The Modern Hotelier #260: Hotel Deal Trends, Disconnects Between Buyers & Sellers, and Market Outlook | with Hunter Advisors
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David Millili: Welcome to a special episode of The Modern Hotelier Hospitality's Most Engaged podcast. We're here at the 2026 Honor Conference in Atlanta, and I had the chance to sit down with some of the hunter team that talked about what's going on in the industry with both buyers and sellers. From deals you're currently working on, what are you seeing in the market right now that owners and investors might not fully realize right now? 
Mayank Patel: I think what's in the future, like if we take a step back to 2025, we had so many issues throughout society and economic impact in terms of hospitality. We started with Liberation Day, we started with Doge, you know, following in the spring, we had ice, which did impact personnel, line level employees, and we had a 43 day government shutdown. So I think what we don't know is what we can't see perfect example is I was launching a deal in January and someone came to me and was like, what do you think about timing?
This is before any noise. And this was the second week of January and I said, look, not to be self-serving, but I think we go now because we don't know what the future holds. So I think that that ambiguity of not having a crystal ball is really what the issue is because once we have that conversation with that particular group, that weekend we were in Venezuela and we took Maduro, I think the following week. There's an investigation into Nepal. So these are all these little ebbs and flows that are shifts. And now within the, I guess now we're two weeks into this war, there are some knee-jerk reactions. So the things that we can't see, I think that the vagueness that is out there and just the sudden ebbs and flows that really impact our, our day to day because we are a nightly business in the hospitality industry.
Sophia Pittaluga: Based on what I'm seeing in the market right now, what I don't think that owners and future owners really realize yet is that while there are some difficult things happening in the market, there's a lot of optimism too that that is yet to be realized. I cover Florida, there's a lot of growth happening, and a lot of times an investors gonna come to me and say, Hey, but this issue is happening here or there. I'm like, okay, it's not Florida. Like you gotta look at everything, very sub-market street corner specific today. So I'd say like that's something that they're not necessarily seeing eye to eye on owners sometimes would say the same, that it's not relevant. But generally speaking, there's some macroeconomic things that are factors here.
Kami Burnette: Owners and investors are trying to understand what growth in the market is gonna support their investment going forward. And there's a lot of uncertainty that exists as a result of macro related issues. And then when you look. You know, in the local market where they exist, how their demand patterns are changing, they're just trying to get their arms around where the growth is gonna come from and how that's gonna be projected going forward.
David Millili: What are the biggest disconnects between buyers and sellers right now? 
Mayank Patel: I think there's a lot, right? I mean, obviously everyone's cost of capital is a little different. We've seen interest rates drop last year, which has been a little bit of a boon to kickstart some of the transactions. I think what we see also is, again, in insurance what we see, real estate taxes. Those have been sort of the fixed costs that have impacted our industry over the last two to five years. Dramatically, we're seeing a pullback in insurance now slightly. I think we've sort of stabilized. Insurance is somewhat relatively the same, but we do see upon sale, you see this dramatic jump if you're in certain states like Florida especially.
So right now I think it's probably those fixed costs, you know, just basically even if you look at sort of line level employees. Your rooms cost, et cetera. Everyone's model's a little bit different from our institutional sellers to our individual or regional owner operators, they can manage a little bit more efficiently and hands-on, but I think that's the biggest disconnect when you take a p and l from a third party, a larger institutional owner, and you have to say, okay, here, here we go. And you're really trying to buy into the idea of like, we can streamline in these efficiencies historically, you could do that very well. Now I think that gap has gotten smaller because just the cost have rise astronomically in the last couple years. 
Kami Burnette: Yeah, the biggest disconnect is likely the renovation. They're a lot larger than when buyers originally took on the project or what they anticipated those costs would be. So when it comes to negotiating the, the transaction, there's a spread between what a buyer thinks they can execute at from a price standpoint versus what a seller thinks that will cost, and that that typically becomes the linchpin of getting the deal executed successfully.
David Millili: If we're sitting here at Hunter next year, what do you think will have changed most in the hotel investment landscape? 
Sophia Pittaluga: I'm optimistic that when we're sitting here next year, what would've changed the most is the financing, right? I focus a lot on kind of middle market deals. Smaller deals. That's where it's hard to get financing right now. Not necessarily hard, but the debt's not the cheapest. And my sellers have really strong expectations on valuation of their properties. So the yield to the leverage ratios, there's a bit of a gap there, and I'm optimistic that that's gonna come in significantly and we're gonna see less negative leverage come 2027.
Mayank Patel: Yeah. Someone sound like a broken record, but I do think AI is gonna have a lot more impact. We were already hearing it, right? We, we can feel it. I've, there was a contract I was negotiating and I could tell these buyers had literally not consulted an attorney but had run this through AI and you had five different partners and I, neither one or any of those guys were attorneys.
And it just felt like, okay, we're already sort of as a standstill because now you have ai, which is great. I think it's amazing for the industry, but I think we're gonna see more and more in terms of underwriting. I think an operational model, I think is everyone sort of latches on to, hey, this can actually help. And versus being somewhat scared of it, right? I think we're always a little bit nervous about adapting, you know, what can AI do? Is AI gonna take my job? Things like that. But I think in the long term. I mean, it's been helpful to me. I mean, I think just even to clarify a little bit of my writing in terms of, if you're just writing a quick response, you're like, you know what, lemme freshen this up a little bit and send it through chatGPT.
