxury hotel acquisitions is being observed as high-net-worth individuals seek opportunities, with the luxury segment of the market showing regulated growth compared to declines in lower-tier hotel segments. Moreover, construction costs for new full-service urban hotels are approximately 71% higher than acquiring existing properties.
In addition to traditional investors, new demographics are entering the hotel market, including family offices and first-time buyers, adding competitive advantages to the landscape. Boutique resorts outside major urban centers are outperforming their urban counterparts, driven by demand in scenic locations, which further diversifies the investment opportunities available.
Upcoming Market Influences
The near future will see significant influences on hotel investment activity due to upcoming loan maturities and property improvement plans. As investors navigate the complexities of the market, select-service and luxury hotel segments continue to draw heightened interest thanks to their robust cash flow stability and promising investment prospects.
Key Data Summary
- Q1 2025 U.S. hotel transaction volume: $9.7 billion, up 3.9%
- Global hotel transaction volume decline: 17.5%
- Phoenix transaction volume: $1 billion, up 4%
- New York City transaction volume: $687 million, down 14%
- Washington, D.C. transaction volume: $565 million, up 78%
- Average price per key: $204,000, up 3.5%
- Total number of transactions: 306, down 6.7%
Chart: Hotel Transaction Volumes by City (H1 2025)
| City | Transaction Volume ($ billion) | Year Over Year Change (%) |
|---|---|---|
| Phoenix | 1.0 | 4.0 |
| New York City | 0.687 | -14.0 |
| Washington, D.C. | 0.565 | 78.0 |
FAQ
What was the total hotel transaction volume in the U.S. for H1 2025?
The total hotel transaction volume in the U.S. for the first half of 2025 was $9.7 billion, reflecting a modest year-over-year increase of 3.9%.
Which city recorded the highest hotel transaction volume in the U.S. during this period?
Phoenix recorded the highest hotel transaction volume in the U.S. with $1 billion, marking a 4% increase from the previous year.
How did New York City perform in terms of hotel transactions compared to 2024?
New York City experienced a decline in hotel transactions, totaling $687 million, which is a 14% decrease compared to 2024.
What are some factors impacting hotel investment in the U.S.?
Factors affecting hotel investment include high interest rates, economic uncertainty due to tariff policies, and declines in RevPAR. However, potential interest rate cuts could stimulate future transactions.
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Additional Resources
- Hotel Dive: Hotel Investment Trends 2025
- Future Market Insights: United States Boutique Hotel Market
- JLL: Global Hotel Investment Outlook
- Hotel Management: Seven Hotel Industry Trends for 2025
- Skift: Hyatt’s Brands Explained
- Wikipedia: Hotel
- Google Search: Hotel Investment Trends
- Encyclopedia Britannica: Hotel
- Google News: Hotel Market 2025
- Google Scholar: Hotel Investment 2025
Author: STAFF HERE PHOENIX WRITER
PHOENIX STAFF WRITER The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
