Hotel REIT Gross Asset Value Index Update – September 2026

September 28, 2026

Hotel REIT Values Rise as Income Growth and Cap Rate Compression Align

Capright’s Hotel REIT Gross Asset Value Index shows a strong first half for hotel valuations, but shifting interest rates could change the picture heading into year-end.

Capright has released its Hotel REIT Gross Asset Value (GAV) Index, providing an updated look at hotel valuation trends, operating performance, capitalization rates, and value per room across an 11-REIT portfolio.

The mid-year results tell an encouraging story: hotel values moved meaningfully higher during the trailing 12 months ended June 2026, as improving hotel-level net income and cap rate compression worked together to support valuations. But with interest rates and energy costs rising after the measurement period, 2H26 may look considerably different.

Hotel REIT Values Post Their Strongest Advance of the Cycle

The latest Capright Hotel REIT GAV Index registered its strongest advance of the current cycle.

On a trailing-12-month basis:

• The static cap rate index increased 6.6 points to 123.1.
• The market cap rate index increased 9.8 points to 119.2.
• Market-basis value per room increased 9.0% to $355,588.
• Hotel-level net income increased 5.4%.
• The applied market cap rate compressed 25 basis points, from 8.25% to 8.00%.

That combination is particularly significant for hotel commercial real estate valuation. In 2023 and 2024, cap rate expansion offset income growth. During the latest period, however, income growth and cap rate movement both supported hotel values at the same time.

The Bigger Story: Income Improved Without Meaningful Revenue Growth

One of the most important findings in Capright’s latest hotel market analysis is where the improvement came from.

RevPAR was essentially flat, increasing just 0.3% from $174.49 to $175.01. ADR declined 0.9% to $240.43, while occupancy increased 89 basis points to 72.8%. Meanwhile, hotel-level net income grew 5.4%, driven largely by a 3.9% decline in the expense residual.

In other words, this was primarily an expense and operating-efficiency story, not a revenue-growth story.

The portfolio filled more rooms at a slightly lower average daily rate while keeping overall revenue relatively flat and operating more efficiently. That distinction matters when evaluating whether recent gains in hotel asset values can be sustained.

Cap Rates Shift From Headwind to Tailwind

Cap rates also played a major role in the latest valuation movement.

The applied market cap rate compressed from 8.25% to 8.00%, a 25-basis-point change worth approximately 3.0% of value on its own. According to the index, this marked the first period since 2018 in which the rate assumption added to value rather than subtracting from it.

Combined with higher net income, that pushed market-basis value per room up 9.0% to $355,588, the largest single-period increase in the series outside the post-COVID rebound. On a static cap rate basis, value per room still increased 5.7%.

The difference between those figures helps illustrate just how influential capitalization rate assumptions can be in hotel valuation.

A New Regime for Hotel Valuation?

Capright characterizes the latest period as the beginning of a fourth regime in the index: “rate-assisted, cost-led.”

From 2016 through 2019, the index reflected an income-led recovery. The 2019–2022 COVID period was largely a cost story, followed by a cap-rate-suppressed environment from 2022 through 2025.

For the 2025-to-mid-year-2026 period, income growth and rate compression moved in the same direction for the first time in the series. The result was a 9.0% increase in market-basis value per room.

There is an important caveat: because RevPAR remained essentially flat, the income improvement depends heavily on expense performance. If expenses begin moving higher, some of the recent valuation improvement could be challenged.

📬 Let’s Talk

At Capright, we are uniquely positioned to support institutional investors, operators, and developers navigating this evolving environment. As an independent valuation and advisory firm, we provide clarity, accuracy, and confidence, especially where the stakes are highest.

If you’d like to discuss the findings or need support with your commercial real estate valuation or strategy, reach out to: