🔒CT hotel sales rebound as investors return to market

Connecticut’s hotel investment market has regained momentum after two sluggish years in 2023 and 2024. Brokers and market analysts say improving hotel performance, the need to address deferred renovation projects and changing market conditions have helped revive deal activity. Hotel sales are increasing nationwide as investors adapt to today’s higher borrowing costs rather than waiting for interest rates to fall, said Didio Pequeno, director of hospitality market analytics for commercial real estate data and analytics firm CoStar Group. Jerry Swon, senior managing director of investments and senior director of Marcus & Millichap’s National Hospitality Group, said rising interest rates temporarily stalled sales activity by widening the gap between what buyers were willing to pay and what sellers expected to receive. As the market adjusted, sellers lowered their price expectations while buyers accepted the reality of higher borrowing costs. “People have been sitting on the sidelines and have had money that they’ve needed to deploy,” Swon said. “Transactions are happening again.”

Dip and bounce

Connecticut hotel sales slumped during the pandemic as occupancy and revenue fell sharply. In 2019, 26 hotel properties traded hands, while average revenue per available room (RevPAR) reached $73.19 statewide, according to CoStar Group. There were only 17 sales in 2020, at the height of the pandemic, as RevPAR dropped to $36.86. Hotel sales rebounded to 35 deals in both 2021 and 2022 before slowing to 21 in 2023 and 16 in 2024 as higher borrowing costs curtailed investment activity. Sales recovered to 29 deals in 2025 and are on pace for another strong year in 2026. Measured by dollar volume, the rebound has been even more dramatic. Through the first half of 2026, Connecticut hotel sales totaled about $125 million, roughly double the $62 million recorded during the same period a year earlier, according to CoStar. The $38 million sale of the Mayflower Inn & Spa in Washington, along with several other upscale hotel deals, helped drive the increase in dollar volume, Pequeno said. Another factor behind the increase in deal activity is a wave of renovations many hotel owners postponed during the COVID-19 pandemic. As travel collapsed, many national hotel brands delayed required property improvement plans, allowing owners to defer multimillion-dollar renovation projects. Those deadlines are now arriving, forcing owners to decide whether to invest additional capital or sell.

Gaurang “Gary” Patel, whose New Jersey-based Kautilya Group recently redeveloped a former East Hartford hotel into dual Marriott-branded properties, said many owners are choosing to sell rather than undertake major construction projects. “The assets need a lot of improvement,” Patel said. “Some people say that I do not want to get into the construction. I’m just going to sell it or pass my headache to somebody else.”

‘Old inventory’

Despite higher borrowing costs and rising operating expenses, industry leaders say Connecticut remains an attractive market for investors. Patel, whose group owns eight hotels, points to the state’s blend of business and leisure travel, along with relatively little new hotel construction. “There is a lot of old inventory,” he said. “And there’s a lot of hotels that are converting into apartments. So that brings more opportunity for the hotels to develop.” Swon said sharply higher construction costs have made new hotel development increasingly difficult to justify, making existing hotels more attractive acquisition targets while limiting future competition. Suzanne Cahill, executive director of the Connecticut Lodging Association, said the state’s hotel industry outperformed the nation last year. While national occupancy declined by about one percentage point, Connecticut occupancy increased by more than two percentage points, she said. “Connecticut is a small but powerful state,” Cahill said. “I’m excited about everything it has to offer.” Even so, operators continue to face pressure from rising labor, insurance and other operating costs, which have compressed profit margins despite improving revenue, she said.