Hotel cap rates widened materially in 2022-2023 with rising base rates and post-pandemic operating recovery. Per AHLA outlook data, recovery is uneven, urban full-service still lagging 2019 RevPAR in some metros; suburban and leisure properties exceeding 2019. Lender debt yield floors track wider cap rates with 100-200 bp cushion.
Hotel cap rate / debt yield cycle dynamics
Recovery dispersion: per AHLA outlook data, hotel recovery has been uneven. Suburban select-service and leisure-resort properties exceeded 2019 RevPAR by 2022-2023. Urban full-service (especially in markets with weak return-to-office and reduced corporate travel) continues to lag 2019 RevPAR. Group business has recovered more slowly than transient.
Lender debt yield response: lender debt yield floors moved with cap rates. Stabilized select-service floors moved from 8.5%-10.0% pre-pandemic to 9.0%-11.0% currently. Full-service floors moved from 9.5%-11.0% to 10.5%-12.5%. Construction debt yield requirements (against stabilized projection) similarly widened.
Subsector differential: extended-stay floors moved least (most cash-flow stable). Luxury / resort floors moved most (highest operational risk and capex). Select-service in major metros widened most consistently because lenders priced both rate cycle and operating recovery uncertainty.
Sponsor playbook: model financing both at current cap rates and at stabilized recovery scenarios. Build flexibility in financing structure for refinance once stabilization confirms. Per MBA delinquency data, hotel delinquency rates inform lender risk-appetite cycle-by-cycle.
Sources
- State of the Hotel Industry Outlook · American Hotel & Lodging Association (AHLA) · 2026
- Commercial/Multifamily Delinquency Report · Mortgage Bankers Association · 2026-Q1
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1