What’s fueling M&A optimism for 2026? By Rob Schneider | January 5, 2026
Bid-ask compression
Still weighted toward refi
Capital chasing deals
INTERNATIONAL REPORT — Cooling demand from the U.S. was a dominant thought among CALA leaders when asked to review the past year in the region as part of a CBRE roundtable discussion.
“In the first half of 2025, we observed that the lodging sector continued to evolve positively, perhaps showing greater stability compared to previous years,” said Francesc Colell, CFO of Ibiza, Spain-based Palladium Hotel Group. “However, what we noticed clearly was a cooling in demand from the U.S. toward Caribbean destinations.”
Bernabé López, director of development and asset management for San José, Costa Rica-based Caribe Hospitality, noticed those shifting dynamics as well.
“Midway through 2025, we’ve seen shifts in demand dynamics — government and leisure segments have softened, while corporate travel has remained steady,” López said. “This has led us to fine-tune our mix and pricing strategy to protect rate integrity and capture share in resilient segments.”
While the year began with challenges, the results are ending on a more optimistic note, according to Conor Lawler, CFO of Montego Bay, Jamaica-based Sandals Resorts International.
“The year began with some short-term challenges, likely driven by consumer confidence and market uncertainty,” Lawler said. “It has been encouraging, however, to see stabilization and recovery take hold so quickly. This resilience, combined with stronger demand, gives us confidence as we head into the fourth quarter and look ahead to the start of 2026.”
CBRE recently hosted a roundtable discussion with Caribbean and Latin American lodging experts from major hotel companies to discuss current challenges and opportunities in the region.
The panelists included:
- Bernabé López, director of development and asset management, Caribe Hospitality
- Mauricio Elizondo, chief development officer, Grupo Posadas
- Pablo Maturana, vice president of development, Architecture, Design and Construction for the Caribbean and Latin America, Hilton
- Tina Necrason, global head of Branded Residential, Hyatt
- Ana Tomicevic, global vice president, Brand & Marketing, Hyatt
- Francesc Colell, CFO, Palladium Hotel Group
- Conor Lawler, CFO, Sandals Resorts International
Hotel Investment Today’s parent company, Northstar Travel Group, will host its annual America Lodging Investment Summit for the Caribbean and Latin America (ALIS CALA) on April 28-30, 2026, at the Loews Coral Gables Hotel in Coral Gables, Florida. Click here for more information on the event.
Here are the panelists' thoughts on various CALA-related topics:
GEOGRAPHIC EXPANSION
Tomicevic: She said several new ultra-luxury projects are opening in markets that were not historically perceived as luxury markets. Travelers are increasingly seeking high-end, curated experiences in destinations beyond traditional luxury hubs like St. Barts. Quintana Roo is a prime example of an area once defined by spring break and party crowds that is now seeing ultra-luxury all-inclusive resorts being developed.
Maturana: Hilton is committed to placing the right hotel in the right destination at the right time, driven by our belief that today’s travelers are eager to explore new places and experiences… Hilton plans to continue expanding its luxury portfolio, including Waldorf Astoria, Conrad Hotels & Resorts, and LXR Hotels & Resorts, aiming to double its presence across these three brands nearly.
Lawler: The Caribbean’s geographic advantage and being the gateway to the U.S. ensure consistent demand. This, combined with the region’s beauty and cultural richness, ensures it will always be a long-term luxury destination.”
Elizondo: Many of these projects are financially driven due to a residential component. The residential component helps lower the project's capital cost.
INVESTMENT
While high-end and all-inclusive resorts may grab the headlines, some hotel companies are diversifying their portfolios and taking advantage of the region’s economic growth and boost in intra-regional travel.
López: For 2026 and beyond, we plan to build on our select-service development DNA with targeted projects in Costa Rica, El Salvador, and potentially another in the Caribbean. Our immediate focus is advancing these opportunities, including our first coastal leisure hotel — an important step in diversifying our traditionally corporate-focused portfolio and extending our presence into new demand segments.
Elizondo: He said Posadas is focusing on Mexico, the Dominican Republic, and Costa Rica for development of properties across the board - economy, limited-service, mid-scale and full-service in urban locations to all-inclusive luxury resorts.
Colell: He notes that Palladium also favors the Dominican Republic and Jamaica for future development. The company is building and renovating all-inclusive properties in these two countries.
