SOUTHEAST U.S. HOSPITALITY MARKET REPORT – Q1 2026

The Southeast remains the most active and liquid hospitality region in the United States by transaction volume and by number of high-quality assets in active marketing. U.S. hotel transaction volume reached $24 billion in 2025, a 17.5% year-over-year increase, with the Americas region leading global growth at 27%. Volume gains are projected to continue in 2026 supported by approximately 300 basis points of cumulative debt-cost reduction since the Federal Reserve began easing in September 2024, returning sponsors to positive-leverage acquisition economics for the first time since 2022.

Within the Southeast, Q1 2026 performance is increasingly segmented by market, asset class, and sponsorship quality. Coastal Florida and the Carolinas continue to support strong ADR through leisure and high-net-worth travel, with Florida statewide ADR reaching $196.41 and RevPAR of $134.97 in mid-2025, and 11 of Florida's 15 hotel markets posting positive RevPAR growth in the first half of 2025. Atlanta and Nashville, the region's two largest urban hospitality markets, remain pressured by recent supply additions, with Atlanta occupancy projected to decline to 62.2% in 2026 (a third consecutive year of softening) and Nashville occupancy to decline to 64.4% on continued elevated supply growth.

RevPAR growth is increasingly ADR-driven rather than occupancy-driven. National Q1 2026 RevPAR was initially projected to decline modestly (-0.2%), with full-year 2026 growth of 0.6%, concentrated in upper-tier segments. Actual Q1 2026 results outperformed those projections, with national ADR rising 2.2% and the upper-end segments leading. Within the Southeast, drive-to leisure markets and well-located full-service assets in convention-anchored urban cores have led on rate, while limited- and select-service properties in oversupplied submarkets have continued to face downward ADR pressure.

Capital markets remain selective but functional. The Federal Reserve held the federal funds rate at 3.50%–3.75% at its April 28–29, 2026 meeting, the third consecutive hold following three rate cuts in late 2025. CMBS hospitality delinquencies fell 73 basis points to 5.81% in September 2025 and stood at 6.17% by November 2025, with the lodging segment outperforming office and retail on a delinquency basis. However, approximately $18.7 billion of hotel CMBS is scheduled to mature through 2026–2027, of which roughly 70% carries floating-rate exposure, creating a meaningful refinancing pipeline that will continue to drive acquisition opportunities and structured-debt demand throughout the year.

For experienced Southeast hospitality sponsors, Q1 2026 represents a markedly different capital environment than the one that defined 2023–2024. Conventional bank rates for hotel acquisitions and refinancings stabilized in the 6.25%–7.25% range through Q1 2026, CMBS hospitality spreads of 150 basis points over Treasuries for branded properties and 180 basis points for non-flagged assets re-engaged the institutional bid, and SBA 7(a) and 504 executions remain the most accessible high-leverage path for owner-operators acquiring or recapitalizing hotels in the under-$30 million range.

The Southeast's Q1 2026 hospitality performance is supported by a combination of durable structural drivers and event-driven catalysts. Population in-migration into Florida, the Carolinas, Georgia, and Tennessee continues to outpace national averages, sustaining drive-to leisure demand and supporting small-bay and infill hotel performance in suburban submarkets and resort destinations. The region's logistics, manufacturing, and corporate expansion footprint, including continuing investment around the Ports of Savannah, Charleston, Jacksonville, and Miami, anchors corporate transient and extended-stay demand outside the major urban cores.

Leisure travel remains the most resilient segment. Drive-to coastal Florida markets, the Outer Banks, the South Carolina Lowcountry, the Tennessee theme-park corridor, and the Smoky Mountains continue to benefit from a mix of domestic vacation travelers and high-spend regional visitors. Consumer bifurcation remains firmly in place through early 2026, with RevPAR growth skewed toward upper-end scales, particularly among luxury hotels where rates have continued to grow at near-inflation levels. Aggregate U.S. hotel guest spending is projected at approximately $805 billion in 2026, a 1.7% increase over 2025, a growth rate that barely outpaces inflation and underscores the sector's continuing margin pressures.

