Why 2025 M&A was a tale of three seasons

NATIONAL REPORT — Kevin Davis said deal flow in 2025 was a story of three seasons.

The first season was the beginning part of the year, January through the end of March.

“There was initial optimism about a pro-business administration and a strong economy and transaction activity picking up significantly,” said Davis, Americas CEO for JLL Hotels & Hospitality.

Kevin Davis

Then Liberation Day happened, and Davis said most deal activity stopped for the next 60-90 days.

“Investors told us at the time was, given the volatility and concerns about tariffs, that we're going to hold for 60 to 90 days — they were very explicit about that, and we absolutely saw that the markets went cold and quiet,” he said.

With June came “a meaningful uptick in investor engagement and bidding activity,” said Davis, and that has continued throughout the balance of the year. He said some deals cycled through all three seasons.

“We literally had campaigns that we launched earlier in the year in an optimistic market that went completely quiet for a couple of months, to having a bidding war by the end of the summer,” he said.

The good news, Davis said, is that since June, market optimism has remained and is continuing to grow.

As we look across our pipeline deals, that we are under contract or exclusive on, on average, we're seeing five to six bids per deal, which is really bull market territory from a depth of liquidity perspective.

Kevin Davis

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“As we look across our pipeline deals, that we are under contract or exclusive on, on average, we're seeing five to six bids per deal, which is really bull market territory from a depth of liquidity perspective,” he said.

Why does Davis think that has happened? First, because there’s been a reduction in the Fed funds rate of 175 basis points since September 2025, that, coupled with the fact that there’s been spread compression in the debt markets, means investors are looking at a cost of debt that is roughly between 225-275 basis points lower than it was in September 2024.

“That has triggered capital to come off the sidelines and start to invest in deals, coupled with the fact that I think you've seen an expansion in cap rates and sellers are more willing to sell today at lower prices,” he said. “There's a lot more transparency around where the market is and what cap rates are, and sellers have started to bridge the bid-ask gap and buyers now can get positive leverage.”

All of this has created a catalyst for getting deals done, Davis said.

Late momentum for 2025

Mark Owens, vice chair and hospitality practice group leader for Colliers, said the momentum has been apparent in the latter half of the year.

Mark Owens

“There are several transactions that will probably leak into Q1 of 2026 that were supposed to close by month's end,” he said.

Owens said the market uncertainty in the middle of 2025 has also changed timelines about how quickly deals get done.

“It's just a lack of sense of urgency from several different stakeholders in the process. When I was much younger, lawyers would work all night. We'd turn [documents] and close a deal in three to four weeks. In some of the conversations and legal negotiations we're having now, there's not that [urgency] to get us the docs tomorrow. Everyone is a bit more lenient in their timelines. Whether we like it or not, that's a factor. The other thing, too, is that there hasn't been that much pressure from the lending side. We all expected [more] of the distressed transactions.”

Return of institutional capital

Jared Kelso, senior managing director for Berkadia’s hotels and hospitality platform in New York City, said transaction volume will be down in 2025 by 20% to 25%, which is essentially what happened in 2024 as well. But he said the market has “absorbed the hiccup” of Liberation Day at this point.

Jared Kelso

“It does feel like we are moving in the right direction. There's definitely more transaction volume in Q4 and more appetite than we've seen all year,” he said.

What’s also coming back in 2025 is institutional capital into hospitality, Kelso said.

“They're absolutely lending more in the back half of this year. It's a significant change, and there’s a significant uptick in liquidity in the credit market,” he said. “We are closing a couple of regional bank loans right now…. You're starting to see more trades, and you're starting to see some of the most prominent players in our space slowly get more and more active.

“What we've heard from investors is that they do want to keep a strong eye on the hospitality sector, because it does offer in-place yield, and it's a tried and true, proven sector. As other sectors get a little bit overheated, I think you're going to continue to see more capital come back into the hotel space.”

Ryan Bosch, principal for Scottsdale, Arizona-based Arriba Capital, agrees that institutional lending, especially from regional banks, has roared back in 2025.

Ryan Bosch

“We're seeing an uptick in activity across the board, and we are not seeing the depository pressures from banks,” he said. “At the end of 2024 through the first half of 2025, you'd call the bank for a hotel loan, and the first question they'd have is, ‘Can you bring a 10% depository relationship of the loan amount’ to even start the conversation?’ That’s waning. We're seeing that less and less, and we're seeing more term sheets and bank quotes on deals. The bank market is pretty healthy.”

Bosch said there was a time when regional banks were returning to hospitality only for the best deals. He said that it is changing, too.

“Everyone always wants to lend on good deals. That's the universal truth… But overall, I've seen regional banks do bridge executions on deals this year that had no in-place cash flow,” he said. “It was more pro-forma-based, where they are lending on the business strategy and the sponsor executing on that. I don't think those types of deals happened in 2024 and early 2025. In the back half of [2025], we've seen quite a few executions like that.”

Refinance still booming

Michael DiPrima, co-head of National Hotel Partners, West Region, and executive vice president at CBRE, said the optimism the market felt about more deals in the second half of 2025 stemmed from investors finally accepting the current reality.

Michael DiPrama

“We thought more transactions would have happened. We've definitely had some larger transactions. I think part of that is pure capitulation on the sales side and owners finally realizing, ‘Hey, these are our values. This is what we have. If you're in the money, let's take a win.’”

DiPrama said the refinance side of the business is booming and set for a record year, which is hampering potential sales.

“I can tell you a lot of transactions or assets that we thought would be coming to market back half of the year, ultimately went to refinance…. Our biggest competition this year has really been the fact that, as opposed to an owner going to market to sell something, they refi, because the refi financing has been and continues to be liquid, and pricing continues to get better.”