Walker & Dunlop has released its first Hospitality Outlook report, “Capital, Divergence, and the Search for Durable Returns,” outlining shifting investment patterns in the U.S. lodging sector.
According to the report, capital is increasingly focused on luxury and upscale leisure assets amid elevated financing costs and tighter underwriting standards. The report also identified a widening performance gap across hotel assets, with outcomes increasingly driven by property quality, location and traveler demographics rather than broader market trends.
“Hospitality is no longer a market where broad assumptions drive performance, however U.S. Q1 RevPAR growth of 3.8 percent was well above expectations,” Jay Morrow, senior managing director of Capital Markets Hospitality Advisory at Walker & Dunlop, said in a statement.
The report also notes that capital allocation is increasingly concentrated in a narrower set of submarkets and assets. The outlook cites continued fragmentation in travel demand across leisure, business and group segments, with hotel performance becoming more closely tied to localized demand drivers and operational execution. It also highlights ongoing pressure on margins, with operators increasingly adopting lean staffing models and artificial intelligence tools to offset labor costs.
The Bethesda, Md.-based firm also noted growing demand for specialized advisory services in response to the more selective investment environment. Walker & Dunlop reported that its Capital Markets Hospitality Advisory team completed nearly $2.1 billion in hospitality transactions in 2025.
Walker & Dunlop recently expanded its hospitality team with the addition of managing director Evan Hurd and director Max Chipouras in Nashville. Both focus on hospitality investment sales, equity advisory and structured capital solutions for hotel and resort assets.