Group and convention demand remains uneven. Atlanta's 2026 outlook is supported by Hartsfield-Jackson retaining its position as the world's busiest airport with more than 790,000 passenger flights in 2025, and by strengthening corporate travel in Alpharetta and other emerging employment hubs that is expected to support metrowide room demand growth in 2026 following a two-year contraction. However, group booking windows remain compressed across the region, event planners continue to be price-sensitive, and corporate transient recovery in legacy CBD markets remains slower than recovery in suburban and resort submarkets.

On the supply side, approximately 95,000 hotel rooms are scheduled to deliver across the United States in 2026, representing a five-year high in deliveries despite an active pipeline that hit an eight-year low at the start of the year. Atlanta ranks second nationally in total pipeline at 159 projects and 17,804 rooms, trailing only Dallas. Rooms in active construction declined from 150,000 at year-end 2024 to 136,000 at year-end 2025, with final-planning projects down 7%, pointing to a slowing supply pipeline beyond 2026 as elevated construction financing costs, tariffs on imported building materials, and higher labor costs constrain new groundbreakings.

The 2026 FIFA World Cup, hosted across 11 U.S. cities including Atlanta and Miami in the Southeast, provides a meaningful but contained Q2–Q3 catalyst. ADR premiums in host markets are projected to range from +5% to +25% during the tournament window. However, recent host-market surveys indicate that nearly 80% of hoteliers reported booking pace below initial expectations, with FIFA room block releases and slower-than-anticipated international booking pace tempering early projections. Miami and Atlanta have outperformed several other host markets, but the national RevPAR uplift from the World Cup is now expected to approximate 40 basis points, meaningful for Atlanta and Miami specifically but not transformational for the broader Southeast.

Florida — Selective Stabilization with Ongoing Bifurcation

Florida's hospitality markets entered 2026 with stabilizing fundamentals after a 2024–2025 period defined by hurricane displacement reversion (Milton and Helene), normalization from the post-COVID surge, and elevated insurance-driven cost pass-throughs. South Florida 2025 RevPAR growth ran 0.8% in Miami, 2.4% in Fort Lauderdale, and 0.2% in West Palm Beach, with all three markets running 16–28% above pre-pandemic 2019 RevPAR levels. Q1 2026 results across the state continue to show ADR resilience in luxury and upper-upscale segments, with the Vineta in Palm Beach (Oetker Collection) and other 2026 luxury openings reflecting a calculated ultra-affluent leisure capital allocation strategy now visible across Florida pipelines.

Orlando's 2026 outlook projects occupancy rising to 72.0%, ADR of $205.40 (a third consecutive year of growth), and RevPAR of $147.83, with full-service properties continuing to outperform limited- and select-service formats tied to lower-income consumer spending. Tampa–St. Petersburg projections show occupancy at 68.4% (closest to 2019 levels of any major U.S. market), with ADR forecast to decline to $175.17 (the first annual ADR decline since 2020) and RevPAR of $119.77, still 28% above pre-pandemic levels. The Tampa softening reflects cyclical inventory absorption rather than demand loss; just over 600 rooms are projected to deliver in Tampa in 2026, the lowest annual total in the past decade, supporting a re-tightening dynamic into 2027.

Florida supply growth has moderated meaningfully from peak levels. Rooms under construction statewide declined 7% quarter-over-quarter in Q2 2025, with continued restraint expected due to high financing costs, elevated insurance premiums, and tighter lending standards on speculative coastal construction. Lenders are prioritizing well-sponsored deals in high-barrier locations with diversified demand drivers and credible exit strategies.

Georgia — Convention Anchors, World Cup Catalyst, and Logistics-Driven Secondary Markets

Atlanta remains Georgia's primary hospitality demand engine and the second-largest U.S. hotel pipeline by both project count and room count. Atlanta's 2026 outlook projects approximately 1,000 rooms delivered in 2026 (a sharp reduction from 2025), with occupancy declining to 62.2%, ADR rising to $127.87, and RevPAR of $79.49. Hartsfield-Jackson's volume of 790,000+ passenger flights in 2025 and the FIFA World Cup's eight Atlanta matches in June and July 2026 are expected to provide modest CBD RevPAR uplift, with Hotel Phoenix and other new full-service supply anchoring rates at the upper end of the market. Short-term rental tracking through April 2026 showed Atlanta occupancy during the World Cup group stage up 74% year-over-year, with average available rates 92% above 2025, although Atlanta's match-day premiums have remained relatively modest at +1.7% versus other host cities, reflecting revenue managers' use of length-of-stay restrictions and inventory fencing rather than aggressive rate-only strategies.

