Hope for Hospitality: With Consumers Favoring Experience-Driven Stays and Leisure Travel on the Rise, the Hospitality Sector Shows Renewed Promise for Long-Term Growth
As travelers place greater value on comfort, wellness, and connection, experience-driven stays are propelling long-term growth across the travel and hospitality sector. In a recent Institutional Real Estate, Inc. feature, Noble’s Angela Johnson noted that technology, intergenerational wealth transfer, and hybrid work patterns are underpinning this sustained demand across the industry with limited new supply.
“The secular trends in demand growth, combined with constrained new supply, creates a compelling environment for travel and hospitality investors. For Noble, this represents a structural opportunity—to acquire at attractive yields, enhance assets through operational alpha, and deliver consistent distributions while compounding long-term growth.”
At Noble, we continue to invest at the intersection of real estate and human experience, advancing branded long-term accommodations that generate durable cash flow and lasting value for our investors and partners.
Read the full article below.
Hope for Hospitality: With Consumers Favoring Experience-Driven Stays and Leisure Travel on the Rise, the Hospitality Sector Shows Renewed Promise for Long-Term Growth
By: Elise Mackanych
After COVID-19 severely disrupted the travel industry, the future of hospitality was uncertain. Business travel stalled, leisure trips were paused, and many questioned whether hotels could recover. However, since the general recovery from the pandemic, the traveling consumer’s mindset has changed, and with it, the hotel industry has recuperated and is positioned to outperform.
Travelers are now placing more emphasis on quality, wellness and comfort, and hotels are increasingly offering their guests an experience, not just a place to sleep. However, some markets are reaping the benefits more than others.
While the hospitality industry has largely regenerated, this comeback is not universal. Luxury locations have bounced back while budget hotels are still struggling to keep up. Due to a preference for quality and comfort, revenue per available room (RevPAR) has exceeded pre-pandemic levels, though occupancy rates have yet to reach them. Luxury accommodations have more flexibility with their pricing power and can fluctuate their nightly prices while still receiving heightened demand. Consumer behavior, demographics and workplace culture are partially responsible for this shift.
Memories, not memorandums
The hospitality industry embodies a unique intersection of real estate and human connection. The physical building is equally as important as the guest interactions.
“Hospitality has always been about more than the physical asset — it is about how people experience space, service and community,” says Pranav Bhakta, senior vice president, corporate business development, at Driftwood Capital. As the sector presents a critical opportunity to refine guest experiences, consumers also have placed a high importance on the quality of engagement with hotel staff and brand.
After the pandemic, consumers have shifted their values and are spending less on material goods and more on experiences.
What began as “revenge travel” to make up for time lost to the pandemic has now normalized as a long-term priority, says Angela Johnson, managing principal and head of global client solutions and strategic partnerships at Noble Investment Group. Leisure travel has been largely supported by a shift in age and demographics, with a large amount of wealth being transferred from boomer parents to their millennial children, both of whom prefer to travel comfortably. Estimated to be near $80 trillion, this intergenerational wealth transfer has placed both groups as two of the highest-spending and most frequent travelers, according to Johnson.
“The initial recovery was led by leisure-driven markets as travelers made up for lost time post-pandemic with some extra cushion in their wallets,” says Garett Bjorkman, CEO at PEG.
While the leisure industry made a strong recovery, business travel has been slower to recuperate. Corporate demand for travel was significantly diluted post-pandemic, but there has been some renewal due to conference preferences and return-to-office mandates. Face-to-face interactions are more impactful than video calls, so while the industry has minimized excessive business travel, companies are still investing in human connection.
“Hybrid and remote work arrangements are fueling greater demand for in-person gatherings, with companies prioritizing periodic group meetings over daily office interactions,” says Bjorkman.
This contemporary work structure has not only increased demand for in-person meetings but has also created flexibility and freedom in employees’ lives. Now, employees can work from hotels, anywhere in the world. This freedom has also led to the “bleisure” trend, an opportunity for business travelers to combine work trips with pleasure.
With the rise of bleisure travel and the increase in boomer and millennial travel spending, nearly half of the U.S. lodging demand in 2025 is supported by upscale select-service hotels that capture the $100,000-plus traveler segment seeking premium consistency as well as branded long-term accommodations that align with $86,000 to $120,000 earners, according to Johnson.
“This resilience in demand, combined with constrained new supply, creates one of the most favorable demand/supply environments in decades, offering durable cash flow and compelling opportunities for hospitality investors,” says Johnson.
Market metrics
Supply growth in the hotel sector is muted, as construction costs remain elevated due to current geopolitical and economic fluctuations. Investors are focused on acquiring existing assets, which should ultimately lead to more mergers and acquisitions as the C-corps look to increase net unit growth, according to JLL’s U.S. Hotel Investment Trends report. While RevPAR has reached a record high, these numbers are slowing due to contracting consumer savings and discretionary spending.