CHALLENGES AND OPPORTUNITIES
López: Elevated interest rates and shifting demand patterns are keeping underwriting standards tight, while upcoming election cycles and the reconfiguration of global supply chains may temper foreign investment in the near term. Currency volatility in certain markets also underscores the need for proactive FX management to preserve stability and performance.
Elizondo: Construction costs and inflation are affecting operating costs.
Colell: One of the major challenges we foresee is the uncertainty of global economic conditions and how they may affect travel demand, especially from key source markets like the U.S…. [But] there are significant opportunities. The growing interest in experiential travel, sustainability, and wellness tourism opens up new avenues for differentiation and value creation. Digital transformation also presents a chance to enhance operational efficiency and guest satisfaction.
While Freeman said President Donald Trump’s administration has “done a number of favorable things for the travel industry,” including investments in air traffic control and customs and border control, there is still a sense of uneasiness.
“The challenge is... nobody feels like they’re winning right now,” he said during an executive interview at The Phocuswright Conference in November.
According to Freeman, international travel to the U.S. is projected to be down 6% in 2025, driven by a 25% decline in travel from Canada.
“The most startling fact is that the U.S. will be the only nation in the world this year to see a reduction in travel. We had 79 million visitors before the pandemic in 2019. This year, we’ll have 68 million visitors—4 million less than we had last year. So, we’re going the wrong way,” Freeman said.
Freeman added that each market is different, but travel is impacted by the expensive U.S. market and general fear.
“There is fear about coming to the United States—justified or not—that is unlike anything we’ve ever seen before: fear of being detained in an airport or having your device searched,” he said. “There clearly hasn’t been enough done to arrest that perception, to change that perception. That’s something we’re working with the White House on.”
Freeman said the current situation in the U.S. has also benefited other countries.
“What I hear from counterparts around the world is a big, hearty ‘thank you.’ We’re driving travelers into their arms. We’re making their markets more competitive. We’re making the U.S. less attractive,” he said.
“But that’s not what we’re looking for, right? We’re looking to make the U.S. much more competitive and attractive to these travelers, and one of the big problems that we seem to have at a federal level is we assume that people are going to come here.”
Freeman also touched on luxury travel, recent visa regulations, biometrics and more. Watch the full discussion with Mitra Sorrells, SVP of content for PhocusWire and Phocuswright, below.
NATIONAL REPORT – Pipelines have been filled predominantly with conversions as recent data reflects some of the slowest new development outlooks in several years. Even announced new developments are hard to get off the ground. So, it should come as no surprise that developers in 2025 had to sharpen their pencils extra pointy to make new deals work because of still-high interest rates, still-expensive construction costs and an outlook suggesting performance could be flat-ish in 2026.
At the same time, available capital has been much more interested in the financial dynamics surrounding below-replacement-cost acquisitions versus someone selling a new development project where it can be easy to poke holes.
So, will the new development environment improve in 2026? That is the question we posed to three executives working for U.S.-based developers known for building. Big picture, they know how to write pro formas that make sense and they have track records to attract capital and debt. So, the quick answer for them is 2026 will continue to present new development opportunities. And, if interest rates continue to drop, they expect more deals to pencil and new development pipelines to grow.
We also asked development leaders Mary Beth Cutshall of Vision Hospitality Group, Ben Pierson of Rockbridge and Kathleen Hollis of First Hospitality if they have more clarity about the overarching macros and for the most part they did not but agreed that is not a deterrent.
Cutshall said Vision definitely has more clarity as they are very focused on certain new development paths. “We have nine to 10 projects in our pipeline. So, we do,” she said. “But that being the case, just speaking for the industry and the environment, I would say that December 2025 is a lot noisier and more unpredictable than January. 2025. The months throughout 2025 brought swings. Day by day, it’s been difficult to know economically the exact direction. So, we, like everybody, have had to navigate that and do our best. So yeah, it has been a bit different, to say the least.”
First Hospitality’s Hollis first explained how they have been a fairly active developer since the early-1990s and including adaptive reuse have developed more than 25 projects.
“We are bullish on development throughout all cycles, and always think that there’s a way to add value,” she said. “In terms of clarity, from where we sit today, there is quite a bit more clarity than where we were one year ago – but it’s been a wild ride in between. Liberation Day in early Q2 absolutely rocked our whole industry, but developers, in particular. I would also say that the third and fourth quarter’s three much-anticipated rate cuts was really helpful to understand what financing is going to look like going forward.”
