As commercial real estate adapts to changing market conditions, one investor class is sharpening its focus: family offices. These high-net-worth entities are increasingly increasing their allocations to CRE and one sector in particular is rising to the top: hospitality.

With double-digit growth, new investor interest, and adaptive strategies shaping the landscape, hotels and extended-stay properties are no longer just a travel trend, they’re a CRE powerhouse.

So why are family offices doubling down on CRE, and what makes hospitality a smart place to focus?

Let’s dig into the numbers and the story they’re telling.

1. Performance Is Outpacing Expectations

According to CBRE’s Q1 2025 U.S. Hotel Figures:

• RevPAR is up 4.6% YoY (compared to a 3.3% forecast)
• Luxury RevPAR rose 9.6%
• Upper-upscale grew 8.4%
• Economy held steady - a sign of value-driven resilience

While initial concerns about demand cooling lingered in late 2024, Q1 2025 shows steady demand returning to pre-pandemic trends. The industry is stabilizing, and performance is strengthening, especially in high-end and select-service assets.

2. Leisure Is Leveling, Business Is Back

Leisure travel still anchors demand, but business travel is rebounding faster than expected:

• Group travel saw a 5.6% increase YoY
• Weekday occupancy growth signals corporate travel recovery
• Tech and finance markets (e.g. SF, NYC, Austin) are seeing renewed compression

CBRE notes that top-performing markets include:

• New York (+10.8% RevPAR YoY)
• Las Vegas (+12.5%)
• Miami, San Francisco, and Austin - all up >8%

Hospitality is showing it’s not just a “revenge travel” story anymore, it’s a broader demand comeback.

3. Urban Core & Conversions Are Driving Strategy

Investors are getting smarter about supply constraints. That’s why conversions and repositioning strategies are on the rise:

• Conversions now make up 40%+ of pipeline in top cities
• Adaptive reuse and branded residence models are becoming essential tools for growth.
• RevPAR in urban core hotels outperformed resort and airport submarkets

Why it matters: We’re seeing a long-term reallocation of capital toward assets with pricing power, walkability, and mixed-use flexibility.

4. Hotels Are Becoming a CRE Hybrid

The lines are blurring:

• Branded residences are merging multifamily and hospitality.
• Extended stay is replacing traditional workforce housing.
• Hotel-like amenities are becoming a multifamily expectation.

CRE investors can no longer afford to treat hospitality as a standalone product. It’s part of a blended asset strategy and one that’s gaining relevance fast.

5. Hospitality’s KPIs Rival Core CRE Sectors

Hospitality isn’t just a feel-good growth story. It’s competitive on performance:

• Average hotel cap rates for select-service assets hover around 7.0-7.5%
• STR reports GOP margins above 35% for efficient operators
• Brand conversions often yield 10-20% ADR lift

Compared to traditional office or even multifamily in oversupplied markets, hospitality is offering both yield and resilience.

6. Family Offices Are Leading the Charge

Hospitality's momentum hasn’t gone unnoticed by institutional and private investors. According to the Knight Frank Wealth Report 2025, 20% of family offices globally plan to increase allocations to real estate this year and hospitality is among the fastest-growing categories.

Why? It offers something rare:

• Cash flow and capital appreciation.
• Hard asset security with operational upside.
• Portfolio diversification in a volatile market.

Family offices are looking for assets with staying power and hospitality delivers it through performance, adaptability, and long-term relevance.

Hospitality Should Be a Strategic Pillar

CRE is experiencing a recalibration, and the smartest investors are responding accordingly. Family offices are doubling down on commercial real estate and hospitality stands out as a sector that offers yield, flexibility, and future-proof relevance.

We’ve seen firsthand how hospitality investments can power long-term growth. From extended-stay conversions to branded lifestyle assets, we’re leaning into a category that combines operational upside with real estate fundamentals.

And we’re not alone. The capital is moving.

Sources:

• CBRE U.S. Hotel Figures Q1 2025
• STR Global Reports
• Real Capital Analytics Hospitality Investment Tracker 2025
• GHC internal portfolio performance data
• Knight Frank Wealth Report 2025

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