Realistic, conservative development gets done
NATIONAL REPORT – Ground-up hotel development isn’t quite as challenging for experienced developers who know how to choose the right product and location – sometimes based on macro conditions and trends. As a result, while there is a fair amount of trepidation surrounding new development, some seasoned developers look at 2026 with great optimism.
We asked Mary Beth Cutshall of Vision Hospitality Group, Ben Pierson of Rockbridge and Kathleen Hollis of First Hospitality where they are looking for new development and what types of hotel products they find most appealing in the current environment.
“Ground up development continues, but only for the strongest projects,” said Cutshall. “So, it’s prime locations, proven sponsorship and realistic underwriting because when you are raising debt or raising capital, the deals are vetted even more so. So, you have to be very realistic and conservative.”
Cutshall said Vision hasn’t done a lot of conversions in adaptive reuse but thinks those are increasingly favored because they reduce basis, speed to market and financial risk. “That’s something that we’ve been hearing a lot about the past couple quarters,” she said.
She continued by suggesting extended-stay and select-service dominate new starts right now, reflecting lender preferences for stable cash flows and labor efficient models.
For Vision, Cutshall said limited- and select-service remains their bread and butter. “We also have a couple of Autographs and some lifestyle boutique. So, compact full-service would be our other sweet spot.”
Cutshall added that brands and lenders are more risk adverse. “So, they’re placing greater emphasis on the sponsor, track record, operating expertise and execution certainty,” she said. “The bottom line is development hasn’t stopped, but it’s reserved for groups that reduce risk across the entire life cycle.”
Manhattan v Manhattan
From First Hospitality’s perspective, Hollis said the most compelling ground-up development opportunities are located on exceptional sites in high RevPAR markets. “Hard costs are essentially the same if you’re building in Manhattan, New York, or Manhattan, Kansas,” she said “And clearly, the RevPAR that you can drive in New York City is a lot higher that you can drive in more suburban, tertiary markets.”
So, First is most interested irreplaceable real estate and Top 10-like markets from a ground-up perspective.
First has also spent time outside of Top 10 markets, especially if there is an Opportunity Zone incentive or an historic tax credit incentive. Hollis said they are looking at a ground-up project right now being partially funded by a large corporation who wants a headquarters hotel outside of their office that they can feel really proud of.
“You just have to uncover a lot of stones,” Hollis concluded.
Luxury lifestyle mindset
At Rockbridge, development strategy surrounds luxury lifestyle – a differentiated product that can outperform its peers and comp set, as well as outperform the broader market and create a customer base and a demand profile that can perform relatively better, according to Pierson.
To that end, Pierson said Rockbridge has spent the last 15 years building a vertically integrated platform that can produce products and that guests will pay for.
“If you aren’t differentiated, it’s hard to beat the market,” he said. “And in the broader market today, the forecast for RevPAR growth is not exciting if you don’t have a better mousetrap.
“If you are hoping that the tide will lift your boat, that is not a great strategy in the next couple years. You have to be strategic and have a platform that’s built to perform over time.”
Pierson said Rockbridge looks at real estate and locations that are conducive to the places that people want to be and are willing to pay for. “The luxury lifestyle product we’ve seen that perform in really great hospitality markets in Charleston, Nashville, Savannah, Dallas and Denver, for example. We’ll continue to look at those,” he said.
Pierson added that they have seen a mix other types of real estate and mixed-use developments, in particular, where the convergence around hospitality and hospitality experiences drives real estate value for all product types.
“You’re seeing cities, universities, mixed-use developers that are looking for really distinctive luxury lifestyle product to help drive and be the heartbeat of the overall development,” he said. “So, we’re seeing that as a as a big opportunity set and an opportunity to leverage the platform that we built.”
1. West Tower of Grand Hyatt Incheon sold for $145.2 million
Paradise Co., a South Korean operator of gaming casinos, has acquired the 501-room West Tower of the 1,024-room Grand Hyatt Incheon in Seoul, South Korea, for 210 billion Korean won ($145 million), according to Focus Gaming News. The deal was originally due to have been finalized on Oct. 31. The seller is South Korea’s KAL Hotel Network.
The West Tower, opened in 2014, is next to Paradise City resort, which has 769 rooms, with the acquired tower resulting in it now having 1,270 rooms. The Grand Hyatt Incheon now has 523 rooms. Paradise also plans to start construction on its fifth South Korea property: a casino-hotel also located in Seoul.
2. Hilton assumes management of three Omani coastline hotels
As of Jan. 5, Hilton has taken over full management of three hotels in the Middle Eastern nation of Oman, all of which are on the country’s coastline at a waterfront development site named Barr Al Jissah. The three hotels are the 302-room DoubleTree by Hilton Muscat Al Waha; 198-room Hilton Muscat Al Bandar, and 180-room Waldorf Astoria Al Husn.
Local firm Zubair Corp. owns the three hotels, and according to CoStar, the Hilton Muscat Al Bandar and Waldorf Astoria Al Husn until the end of 2025 were managed by Shangri-La Hotels & Resorts. The three hotels now will be included in Hilton’s “White Label” luxury collection division. Barr Al Jissah is approximately 25 miles east of Oman’s capital, Muscat.
3. Goldman Sachs launches $500 million Japan-focused hotel fund
Investment firm Goldman Sachs has launched a $500 million hotel fund that it says will target hotels in Japan. Bloomberg News reports the New York City-based firm is expected to close the fund’s first deal by the end of March.
Peer news site Private Equity Insights added that “Japan has drawn sustained interest from global real-estate investors due to comparatively low borrowing costs and a weak yen. Goldman's fundraising effort comes amid heightened competition from peers, including Morgan Stanley, KKR and Blackstone, which have all committed significant capital to Japanese real estate.”
4. Hotel stocks show mixed December numbers
Hotel stocks showed a mixed performance in December compared with November, according to the Baird Hotel Stock Index. Year to date through December, the global hotel brands gained 9% but underperformed the S&P 500 by 7.25% and hotel-focused real estate investment trusts declined by 10%.
“Numerous demand headwinds negatively impacted revenue per available room growth throughout 2025, which weighed on investor sentiment and stock performance,” said Michael Bellisario, Baird’s senior research analyst and managing director. He added 2026 provides optimism, notably from favorable holiday timing and June and July’s FIFA World Cup 2026.
5. US government accuses Hilton of canceling ICE reservations
The U.S. Department of Homeland Security claims Hilton canceled reservations at a Minneapolis hotel made via official channels by Immigration & Customs Enforcement employees, Reuters reports.
Hilton told the news agency “the property is independently owned and operated, and [that it] is investigating the matter.”
“Hilton works with governments, law enforcement and community leaders around the world to ensure our properties are open and inviting to everyone,“ a Hilton spokesperson said in a statement.
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