Michael Bellisario, senior research analyst at Baird, joined the REIT Report to review the outlook for the lodging and hotel REIT sector in 2026, focusing on demand trends, the impact of major events like the World Cup, and strategies for maintaining occupancy and navigating market challenges.
Bellisario said the overall outlook for the sector for 2026 is “positive but muted,” following a tough 2025. The World Cup is expected to boost revenue this year, with Baird estimating it will contribute 75 basis points or more to REVpar for the year. “It’s going to be a tailwind. It's just a matter of how much and when do we see those bookings start to pick up,” he said.
Meanwhile, Bellisario pointed out that wealthy travelers are currently driving growth within the leisure sector, with high-end hotels performing better than economy and mid-scale segments. Higher-end establishments can charge more for additional services, he noted, such as dining and experiences, beyond room rates. This trend indicates a potential strategy for hotels to focus on non-room revenue streams.
Geographically, New York and San Francisco are on the mend, Bellisario said, with San Francisco “recovering off a very low base” and benefiting from a resurgence in conventions and technology spending. Maui has also rebounded well from past setbacks, indicating a robust recovery in tourism.
Bellisario noted that capital allocation strategies are focused on selling assets while waiting for favorable buying opportunities. “The capital allocation strategy is being patient. We've seen that from almost every company,” he said. “I would be surprised if the REITs are buying anything in the first half of 2026 because costs of capital are still elevated. The overly simplistic math doesn't really work. Some of them are buying back stock. They've pared that back a little bit too,” he noted.
As for the strategies being used by the most successful REITs to maintain and increase occupancy, Bellisario pointed to a renewed focus on group travel. When the transient guest base softens or the booking window shrinks, he said, “they want to build occupancy and they group up.”