And I'm not afraid to admit that because I think we can all use a little polishing here and there. But I do think it's gonna have more and more of an impact, especially when you may not have the depth, the bench of a team to help you underwrite or sort of asset manage. And I think if you can just tweak a couple things here with ai, I think it's gonna help.
Kami Burnette: We're starting to see more transactions last year. Overall transaction volume was down. But we're seeing it start to tick up. And I think a big part of that is owners, um, assessing their portfolio to determine which assets are part of their core strategy versus those that are not, and then executing on a plan to dispose of those assets. And we're in the middle of a, a period of time where everyone's trying to reconcile that question in their own way. But between now and next year, I think a lot more people will have come to a decision on what they need to do with those assets and move forward accordingly. 
David Millili: What's one deal trend you're seeing right now that tells you where the industry is heading?
Mayank Patel: Yeah, and I think we go back to the sort of, I don't wanna call it ambiguity, but again, there's that uncertainty, right? And we are seeing more and more deals that are, I think people, buyers are nervous about. There's not a lot of commitment level in terms of like, again, I can just a little fluctuation at NOI Geopolitics in terms of what's happened in the last two or three weeks. All that does cause a kneejerk reaction. So, we are seeing sort of, again, it is a nightly business that I mentioned. It's not a long-term lease as a multifamily or office. So something can change dramatically in terms of, what is your occupancy overnight.
And so we do see that in terms of day to day. Like what is in the headlines. Like, you know, we have a Wall Street Journal on our counter every morning we walk in, you read the headlines, all right, what is that? All right, how is this gonna impact us today? And the fear is like, it's out there. Like before news, you watch the six 30 news with your family and that was it. Your news is there in the morning. As soon as you open up your phone, you CNN, Fox News, whatever it may be. And so it is real time data and time reactions, and I think that has an impact. Again, gas prices immediately became a concern over the last two weeks. And so people pull back a deal that we're working on. We're like, well, we're a little nervous about what's gonna happen in the spring, spring break, summer travel families. And already that is somewhat softened. Like, you know, we saw gas prices in Atlanta, I think rise 10 to 15% immediately. And so that's been something of just that knee jerk reaction to what's happening in the news cycle that can have an, again, immediate impact on our industry. 
Sophia Pittaluga: One deal trend I'm seeing is that everybody wants luxury or lifestyle. I'm really optimistic of what that's gonna do to the market. I fall in the millennial bucket still, and I enjoy more lifestyle, um, properties. So seeing that become more and more scalable business for institutional investors is something I'm really excited about.
Kami Burnette: This is a tough one because one deal trend doesn't necessarily point to us going in the right direction. But maybe there's a silver lining there. We're seeing less people participate on the buy side. I think people are being a little bit more discerning with what assets they, uh, would like to pursue as a part of their overall strategy.
So on one hand, less participants might not be a good thing. You know, maybe quantity is better than, or quality is better than quantity in the bigger picture, so that those people that are participating in these transactions are gonna be the ones that have the highest level of and ability to execute.
David Millili: Why is this conference so important to the industry? 
Sophia Pittaluga: I mean, look, hey, they just got off the stage for Main Street Talks and Wall Street talks, and I think that's what's really important about Hunter Proud to be a part of this company that's known for connecting Wall Street and Main Street biased right?
Mayank Patel:  But I go to all the conferences, the four major conferences in oa, and this is just a perfect mix amalgamation of, you know, regional ownership. Guys who are, you know, maybe one or two hotel groups, you know, we saw the panel earlier. You guys, you know, you have Blackstone on there, noble. So you have large private equity, large REITs that all here and it's just a great place to sort of, again, you can meet somebody here, which is fantastic. But again, you could have two or three hotels you maybe just throwing out, we have great college students here who are learning and et cetera. So it is fantastic in terms of, it's not just Wall Street in terms of, uh, NYU, it's just not West Coast, you know, large private equity at Alice. It's just a perfect mix and I think, you know, again, Bob Hunter started this for that same purpose and I think it's carried on and it's just sort of great to see.
I mean, we've grown, I've been with Hunter for 20 years, and you've just seen how this conference has grown, this quality of the speakers, the quality of the atmosphere, and just everything else that we have to offer. I think it's fantastic bias, but fantastic. 
Kami Burnette: Part of the DNA of the Hunter Conference has been bringing the regional developer together in a forum that allows them to discuss deals, right? To bring them together with other folks within the industry, whether it be, uh, lenders, whether it be vendors, et cetera in a approachable environment. And as time has gone on, we've figured out that a lot of other people like that type of environment as well. And so it's grown to something that's bigger than a regional event. Where we have people flying in from all across the country. And those people are not just the regional developers, they're also private equity, they're also you know, large public REITs, wall street funds, et cetera. So it's grown in based on just the fundamental desire to get people together in an approachable environment to discuss deals. 
David Millili: And that does it for another episode of The Modern Hotelier Hospitality's Most Engaged Podcast. Whether you're watching or listening, we appreciate you. Hope to be with you again soon, and want to give a special thanks to Hunter for having us attend this conference. Thank you.