Last week in New York, hospitality and lodging industry leaders convened at the 2025 NYU International Hospitality Investment Forum (IHIF) to assess the current state of the industry. Panels of economists and industry stakeholders emphasized how current macroeconomic complexities are reshaping hospitality capital markets and investment strategies for the remainder of 2025 and beyond.

The first quarter of 2025 saw increased transaction volume across the industry, but various challenges have tempered expectations for the remainder of the year. Economists generally expect the imposition of broad-scale tariffs announced in early April (described by one speaker as the largest trade shock in a century) to exacerbate persistent inflationary pressures, which already outpaced ADR growth over the last two years. The tariff announcements and resulting uncertainty have also led to lower consumer sentiment overall, and a significant decrease in international travel to the United States has been well publicized.

There are, however, several reasons to remain optimistic. First, despite a sharp decline in consumer sentiment over the last six months, consumer spending remains robust—a continuation of a notable divergence between those two metrics over the past few years. Second, inbound international tourism largely rebounded in April after the March lows, leading some presenters to theorize that the timing of the Easter holiday (a popular time for European tourists to travel) was the primary driver instead of international backlash to tariff policy. Third, the ongoing housing crisis and sustained remote work flexibility continue to boost demand for extended stay hotels, which are performing exceptionally well. Finally, in keeping with a consistent post-COVID trend, surveys continue to reflect all-time high interest in travel, both domestically and abroad, with households reporting a desire to take more trips and spend more on them. 

In the current economic environment, speakers noted that the financial engineering used to generate returns over the last decade is giving way to fundamentals-based value creation. Success requires more selective deal-making and often a healthy dose of creativity. Bridging the gap between buyer and seller expectations may require earn-outs or similar structures, and filling capital stacks may require tapping into an increasingly deep pool of private credit. Where available, adaptive reuse and other tax incentives may make certain deals possible that otherwise would not be. It also remains to be seen which industry operators can best leverage the emerging use of AI in booking travel, a practice that remains a small fraction of overall activity, but which saw a 400% increase in the last 9 months alone.

Ultimately, despite the near-term headwinds, IHIF participants expressed cautious optimism about the medium- and long-term industry fundamentals. “Uncertainty” may have been the word of the week, but there are few industries over the last decade that have proved more resilient in the face of uncertainty.