Wall Street Sees Better Year for Hotels

A tougher year behind the sector

Photo: Hotel news resource

Wall Street analysts believe 2026 could mark a comparatively stronger year for publicly traded US hotel companies after a challenging 2025. The outlook reflects easier year-over-year comparisons and expectations of a more stable operating environment.

Early-year momentum

According to Baird Capital, the setup for hotel companies appears particularly favourable in the first half of 2026. Analysts also point to the timing of holidays as a supportive factor for travel demand and occupancy levels.

Stability as a core assumption

The positive outlook assumes no major disruptions, such as government shutdowns or policy shocks. While this remains a key risk, current booking trends are described as solid, providing confidence for near-term performance.

Major events drive demand

Large-scale events are central to the bullish thesis. The largest FIFA World Cup ever and the America 250 celebrations are expected to boost travel, particularly in urban and gateway markets across the US.

Consumer spending tailwinds

Analysts also cite potential improvements in consumer spending. Lower credit card fees, possible mortgage-backed securities purchases and higher tax refunds could support discretionary travel budgets in 2026.

Brands outperform, REITs lag

Hotel brands structured as C-corporations have generally outperformed hotel REITs in recent years. Some improvement for REITs is possible in 2026, although this will depend heavily on capital market conditions and investor sentiment.

Margins remain under pressure

Despite revenue growth, expense increases are expected to continue outpacing topline gains. As a result, margins may remain flat or decline slightly, with mergers and acquisitions adding another layer of uncertainty.

Economy segment gains attention

Analysts suggest that the performance gap between large and smaller hotel companies could narrow in 2026. Operators with strong exposure to the economy segment are viewed as potential beneficiaries of resilient demand and relatively low valuation multiples.

Looking beyond 2026

The outlook for 2027 is less clear, with no comparable mega-events currently on the calendar. A recovery in government travel and international inbound demand could provide upside, but there is limited visibility at this stage.

International Investment expert insight

According to International Investment experts, Wall Street’s projections point to a cautious recovery phase for US hotel stocks. Investors should focus on cost discipline, exposure to mass-market demand and the ability to monetise major events without eroding margins.