Rise of HNWI deals good news for hotels

One of the reasons for optimism about dealmaking is a near-record amount of dry powder, some coming from new places, like high-net-worth individuals (HNWI). Ferroni said JLL tracks transactions closely and is able to amalgamate the different sources of capital in the market, and “some of the more acquisitive buyer types have been private equity and high-net-worth investors.”

The HNWI is creating an interesting trend for this year, Ferroni said.

“A big theme that we’re talking about a lot within our capital markets business is the additional preponderance of high-net-worth capital that is looking to gain more exposure to private markets, of which commercial real estate is an important component,” he said, noting data that tracks fundraising for family offices and private wealth firms is up by 300% or more versus 10 years ago.

A big theme that we’re talking about a lot within our capital markets business is the additional preponderance of high-net-worth capital that is looking to gain more exposure to private markets, of which commercial real estate is an important component.

Lauro Ferroni

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The formal definition of HNWI can mean many things, Ferroni said. It could be one person or a family office investing for multiple people or multiple families.

“It’s really someone who is deploying their own money, or maybe is pooling capital from other families around them, or some individual investors,” he said. “Those types of groups tend to be more nimble and more entrepreneurial. In some cases, they’re making all-cash investments. That’s something that can distinguish them in the bidding process. They may also have more motivation as to what the hotel asset represents and maybe the halo effect around it.”

Notable HNWI hotel investors in the past year include Oracle billionaire Larry Ellison, who bought the Eau Palm Beach Resort & Spa in Manalapan, Florida, last year, and Tinder founder Justin Mateen and his brother Tyler, who bought the El Encanto Hotel in Santa Barbara, California, earlier this year.

Dan Peek, president of JLL Hotels & Hospitality Group, said that this type of investor can often seem like a caricature of a rich person who thinks, “Oh, I like that. I’ll write the check.” But he cautions that they are very sophisticated investors.

“It’s become an increasingly important part of our business,” Peek said. “You know, hotels are kind of cool, to be honest. With all due respect to my partners, it’s a little cooler than dock-high industrial… Hotels are a little bit cooler. They’re also a little bit riskier. That rising part of the market has become incredibly important, both domestically and globally.”

Last year, billionaire Larry Ellison bought the Eau Palm Beach Resort & Spa in Manalapan, Florida.

The increase in HNWI investments correlates with the rising number of millionaires and billionaires in the world, Ferroni said.

“These type of individuals are broadening their investment holdings beyond public markets... They want to have more private-market exposure, more real-estate-asset exposure,” he said. “They’re intrigued by the cash flow, the appreciation potential and the portfolio diversification benefits that real estate can offer. Maybe most relevant for the hotel sector is some of the inflation-hedge characteristics.”

Reasons for optimism

Another factor driving optimism for hotel transactions to pick up in the second half of 2025 is institutional capital returning to hospitality, Peek said.

“I think we’re seeing it. The data that we’re talking about, the data that we’re printing, relative to the first half, is a bit of a rearview mirror,” he said. “To go back to the dry powder point, what we’ve found is that those investors are getting interested in reinvesting and investing actively in the sector. When Liberation Day hit, they hit a pause (and said) ‘Let’s figure out what’s going on with the tariffs.’ Now I would say they’re past that.

Dan Peek

“They’re re-engaging with the market. They do anticipate we’re going to have some rate cuts, and they do anticipate some re-acceleration in the economy. So, they’re definitely out there again.”

Peek anticipates more transactions starting in Q3 and that the average deal size will go up.

“We’re seeing an increase in average deal size, which is reflective of [institutional investors] participating in the market and being the sellers of larger assets,” he said. “That will be good because with the REITs currently on the sidelines for the most part, those institutional investors really will create the market for those larger assets and portfolios.”

Peek also anticipates transaction volume picking up in Q4.

We’re seeing an increase in average deal size, which is reflective of [institutional investors] participating in the market and being the sellers of larger assets.

Dan Peek

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“What you’re starting to see is people think about substantially larger deals and bringing them to market,” he said. “There’s plenty of debt, but we don’t love the indexes. We’d like SOFR to be 100 basis points lower. But hope is not a strategy, and there’s no lack of equity in the market. It’s really a question of conviction and it seems to us that conviction is rising.

“So, if we get rising conviction and a little bit of relief on the interest rate side, then I see these larger assets come back to market that have really been waiting to trade for quite some time.”

The refinance markets are exceptionally strong right now, Ferroni said, noting that JLL is still doing a bigger proportion on its debt advisory side than it normally is. Ferroni said seeing a lot of loan maturities coming due in the next few years, especially on the CMBS side, tells him a couple of different things.

“The reason we think it’s interesting… is because it provides some further evidence of why we think there’s going to be a pickup in activity. It is going to lead to an increase in sellers and more motivated sellers,” he said. “If that is coupled with a rate cut, that may make someone feel good enough about… executing on their disposition.”

There are a number of reasons to think there will be more M&A over the next year, Peek said, with long maturities, fund maturities and plenty of assets that need considerable capex.

“There’s a lot of motivating factors for sellers and we are hopeful that we get a confluence of events that results in increased transaction activity and an opportunity for new investors,” he said. “Obviously, we’d like the backdrop for that to be a re-accelerating economy and re-accelerating RevPAR growth that leads to a positive environment.”