Atlanta's market is composed of approximately 113,000 rooms across 976 hotels, with property types spanning 15-room boutique inns to 1,000-key full-service convention hotels. The 976-room Signia by Hilton convention hotel addition in 2024 contributed to recent occupancy compression, but lenders remain constructive on well-located select-service and extended-stay assets in suburban employment hubs including Alpharetta, Buckhead, and the Cumberland/Galleria submarket. Investment activity in Q1 2026 has concentrated in select-service and suburban assets with strong business-travel demand fundamentals.

Secondary Georgia markets, including Savannah, Augusta, Columbus, and the I-75/I-16 logistics corridors, are seeing more stable performance than urban Atlanta. Savannah maintained occupancy near 73% through 2024 with ADR around $152, supported by cruise traffic, the Port of Savannah's $300 million terminal expansion (boosting capacity by 50%), the $100 million Savannah Convention Center expansion completed Q1 2025, and Gulfstream Aerospace's continued employment expansion. Select-service and extended-stay hotels serving manufacturing, port, and distribution employment have shown more durable performance than the urban convention-dependent submarkets.

Carolinas — Diversified Growth Across Urban, University, and Coastal Markets

The Carolinas continue to benefit from population in-migration, diversified employment growth, and a balanced mix of urban business, university, and coastal tourism markets. Charlotte and Raleigh-Durham remain the region's primary business-travel hubs, anchored by financial services, technology, life sciences, and the major research universities of the Triangle. Charlotte TTM occupancy ran 65.9% with ADR of approximately $126 and RevPAR of $83 through August 2024, and the Charlotte market continued to absorb supply additions through 2025, supported by approximately 33 active hotel projects representing 3,140 new rooms and roughly $810 million of construction value.

Raleigh-Durham, supported by the Research Triangle's education, healthcare, and manufacturing employment base, has demonstrated stronger fundamentals than most Southeast markets, with record occupied room nights exceeding one million by year-end 2025 and demand growth continuing to outpace supply growth. Approximately 27 hotels representing 4,600 rooms are planned or under construction in Wake County, a $500 million pipeline reflecting the area's positioning as a top-tier business and leisure destination. Major demand drivers ahead include expanded convention capacity, new mixed-use districts, and continued healthcare investment.

Coastal Carolina markets, including Charleston, Hilton Head, Myrtle Beach, and the Outer Banks, continue to support strong ADR through high-spend leisure travel. Charleston, with approximately 23,000 rooms across 223 reporting hotels, ran TTM occupancy near 71% with ADR around $175 and RevPAR of approximately $125 through August 2024, and continues to demonstrate fundamentals consistent with that profile through Q1 2026. The Charleston peak season (March–April) sustains occupancy in the 75%–81% range, with conference and convention group occupancy up nearly 10% year-to-date through April 2024, a positive indicator of group recovery in coastal South Carolina markets. The Cooper Hotel, a luxury waterfront property opening in 2026, exemplifies the boutique-luxury investment thesis playing out in tourism-anchored historic markets across the Carolinas.

Lenders continue to focus Carolinas hotel underwriting on projects with clearly defined demand generators (medical districts, research campuses, and mixed-use developments) and on RevPAR projections that reflect the post-COVID normalization rather than the 2021–2022 surge.

