The following is a guest post from Russ Flicker, co-founder and managing partner at AWH Partners. Opinions are the author’s own.

Heading into 2026, many hospitality investors entered the year with a familiar set of assumptions: interest rates would remain elevated; sellers would continue to resist price discovery; and transaction activity would improve only gradually.

Some of that proved right. But the first half of 2026 also delivered several surprises — which will likely impact the rest of the year.

1. Buyers and sellers are finding common ground

One defining story from the first half of the year was how many sellers demonstrated a willingness to accept the new valuation environment.

For three years, owners held 2021-era pricing expectations, absorbing higher debt service deferring capital projects rather than accepting market reality. So far in 2026, we have witnessed a pivot.

The catalyst was not one event, but rather an accumulation of pressure: maturing loans with limited refinancing options, cash flows insufficient to service debt and equity partners unwilling to fund ongoing shortfalls. According to Trepp, nearly 70% of the $18.7 billion in hotel CMBS loans maturing in 2026 carry floating rates — loans originated when the cost of capital looked very different.

For disciplined buyers, the result has been a more actionable pipeline than expected. Deals that had been discussed theoretically for months began becoming real.

That dynamic should continue into the second half, though unevenly. Some of the earliest sellers were likely the most pressured, and others may still hold out for better conditions. But the broader shift is clear: Price discovery is no longer hypothetical. The market has begun to move, and sellers who are realistic about value will find liquidity. Those anchored to outdated pricing may continue to sit on the sidelines.

2. Lenders got serious about final resolution

Lenders pivoted toward forcing a final resolution on troubled hotel loans. The conventional wisdom heading out of 2025 was that lenders would continue to extend and pretend while interest rates remained elevated, particularly for assets with decent operating performance but challenged capital structures. In practice, balance sheet pressure, regulatory scrutiny and the sheer number of upcoming maturities changed the equation.

Special servicers, regional banks and some debt funds began pushing more decisively toward outcomes. That matters because lender-driven transactions are different from voluntary sales. They tend to come with greater urgency, more realistic expectations and a premium on certainty of execution.

For buyers with capital ready, diligence teams in place and the ability to manage complexity, the first half created opportunities that were not widely available a year ago.

In the second half, lender-driven activity should remain an important source of deal flow. The best opportunities may not come through traditional, broadly marketed processes. They may come through complicated situations where speed, credibility and operating capability matter as much as price. Investors who can move quickly without cutting corners will be best positioned.

3. Operating fundamentals meaningfully outperformed analyst expectations

Perhaps the most underappreciated surprise in the first half of 2026 was the resilience of operating fundamentals.

Entering the year, market analysts and investors worried that softer leisure demand, uneven corporate travel recovery, inflation fatigue and broader geopolitical uncertainty would weaken pricing power.

But that was not the case in many high-barrier, supply-constrained markets with diversified demand drivers. Occupancy remained resilient and rate discipline largely held. Performance was not uniform across every geography or asset class, but the broader picture was not one of sector-level distress — it was one of strength and recovery.

In the second half, operating performance will be the key filter. The most compelling opportunities will likely be assets with solid fundamentals but impaired capital structures. Investors who can identify that difference — and avoid mistaking cheap pricing for real value — will have an advantage.

4. Bifurcation of quality became more extreme, not less

Finally, many expected that as the market thawed, capital would gradually move down the risk curve. Trophy and luxury assets would remain competitive, but investors would eventually rotate toward value-add and repositioning opportunities. Instead, the first half only intensified that bifurcation.

Institutional and foreign capital continued to pursue trophy and luxury assets aggressively, keeping pricing elevated and yields compressed on a relative basis (though still attractive on a historical basis). Meanwhile, value-add, operationally intensive and repositioning opportunities remained overlooked, under-appreciated and under-valued by many investors — not because the fundamentals were absent, but because the execution risk was harder to underwrite.

That gap may well persist in the second half and into 2027, requiring sellers of assets that require repositioning to reset their pricing expectations. Clean assets with straightforward business plans will continue to attract capital. The more interesting opportunities may sit in the middle of the market: hotels with strong real estate, fixable operations, deferred capital needs or challenged ownership structures. 

While the first half of 2026 did not mark a full recovery in hospitality transactions, it did show welcome progress. For the rest of the year, the market is likely to remain active but uneven, continuing the need for selectivity and restraint, but also a willingness to move with speed when the right opportunities arise. Sellers are adjusting, lenders are becoming more decisive, macro uncertainty is being absorbed, operating fundamentals are proving durable — and the gap between simple and complex deals is widening.

The challenge today is the mismatch between today’s capital markets and yesterday’s capital structures. For investors prepared to navigate that mismatch, the second half of 2026 may offer some very compelling opportunities.