Transaction volume is growing but is still significantly below average, at 306 total transactions in first half 2025, marking a decrease of 6.7 percent from 2024 but an increase of 11.3 percent from 2019. The total transaction volume amounts to $9.7 billion, marking an increase of 3.9 percent to 2024 and a decrease of 11.6 percent compared with 2019, according to JLL.
JLL believes catalysts for future transactions include the expectations of falling rates, loan maturities, property improvement plan (PIP) requirements and private equity fund-life expirations.
U.S. hotel liquidity grew in first half 2025 but still lags historical levels due to capital market uncertainty. Portfolios are muted, but single-asset trades and smaller deals are fueling liquidity for investors, according to JLL. The firm expects larger trades to increase in the second half of the year.
Discount-to-replacement has increased to 71 percent, marking an opportune time for investors to acquire high-quality urban hotels, where liquidity has recently accelerated. An uptick in office-to-hotel conversions has provided a compelling entry point for investors, as construction and ground-up development costs remain high. However, conversion strategies come with obstacles, as investors are constrained by the underlying foundation of the existing structure, says Bjorkman.
Luxury hotels are the largest recipients of investor capital, as the assets come at high replacement costs and are increasingly sought-after.
“Upper-upscale to luxury hotels are leading the industry’s recovery and are positioned to outperform in the near term,” says Stephany Chen, head of investor relations for Trinity Investments. According to Chen, destination markets with a diverse set of demand generators, such as resort locations and convention-oriented markets, offer the strongest investment opportunities and market resiliency.
Markets with nonleisure demand drivers are equally as important, says Johnson, as healthcare, education, infrastructure projects and corporate relocations provide consistent occupancy across cycles. Because these sectors generate consistent demand regardless of market conditions, mid-tier hotels may find their resurgence in properties near segments that do not require luxury but provide reliable occupancy.
In addition, the slowing of new development, barriers to entry and shortage of traditional supply places branded long-term accommodations (BLTA) and upscale locations as a strong investment opportunity.
“For Noble, this represents a structural opportunity: to acquire at attractive yields, enhance assets through operational alpha, and deliver consistent distributions while compounding long-term growth,” Johnson says regarding her firm’s strategy. “By aligning with resilient demand segments and investing in institutional markets with clear exit optionality, we position our portfolio at the most compelling intersection of real estate and hospitality.”
Balancing smart technology and human experience
The hospitality sector combines real estate fundamentals with human experience, and properties aligned with both are positioned to outperform. Branded long-term accommodations, for example, capture this strong intersection, pairing the efficiency of hotel operations with the stability of multifamily and patterns of how people live, work and travel, according to Johnson.
As consumer preferences shift toward high-quality, experience-driven stays, hotels are innovating to offer unique, authentic experiences while staying attuned to real estate trends. “Traveler patterns suggest an emphasis on wellness and authenticity in travel preferences,” says Bhakta. “Culinary programming, local integration and wellness amenities are no longer differentiators but expectations. For investors, this means underwriting must go beyond RevPAR to assess ancillary revenues, food and beverage concepts, and community positioning.”
To better understand and capitalize on these trends, investors are increasingly leveraging artificial intelligence and smart technology. AI tools create a data-driven approach to analyze traveler behavior, optimize pricing and operations, and identify opportunities to enhance guest experience.
On the guest-facing side, AI helps personalize offers and experiences, streamline check-in processes, and provide smart-room assistance. For instance, room temperature can now be controlled from an app, and check-in can be done completely online. Operationally, analytics are transforming revenue management, labor scheduling and maintenance, helping improve both hotel service and efficiency.
Noble Investment Group, for example, has leveraged AI analytics by taking more than 5,700 Google reviews across its hotel portfolio to reveal recurring themes, such as cleanliness and elevator performance. These insights were converted into property-specific action reports that improved operations, says Johnson.
Integrating new technology, however, presents challenges for older properties. Retrofitting assets, ensuring data privacy and combining new platforms with legacy systems require significant up-front capital, says Bjorkman. When properly adopted, these advancements can elevate the guest experience and hotel profitability.
While smart technologies are integral to a modern hotel operation, human interaction remains the foundation of meaningful hospitality. Bjorkman emphasizes that efficiencies complement — not replace — the personal touch of quality service.
Chen confirms this sentiment: “Luxury and upper-upscale hotels will continue to rely on one-on-one experiences, which remain the cornerstone of luxury and full-service hospitality.”
From recovery to outperformance
The hospitality industry’s post-pandemic resurgence demonstrates both resilience and transformation. Travelers’ expectations for wellness, comfort and quality are reshaping the hotel and resort markets. As luxury and upper-scale accommodations are supporting this transition, mid-tier and budget segments are still navigating their place in the evolving travel environment.
Smart technology, AI and data-driven tools are supporting hotels’ efforts in guest personalization and operational efficiency. While the industry will inevitably adopt technological advancements, the foundation remains unchanged: Meaningful human connection is central to successful hospitality operations.
By understanding the experiential and tangible drivers of the current market, investors and operators will not only continue recovering from the effects of the pandemic but will also create long-term performance and resilience in the ever-changing hospitality market.