Tennessee — Entertainment, Healthcare, and Continued Supply Absorption in Nashville

Nashville remains a national tourism and entertainment hub, supported by music industry events, conventions, professional sports (Tennessee Titans, Predators, Nashville SC), and a deep food and beverage scene. The market has, however, absorbed a substantial volume of new inventory over the last five years. Nashville delivered 524 rooms during Q3 2025 with 2,587 rooms remaining under construction, representing 4.2% of existing supply, roughly twice the national average. Nashville Q3 2025 occupancy declined 2.8% year-over-year, ADR fell 1.4%, and RevPAR dropped 4.2%, reflecting the impact of new mid-tier supply, softer weekday business, and lighter group travel.

The 2026 Nashville outlook projects continued occupancy decline to 64.4%, ADR rising slightly to $175.53 (the highest level among inland, non-resort markets), and RevPAR softening to $112.97, though still above pre-pandemic levels. Supply pressure is shifting outward to suburban corridors as the urban core stabilizes. Major demand drivers ahead include the $2.1 billion Nissan Stadium and East Bank development, Pendry Nashville (180 rooms, 2027), and ongoing convention, concert, and sporting-event activity. Investors are underwriting more conservatively, but assets in the urban core have shown more durable performance than oversupplied suburban submarkets.

Memphis and other Tennessee metros remain tied closely to logistics, healthcare, education, and regional tourism demand. Well-positioned limited- and select-service hotels and extended-stay properties near hospitals, universities, FedEx's Memphis hub, and major distribution corridors have shown more durable performance than Nashville's CBD entertainment district through Q1 2026. Lenders continue to focus on operational diversity, sponsor experience, and realistic ADR underwriting rather than pure leisure-driven assumptions.

Q1 2026 hospitality capital markets activity in the Southeast reflects a meaningfully more constructive environment than 2023–2024, but selectivity remains the operative word. U.S. hotel transaction volume reached $24 billion in 2025 (up 17.5% year-over-year), with the Americas region leading global growth at 27%. The second-half 2025 acceleration was driven by approximately 300 basis points of cumulative debt-cost reduction since the Federal Reserve began easing in September 2024, returning hotel acquirers to positive-leverage economics. Volume growth is expected to continue in 2026, particularly in transactions exceeding $250 million as the bid-ask spread narrows and additional comparable trades unlock pricing transparency.

The Federal Reserve held the federal funds rate at 3.50%–3.75% at its April 28–29, 2026 meeting, the third consecutive hold following three rate cuts totaling 75 basis points in late 2025. The 10-year Treasury yield was approximately 4.26% as of early May 2026, supporting commercial mortgage rates that started at 5.33%. Consensus market expectations are for the Fed to remain on hold through the balance of 2026, with the next directional move likely a 25-basis-point hike contingent on labor-market and inflation evolution.

Within hospitality lending specifically, conventional bank rates for hotel acquisitions and refinancings stabilized in the 6.25%–7.25% range through Q1 2026. CMBS hospitality spreads have ranged from 150 basis points over comparable Treasuries for flagged/branded properties to 180 basis points for non-flagged or independent assets, with maximum LTVs of 75% and DSCR floors of approximately 1.20x–1.35x for stabilized assets. CMBS issuance broadly was on pace to exceed $120 billion in 2025, the highest level since 2007, providing a depth of liquidity that has continued to support hospitality refinancing executions through Q1 2026.

CMBS hospitality delinquency trends improved through late 2025. The lodging delinquency rate fell 73 basis points to 5.81% in September 2025 (its lowest level since March 2024), edged back to 6.17% in November 2025, and the broader CMBS delinquency rate fell to 7.14% in February 2026 from 7.47% in January 2026. The hospitality segment continued to outperform office (11.20% in February 2026) and retail (7.06% overall, with mall delinquency at 11.2%) on a delinquency basis. However, approximately $18.7 billion of hotel CMBS is scheduled to mature through 2026–2027, with nearly 70% of that maturity book carrying floating-rate exposure and approximately $5.71 billion of fixed-rate loans with sub-6% coupons facing meaningful refinancing-rate widening on takeout, creating a structural source of acquisition opportunity and structured-debt demand throughout 2026.