The 75-basis point cut was helpful, Hollis continued, calling the current debt market “A Tale of Two Cities.”
“If you are a credible sponsor with a strong track record, have a good brand, a good manager, and a good site, actually financing isn’t great, but it’s not terrible, and it doesn’t destroy projects.”
But, she added, first time hotel developer, even those with other incredible commercial real estate experiences, are really struggling to get hotel projects financed.
What the cuts will catalyze, Hollis said, is hotel transactions among existing cash-flowing assets. “While that would certainly be good for our industry, you’re still left with that allocation of capital question of does it make sense to develop or to buy.”
Rockbridge’s Pierson said he is seeing banks focusing on their best customers and clients, the ones that performed well over the prior years. Even as interest rates continue to come down in 2026 and more deals pencil out, he added, lenders will increase activity but will still be a bit picky about their partners.
Constraints remain
On the development side, the bigger issue, according to Hollis, is just how expensive it is because of hard costs.
“To develop a select-service asset right now you’re well north of $300,000 a door. It’s ridiculous,” she said.
Cutshall believes that financing remains a primary constraint to new development. Quite simply, she added, fewer new deals are “penciling” because of higher interest rates, tightening underwriting standards and the need for low leverage.
“Vision Hospitality Group is very fortunate. This is our bread and butter,” Cutshall said. “We’ve been doing new development for 28 years and built many hotels. Our lender relationships are very strong. We refinanced throughout 2025 with terms that were favorable.”
Rockbridge’s Pierson said that while complex luxury lifestyle developments are always challenging, the dynamics for developing even select-service assets has fundamentally changed as the branded landscape has become more saturated and consumers demand a lifestyle experience no matter the product type.
“The cost of entry and capitalization size of those projects has grown so that even upper upscale and upper-end select-service options have significant development costs,” he said. “The size of deals is getting bigger, which means you need more access to capital. That’s really the threshold you have to cross.”
Throw on top of that the challenges of finding debt and fewer people are built for that type of project size, Pierson added. “And, oh, by the way, the people that traditionally capitalize 60% to 65% of construction projects are backing away from the market,” he continued. “So, I think that’s created over the last three years, at least, a really hard [development] landscape.”
Pierson added that investors like confidence and clarity and the introduction of the tariff policy created uncertainty in the market. “That has been a challenge and a distraction. But I think labor and trade availability persists,” he said, especially in markets where there is a lot activity from institutional or data center developers.
He also said mechanical, electrical, plumbing (MEP) trades are another big focus, again pointing to data center development as a big culprit.
Sourcing debt
Cutshall also confirmed growing discussions surrounding the slow return of institutional lenders to the hospitality space, adding Vision recently closed a refinance with an institutional bank and got really good terms.
“They were favorable to working with us because of our track record. I think that is where the rubber meets the road,” Cutshall said. “Predominantly, we are working with relationship lenders that we’ve been cultivating for many years, but we are also opening the doors to more institutional lenders when it makes sense.”
Hollis agreed that institutional debt is returning, but added hotels are still facing a bit of a perception issue from institutional groups who play in all of the asset classes.
“I think it’s a combination of stagnant RevPAR growth projected over the next few years, but above inflationary wage growth in most markets, that are leading to real concerns about NOI degradation, which is never what you want for an existing cash flowing asset, but especially for development,” she said. “Generally, to make your project pencil, you need to be able to assume you have a few years of market growth going on. And if you can’t count on that, it’s tricky.”
While a lot of uncertainty remains to suggest new hotel development is going to rebound in a dramatic way, Hollis closed by saying last year prepared everyone for the unexpected development from the current White House administration and maybe the next surprise could be a positive for developers.
With tongue somewhat planted firmly in her cheek, Hollis said costly tariffs could disappear as quickly as they appeared. “There is a world in which development does become a lot more palatable very quickly. It’s possible a few more rate cuts will happen and there could be a lot of changes in 2026 that make development more palatable than we’re thinking.”
Pierson added another note of optimism saying while 2025 was a particularly volatile year in terms of inflation, tariffs and the interest rate environment, he suspects that 2026 will settle down and the hotel industry is going to see a more stable environment.
“A little more stable macro and interest rate environment will be helpful,” he said. “But we are focused on opportunity in 2026 and beyond and see a lot of opportunity to grow our platform, both in development and otherwise, and specifically in the luxury lifestyle space.”
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