Hotels used to be viewed by institutional investors as the volatile cousin of commercial real estate, seeing it as a sector able to generate strong returns but having a huge amount of operational risk compared to others such as offices, retail or logistic. Fast forward past the travails experienced by retail and offices in (semi)recent years and now it seems they’re seeing the light.
At the OpRE Summit in London earlier this week, investors, lenders and operators repeatedly pointed to a growing institutional acceptance of hospitality, with hotels viewed more and more as a core component of modern real estate portfolios. What’s more, they added that other operational real estate sectors such as student housing, build-to-rent (BTR), retirement living and extended are borrowing directly from the hospitality playbook - and vice versa.
180° turn
So why the about face?
Lauren Okada Young, managing director – real estate at Brookfield noted that investors are increasingly drawn to sectors where income can be adjusted quickly in response to changing market conditions.
“We've definitely observed a step change in the desire of the consumer to travel and a new normal in terms of valuing experiences. Couple that with the disruption to the other sectors and uncertainty, investors are trying to focus on unlevered return and yield, where you have the opportunity to reset your rent more regularly. These more operational sectors really lend themselves well to being in control of the yield and the return,” she said.
Her comments align with JLL's Global Hotel Investment Outlook 2026 which noted a positive performance in global hotel transaction volumes in 2025, with direct investment rising 22 per cent from the 2023 trough amid investors' search for yield and renewed confidence in hotels' resilience. This is as the report notes that international tourist arrivals surpassed pre-pandemic levels in 2025, with global air passenger volumes forecast to grow a further 4.9 per cent in 2026.
Saurabh Chawla, vice president at Westmont Hospitality added the investor base itself has evolved, noting that institutions which once grouped hotels under alternative investments increasingly have dedicated hospitality investment teams.
The blueprint
While investors are becoming more comfortable with hotels, other operational real estate sectors are borrowing from hospitality's book. Okada Young highlighted how hotel operating knowledge influenced its expansion into European purpose-built student accommodation (PBSA).
“When we entered the PBSA market on the continent and we were trying to build the platforms and the teams, there weren't a lot of people that had already worked in PBSA. So we had to look elsewhere to figure it out and we really drew upon a lot of the expertise in the hospitality sector,” she noted, adding that areas such as revenue management, customer acquisition, loyalty strategies and operational efficiency are ones where the dots could be connected.
But while convergence in hotels, student housing, retirement living and BTR is accelerating, differences remain, and the answer to the debate around whether these sectors are becoming a single operational real estate category appears to be both yes and no.
Operationally, there is growing overlap as investors share best practices across sectors. Financially, however, there are important distinctions.
Emma Young, head of hospitality, healthcare and business development at AIB UK, stressed lenders still view the sectors differently.
“There are definitely convergences and there are similar themes that you pull out of them but there are also some distinct differences in terms of the income and the volatility,” she said.
The extended stay bridge
While risk continues to be assessed differently depending on whether income is generated from nightly hotel stays, annual residential leases or multi-year retirement living arrangements, if there’s one asset class that may best illustrate the convergence between hospitality and living, it may be extended stay.
Extended stay properties combine residential-style accommodation with hotel services and amenities, creating a hybrid product that appeals to both guests - who want flexibility and convenience - and investors seeking yield without taking on the same level of volatility traditionally associated with hotels.
Jackie Brown, senior regional director for North & West Europe at Wyndham Hotels & Resorts, said many entrants to the segment are traditional real estate specialists who have only dabbled in hotels and are therefore seeking partnerships with those who have relevant expertise.
Extended stay operators can also balance short, medium and long-term demand under a single roof. William Kirkpatrick, head of hotels & extended stay at Newmark pointed to operators such as Edyn which have refined the ability to “yield and manage those three businesses under one roof”, creating an operating model that blends flexibility with the stability of longer-stay accommodation.
Abundance of capital
Despite ongoing macroeconomic uncertainty, panellists were notably positive about capital availability, with AIB’s Young noting that both lenders and investors remain highly active across hospitality and living sectors.
“There is a lot of liquidity out there at the moment. All these categories that we're talking about today of living and hotel are all very much in favour with both investors but also with lenders.”
This is as JLL notes 2026 is expected to see the deepening of a new hotel investment cycle, supported by strong debt markets, substantial dry powder and growing investor confidence in hotel performance.