Across the Southeast specifically, traditional bank lenders are open to new hospitality credit but are prioritizing several criteria:

• Experienced sponsorship with strong global cash flow, verifiable operating history through the 2024–2025 RevPAR softening, and demonstrated ability to maintain margin discipline.
• Assets in markets with diversified demand drivers (corporate, leisure, group, and event-driven) and manageable new-supply pipelines relative to existing inventory.
• Conservative leverage levels (typically 60%–70% on conventional executions) and DSCR cushions of 1.25x–1.40x stress-tested under elevated debt-service scenarios.
• Diversified demand profiles that reduce reliance on any single corporate, group, or leisure segment.

Sponsors unable to meet conventional bank criteria, particularly first-time owner-operators, those acquiring hotels with near-term PIPs, and those with complex partnership-buyout or recapitalization structures, are increasingly turning to alternative debt structures:

• SBA 7(a) and 504 executions for owner-operators acquiring hotels, partnership buyouts, or major renovations. The SBA 7(a) program maximum loan amount remains $5 million, with up to 90% LTV for qualified hotel acquisitions, 25-year amortization on real estate, and the ability to combine operating company and real estate financing. Most SBA hotel loans require 10%–20% borrower equity contribution, with lower-end requirements typically reserved for strong flagged franchise properties with experienced operators.
• Bridge and transitional loans for resolving 2020–2022 vintage maturity exposure, completing brand-mandated PIPs, stabilizing post-renovation assets, and recapitalizing partnership structures ahead of long-term permanent financing. Bridge spreads have tightened modestly in Q1 2026 as debt-fund competition increased and the broader CMBS bid re-engaged.
• CMBS and LifeCo permanent financing for stabilized hotels with proven cash flow, providing non-recourse, longer-term, fixed-rate solutions. Insurance-company executions typically begin at $25 million for primary-market assets with low leverage, while CMBS hotel financing is available starting at approximately $2 million with LTVs up to 75%.
• Structured equity and preferred-equity solutions for larger Southeast portfolios undergoing transformative renovation, brand conversion, or partial recapitalization, particularly where the senior-debt market alone cannot fund the full capital stack at acceptable leverage.

Hotel cap rates show luxury-segment cap rates near 8.1%–8.2% in Q1 2026 with a slight expected improvement to 8.0% by 2028–2029, while economy/midscale cap rates have widened to approximately 9.5% in 2025, with a forecast peak near 9.7% in 2026 before easing to 9.5% by 2027–2029. Trophy and irreplaceable luxury assets continue to trade at materially lower yields, while limited-service and economy hotels in oversupplied submarkets continue to face wider cap-rate dispersion as buyers price in execution risk and PIP exposure.

Private investors accounted for approximately 75% of total hospitality deal volume in 2025, with deal flow up 14% year-over-year. Pricing recalibration, with many hotels trading below replacement cost, has favored acquisition and renovation strategies over ground-up construction, where construction loan costs (currently 6.25%–7.25% conventional) and elevated material/labor costs have pushed many speculative projects out of feasibility. Construction cost benchmarks per room in 2026 approximate $175,000 (midscale), $205,000 (upper-midscale), $225,000 (upscale), $290,000 (upper-upscale), and $550,000+ (luxury), figures that continue to constrain new-supply economics through Q1 2026.

Explore Southeast hospitality financing program options →

Operating Cost Pressures and Margin Discipline

Elevated labor, insurance, and utility costs remain the dominant operating-margin headwind for Southeast hotel owners. Hotel workforce growth of approximately 30,000 jobs is projected for 2026 (bringing direct hotel operations employment to approximately 2.2 million), but operating costs remain elevated and profitability lags pre-pandemic norms in many markets. Florida hotels specifically continue to report staffing shortages, with approximately 65% of Florida hoteliers citing staffing gaps and the state averaging only 53 available workers per 100 open positions. National hotel job openings declined to approximately 14 per hotel in February 2026, a 9% year-over-year decline, but staffing remains a structural challenge.

Insurance pass-throughs continue to weigh on Florida and Gulf Coast underwriting in particular. Recent FHA hospitality serious delinquencies rose to 10.62% nationally, with notable spikes of 15%–25% in Florida and Georgia tied to higher tax and insurance assessments, a structural cost dynamic that lenders are stress-testing in Q1 2026 underwriting. Operators are responding through technology-assisted scheduling, cross-training, and disciplined ADR management, while lenders are scrutinizing historical and projected expense ratios more rigorously than at any point since 2019.

