Hotel REITs passed Go. Is it time to collect?

Many of you already know this, but one of my favorite childhood boardgames was Monopoly.

I loved everything about it: buying the properties. Building the houses. Adding hotels…

And collecting as much rent as I possibly could.

Of course, Boardwalk and Park Place cost the most, both to buy and to land on. The same went for putting hotels on them.

Knowing that, some players put themselves in pretty silly positions to gain those properties. They’d spend their last dollar to buy them up. Or they’d turn down every other option on the board just to have enough money for Boardwalk and Park Place – if they were lucky enough to land on them.

That kind of strategy usually doesn’t end well.

After more than three decades investing in commercial real estate (CRE), I've seen enough to recognize that adults too often treat the real world the same exact way. We see something attractive, then go overboard trying to make the most of it.

It’s happening right now in the hotel sector, which has been on a remarkable winning streak. Data from iREIT® + Hoya Capital shows that the publicly traded hotel real estate investment trust (REIT) sector has gained 53% year to date.

That’s impressive, especially when you consider that three of them – Service Properties Trust (SVC), Braemar (BHR), and Ashford Hospitality Trust (AHT) – have actually fallen more than 40%, weighing down that average. Plus, REITs in general have only gained 11% this year.

It’s true that hotel stocks were pretty unloved in 2025 and that their fundamentals have improved in 2026. So they had some catching up to do.

But just like in Monopoly, the price you pay matters. A good thing is only a good thing under the right conditions.

Otherwise, it can cost you the game.

Hotel REITs don’t actually own hotels as a general rule. They rent them out to big-brand hotel names like Marriott International (MAR), Hilton Worldwide (HLT), Hyatt Hotels (H), and InterContinental Hotels Group (IHG).

These companies have trended toward an asset-light business model. It’s like playing Monopoly in that they don’t have to worry about construction fees, property purchases, or major renovation costs.

Yes, they pay to use the buildings they operate out of, but they have to take a lot less debt on that way. So this setup tends to work well for them, especially when people are under the influence of the travel bug.

Which they certainly seem to be right now. That’s why Marriott was able to report an 8% increase in Q3 revenue growth. Revenue per available room (RevPAR) rose 6.5%, and it raised its full-year outlook to 4.5%–5%.

Hilton, meanwhile, achieved 5.8% RevPAR growth, with management and franchise fees climbing an impressive 9.5%. And Hilton opened more than 180 hotels in Q3 with a development pipeline that now exceeds 543,000 rooms.

Hyatt was quite the standout, too, with RevPAR increasing 7.2% and gross fees jumping 15.2%. While IHG’s global RevPAR grew 5.3% and 6.9% in the U.S.

Clearly then, business travel and group bookings are strengthening. It’s therefore easy to conclude that, if hotels are doing so well, so are the landlords they’re renting from.

That’s not automatically untrue. But it’s also not automatically true since Marriott and its competitors all collect fees.

Whereas hotel REITs own real estate. And that is quite the distinction to understand.

Because they own physical properties, hotel REITs shoulder the costs of insurance, property tax, renovations, fixtures, equipment – and, again, debt.

My regular readers know I like real estate ownership. But hotels can be tricky.

They don’t get to collect predictable contractual rent checks under long-term triple-net leases. Their cash flow can change on an almost daily basis as occupancy, room rates, and operating expenses fluctuate.

And that’s across the affordability board. It applies equally to:

According to iREIT® + Hoya Capital, Pebblebrook generates an average room rate of $320, Braemar Hotels commands near $400, and Apple Hospitality comes in at $160.

But here's something else you need to know about hotel REITs: Higher rents don't necessarily translate into higher profits.

Take a luxury hotel charging $400 per night. It could easily rack up higher costs than a limited-service hotel charging $160 on everything from employee pay to amenities. Moreover, those expenses don't always decline proportionately when bookings decrease.

That's why I scrutinize their margins, capital expenditures, cash flow… and balance sheets.

It only takes one bad Monopoly roll to wipe you out if you’ve leveraged all your properties. And some hotel REITs play a very similar game with theirs.

Not all of them, mind you. Host Hotels, for instance, has debt equivalent to 2.7x EBITDA with just 0.6% of its debt tied to variable interest rates. But then you have:

That’s not an abject death sentence. But since hotels have to continuously find new customers, it can make things much more difficult when the economy starts to slow.

Investors definitely can make money on hotel REITs, as our small-cap focused Wide Moat Confidential members know. That’s where we identified Chatham Lodging Trust (CLDT) as a top investment idea for 2026.

And, man, were we right. The stock has surged a whopping 134% year to date.

Chatham has a debt equivalent to 3x times EBITDA, making it pretty conservative in the leverage category among its peers. And, for the record, it focuses on reasonably priced lodging properties. So it’s hardly a “Boardwalk” property play.

But we weren’t looking for Boardwalk. We were looking for overlooked companies with attractive fundamentals and significant upside potential.

That's what Wide Moat Confidential is all about.

Of course, Wide Moat Research in general also acknowledges that past performance is one thing. It doesn’t guarantee anything going forward – especially for an investment that’s run up so far so fast.

Sometimes the smartest move in Monopoly, as in real life, isn’t buying another hotel. Sometimes it’s knowing when to save your money for better plays ahead.

As shown above, Chatham isn't the only hotel REIT that’s delivered exceptional returns this year. It’s clear that investors are increasingly optimistic about the larger sector’s trajectory.

However, that doesn’t mean they’ll keep climbing quite so nicely from here. Or at all.

I'm reluctant to chase any asset or asset class after such a powerful rally. And that’s particularly true when it’s so exposed to economic cycles and weighed down by leverage.

Never forget that the secret to winning Monopoly isn’t owning every property on the board. Or even holding the most expensive ones.

It’s knowing what to buy and when.

Knowing that, rest assured that I'm keeping an eye on Boardwalk and Park Place. But I only want them at the right price.

Until then, I’ll be paying just as much attention to St. James Place, Illinois Avenue, and Marvin Gardens. Because there’s plenty of inexpensive investment opportunities out there if you’re only open to the possibilities.

Happy SWAN investing,

Brad Thomas
Editor, Wide Moat Daily