What’s fueling M&A optimism for 2026?

NATIONAL REPORT — With hotel deal flow increasing in the second half of 2025, no one is debating a bullish optimism for transactions in 2026.

Jared Kelso

Jared Kelso, senior managing director for Berkadia’s hotels and hospitality platform in New York City, said he expects transaction volume to be up 30% to 40% this year.

“It will be a big uptick this year,” he said. Kelso also thinks, unlike last year, the deals will be “relatively evenly spaced.”

Hotel Investment Today spoke with several hospitality experts about their views on the 2025 deal market and their expectations for 2026. Many of them said hotel deals got off to a later-than-normal start last year (after ALIS, which is held in late January in Los Angeles and is run by Northstar, the company that owns Hotel Investment Today), and while they anticipate that will also be the case in 2026, there’s optimism for more volume the rest of the year.

There's still a lot of product out there that, in the new market realities, is 80-plus percent leveraged. That product, even with cash flow, is going to be more challenging to refinance due to leverage constraints.

Jared Kelso

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“We get asked to BOV [broker opinion of value] a lot of loans,” Kelso said. “They may not come to market. But we can also look at many lending situations, and there is still a lot of product out there that, in the new market realities, is 80-plus percent leveraged. That product, even with cash flow, is going to be more challenging to refinance due to leverage constraints.

“As appraisals start to see more trades, they have more data points and appraised value comes more in line with market value. So even though the credit markets are liquid, it’s just time, right?”

Kelso said he expects significant pressure on net operating income (NOI) margins this year.

“The last thing a lender who has an 80% levered loan wants to see is decreasing cash flow. I liken it sometimes to a slow-moving train. People have continued to dance on the tracks, but the train is not stopping, as long as the long end of the curve, the interest rate curve, is wide,” he said. “To me it’s inevitable that there’s going to be, or has been, a little bit of resetting in value and it just takes time to realize that in terms of volume of trades.”

Bid-ask compression

The bid-ask spread is certainly narrowing right now, according to Mark Owens, vice chair and hospitality practice group leader for Colliers.

Mark Owens

“That’s a factor of the debt capital markets behaving more aggressively, and in certain circumstances, either lenders or equity being more inclined to sell,” he said. “You’re probably at 10-15%, whereas 6-9 months ago, you might have had a 20% bid-ask spread. So we are seeing a narrowing there.”

Owens said what’s also been interesting is a notable shift in the number of buy-side offers coming in, just even in the last month.

“The bid market is deeper, and buyers are more constructive on their valuations and meeting what our asks have been versus holding firm,” he said.

Owens said he anticipates Colliers’ deal volume to be 20% to 30% higher than in 2025 for his growing team. He also said he’s probably underestimating.

“I think I’m being quite conservative,” he said.”

Michael DiPrima

Michael DiPrima, co-head of National Hotel Partners, West Region, and executive vice president at CBRE, said the bid-ask spread compression is driven by sellers finally understanding what their assets are actually worth right now, with perhaps some capitulation setting in as well.

“That's definitely what’s ultimately going to drive more volume into [2026],” he said. “[Some of the people] on the sell side that have really been out there forcing transitions are in those funds that have end of fund life… They’re just saying, ‘Hey, this is the end of fund life, and we need to return capital to investors. We do think that's going to continue. I would say, for the most part, sellers have a good pulse and understanding of what their assets are worth.”

Still weighted toward refi

Kevin Davis, Americas CEO for JLL Hotels & Hospitality, said the overall deal volume is still heavily weighted toward refinancings rather than acquisitions, but he anticipates a shift in 2026.

Kevin Davis

“It is still definitely more heavily weighted toward retail, but as the sales market picks up, we are seeing more deals that are acquisition financing, and we expect that trend will continue,” he said. “We think that 2026 will be a meaningfully stronger investment sales year, which also translates into a larger share of the acquisition financings that we do.”

What would it take to get the refi and acquisition volume closer to 50-50?

“We would probably need to see a 30% to 50% pickup in the sales market to get back to something more akin to 50-50,” Davis said. “It has been more heavily weighted toward refi really over the past three years or so because the investment sales market has been challenged.”

Capital chasing deals

Ryan Bosch, principal for Scottsdale, Arizona-based Arriba Capital, said that right now there’s a lot more capital chasing deals than deals chasing capital.

Ryan Bosch

“Deals are extremely competitive and the debt side of the market right now is very liquid,” he said. “It’s completely flipped… Equity is still very muted, but on the private capital side, we've seen spreads compressed because there's so much competition in that market. Then with banks roaring back, we're seeing twice the number of quotes on deals in the back half of the year than we were in the beginning of the year.”

Ultimately, Bosch said there is always optimism heading into a new year, but a healthy pipeline for Arriba makes him think it will be a bustling first quarter and that there will be more overall deals in 2026.

“We have a lot of deals that are already term sheet signed. We're in the closing process that will close out in January, February, and some leading into March already,” he said. “We're expecting deal volume to be up 15% to 20%.”

Bosch also said he anticipates more pressure on investors whose deals are still incurring losses to finally pull the plug.

“There’s still just a lot of equity tied up in deals and [investors] were expecting to have exited those positions and sold assets by now… but they are still trapped in those deals,” he said. “Going into next year, there’s going to be some more pressure on some of those deals, realizing losses, to put capital back in LPs’ hands. If the deal didn't go well, the clock's up on a lot of those transactions.”