PIP Execution and Brand Repositioning

Brand-mandated property improvement plans (PIPs) remain a defining operational and capital-stack consideration for Southeast hotel owners through 2026. Major brands have each emphasized conversion-led growth, lifestyle-segment expansion, and asset-light development through 2026. Sponsors facing near-term PIP requirements, particularly on 2020–2022 vintage acquisitions where original underwriting assumed lower future debt costs, are increasingly evaluating whether to fund the renovation, refinance through a value-add bridge structure, or sell at a discount.

PIP cost increases in recent years have shifted the cost-benefit calculus for many owners, with forecasted ADR growth often insufficient to support the magnitude of capital required. As a result, debt funds have emerged as a key source of capital for sponsors acquiring hotels with upcoming PIPs, providing flexible structures during periods when conventional banks have reserved most of their hotel capacity for existing customers. SBA and bridge structures, sometimes combined with mezzanine or preferred equity for larger portfolios, have become the dominant Southeast PIP-funding architectures through Q1 2026.

Distress, Workouts, and Opportunistic Acquisitions

Systemic distress has not materialized across the Southeast hospitality landscape, but pockets of stress are visible where elevated debt service, softening demand, deferred maintenance, and near-term maturities have collided. Maturity defaults remain the primary driver of new CMBS hospitality delinquencies, with stress concentrated in weaker assets and oversupplied submarkets. For well-capitalized Southeast investors, the resulting environment is producing selective acquisition opportunities at materially more attractive going-in yields than were available during the 2021–2022 cycle peak.

Bid-ask spreads began to compress in late 2025 and early 2026, with H1 2026 transaction velocity expected to accelerate as debt maturity continues to force sales. Cap rate compression for high-quality assets is not expected to begin meaningfully until H2 2026 as distressed inventory clears. Family offices, high-net-worth individuals, and specialized hospitality funds remain the most active acquirer cohort, while institutional investors have remained largely sidelined pending greater RevPAR clarity and corporate-travel recovery.

Where Experienced Sponsors Create Advantage

Lender, franchisor, and equity-partner emphasis on sponsorship quality has continued to intensify through Q1 2026. Capital providers are differentiating sharply between sponsors who can demonstrate revenue-management discipline, expense control, capital-planning sophistication, and successful execution through the 2024–2025 RevPAR softening, versus sponsors with less demonstrated experience in disciplined Southeast hotel operations. Sponsors who present detailed operational-improvement plans, realistic underwriting (including conservative ADR-growth assumptions and stress-tested DSCR cushions), and clear exit strategies are obtaining materially more competitive terms across SBA, bridge, CMBS, and LifeCo executions.

Connect with Cornovus about a Southeast hotel transaction →

Forward indicators for Q2 2026 and the balance of the year suggest a moderate but uneven recovery in Southeast hospitality fundamentals, with performance bifurcation continuing to drive both operating outcomes and capital allocation. Several discrete catalysts and structural drivers warrant sponsor attention.

FIFA World Cup Q2/Q3 Catalyst — Atlanta and Miami

The 2026 FIFA World Cup runs June 11 through July 19, 2026, with Atlanta hosting eight matches and Miami hosting seven matches. ADR premiums in host markets are projected to range from +5% to +25% during the tournament window, although recent host-market surveys indicate that 80% of hoteliers reported booking pace below initial expectations, with FIFA room block releases and softer-than-anticipated international booking pace tempering the upside. The national RevPAR uplift from the tournament is now expected to approximate 40 basis points, meaningful for Atlanta and Miami specifically but more contained than initial projections suggested. Sponsors with Atlanta and Miami exposure should expect concentrated June–July compression nights, with shoulder-period performance more dependent on domestic leisure and group-event demand than on international fan travel.

