Hotel investment sales volume dropped 35% from a year prior as investors responded quickly to economic uncertainty, according to MSCI U.S. Capital Trends data representing April activity.

There was just $1B of hotel investment sales in April. The drop comes as U.S. hotel trade volume was predicted to increase this year, continuing a trend that began in 2025.

But stagnant interest rates, the chance of a rate hike, and political volatility are keeping some capital on ice, one opportunistic hospitality investor said.

“There is so much liquidity in the marketplace wanting to be deployed,” said Doug McKnight, president of RREAF Holdings, a hospitality and multifamily investment and development firm. “It's just a matter of what pencils, and you have to be very selective.”

The wave of loan maturities has forced sellers to be more realistic about pricing, narrowing the bid-ask gap that hindered transactions in recent years. Transaction volume plunged from $42.6B in 2022 to $20.4B in 2024, before ticking back up to $24B last year, according to JLL.

During the past 12 months, there was $29.9B of hotel sales activity, a 19% increase from the prior year, per MSCI data.

Hotel room demand responds to economic conditions more quickly than other asset classes, and uncertainty about the growth of the U.S. economy may be making investors cautious, MSCI said in its report, which helps explain the April drop.

There is tremendous capital available for the hospitality sector, but it will be used strategically and patiently, said McKnight, who has 38 years of experience in investment banking and institutional trading.

RREAF is selectively seeking hospitality investments in specialized sectors, such as drive-to-leisure and long-term stays. It has found enough opportunities to boost its investment volume across its entire portfolio — including multifamily, RV parks, hospitality, master-planned communities and ground-up extended stay — from about $500M last year to what McKnight expects to be about $750M this year, he said.

RREAF did less than $250M in investments in 2023 and 2024, following $1.3B of activity in 2022.

Interest rate spikes led to the initial plunge in investment activity, but the stubbornly high rates are now creating some investment opportunities as owners have loans maturing and can’t afford to refinance, McKnight said.

Opportunities also exist in the luxury and experiential sectors, he said, citing a hotel RREAF is buying in Destin, Florida, as an example.

“We're actually getting into that property below the value of the land, our basis is so low,” he said. “So we're always looking for opportunities, whether it's distress or … it's just opportunistic.”

RREAF is also developing experiential hospitality projects, such as a $700M Margaritaville Resort and Beach Cottages project in Galveston, Texas. Purpose-driven hotels like this, and long-term stays, have outperformed other sectors, McKnight said.

While 2026 FIFA World Cup hotel bookings are pacing below forecasts at 80% of hotels, McKnight said the event’s impact on hospitality investment sales will be mixed. Host markets have seen heightened attention, and it’s likely that some international travelers will return to the cities they visit, creating more long-term demand.

There are many trends in hospitality that make it tempting to follow the short term, but RREAF focuses on the fundamentals and foresees a continued upward trajectory in investment activity, McKnight said.

“I think overall transition transaction volume is going to continue to gradually increase,” he said. “We have seen a rather meaningful increase of late in volume in hospitality as a whole.”

CORRECTION, JUNE 15, 10:33 A.M. CT: This article has been updated to clarify RREAF's investment volume.