Supply Pipeline Deceleration into 2027

Rooms in active construction declined from 150,000 at year-end 2024 to 136,000 at year-end 2025, with final-planning projects down 7% year-over-year. The 2026 delivery wave (~95,000 keys nationally) represents a five-year peak, but the slowing groundbreaking pace points to materially reduced 2027–2028 deliveries. For Southeast markets that have absorbed elevated supply over the last several years, particularly Nashville, Atlanta CBD, and select Florida submarkets, the supply deceleration provides a tailwind for occupancy stabilization and ADR re-acceleration in 2027 and beyond.

CMBS Maturity Wave — Continued Acquisition Opportunity

Approximately $18.7 billion of hotel CMBS matures through 2026–2027, with floating-rate loans representing nearly 70% of the maturity book and approximately $5.71 billion of fixed-rate loans with sub-6% coupons facing materially higher refinancing rates. Q2 2026 will see continued acquisition opportunity from owners unable or unwilling to fund the equity-recapitalization or PIP-cost requirements demanded by lenders on takeout. H1 2026 will see accelerating transaction velocity as bid-ask compression continues, with cap-rate compression for high-quality assets unlikely to begin until H2 2026 as distressed inventory clears the market.

Federal Reserve Trajectory and Debt-Cost Outlook

Consensus market expectations are for the Federal Reserve to hold rates at the current 3.50%–3.75% range through 2026, with the next directional move likely a 25-basis-point hike in Q3 2027 contingent on labor-market and inflation evolution. There is potential upside if the Fed moves to additional rate cuts of 75–100 basis points during 2026, which would provide meaningful upside for early 2026 acquirers, though further easing will likely require a meaningful labor-market deterioration. The base case for Q2 2026 hospitality underwriting is that conventional bank rates remain in the 6.25%–7.25% range, CMBS hospitality spreads remain in the 150–180 bps range over Treasuries, and SBA 7(a)/504 executions continue to provide the most accessible high-leverage path for owner-operators.

International Inbound Travel Recovery — A Key Variable

International inbound travel remains below pre-pandemic levels, with World Cup host-city hoteliers reporting that visa barriers and broader geopolitical concerns have suppressed international demand. Approximately 65%–70% of surveyed hoteliers in host markets identified visa and geopolitical issues as the top constraint on World Cup-driven travel. International recovery represents a meaningful Q3/Q4 2026 upside variable for Florida luxury (Miami, Orlando, Palm Beach), urban Southeast (Atlanta), and gateway markets, particularly if visa-processing constraints and air-travel cost pressures ease through the balance of the year.

Operating Cost and Insurance Environment

Operating cost pressures will remain a dominant Q2/Q3 underwriting variable. Florida insurance-cost pass-throughs and the elevated FHA hospitality serious-delinquency rate (10.62% nationally, with Florida and Georgia spikes of 15%–25%) require that Southeast hotel underwriters apply more rigorous expense stress-testing than at any point since 2019. Wage growth remains a structural margin constraint, particularly in coastal Florida, urban Atlanta, and Nashville. Sponsors with disciplined revenue management, technology-enabled operating efficiency, and credible cost-control execution histories will continue to differentiate on lender pricing and on equity-partner appetite.

Cornovus View — Capital Strategy Implications

For Southeast hospitality sponsors evaluating Q2 2026 capital deployment, four strategic considerations remain central. First, the CMBS maturity wave continues to produce acquisition opportunities at acceptable going-in yields, but underwriting must reflect post-rebound RevPAR norms rather than 2021–2022 surge assumptions. Second, PIP-driven debt restructuring will continue to dominate refinancing flow through 2026, favoring bridge, mezzanine, and SBA 504 structures for capital-intensive renovations. Third, well-located full-service and upper-upscale assets in Atlanta, Miami, Charleston, Nashville, and Raleigh-Durham continue to attract the most aggressive lender competition, while limited-service assets in oversupplied submarkets require additional sponsor equity and more creative debt structures. Fourth, sponsors with diversified Southeast portfolios are well-positioned to execute portfolio-level recapitalizations during H2 2026 as cap rates compress and the institutional bid re-engages.

← Return to Hospitality Market Updates | Explore CRE Financing Hub →

Start a Hospitality Financing Request →