Lodging/Resorts REITs: Focus on High Quality Assets in Prime Locations

Lodging/resorts REITs specialize in the ownership of hospitality properties, including hotels, resorts, and vacation rentals. These REITs generate revenue primarily by leasing their properties to hotel operators, who manage the day-to-day business of accommodating travelers for both leisure and business purposes. By investing in portfolios of high quality lodging assets in prime locations, these REITs position themselves to benefit during periods of strong economic growth and increased business and consumer spending.

In 2025, lodging/resorts REITs have returned -17.2% through March 31 due to concerns related to lingering inflation, softening consumer sentiment, and uncertainty about future economic growth. Over the past five years the FTSE Nareit Lodging/Resorts Index has provided a cumulative total return of 57.9%, with most of these gains coming during the initial recovery from the shock of the pandemic. Over the past three years the index has posted a total return of -20.3%.

As of March 31, the dividend yield of lodging/resorts REITs was 5.6%, compared to 4.0% for the FTSE Nareit All Equity REITs Index. The yield on the lodging/resorts sector trails only diversified and has risen from 5.1% at the end of 2024 owing to the negative returns the sector has faced in the first quarter.

In 2024, lodging/resorts REITs posted $2.2 billion in property acquisitions with dispositions of just under $1 billion. These figures represent a rise in acquisition activity from 2023 when lodging/resorts REITs were net sellers, acquiring $1.5 billion in properties while disposing of $1.7 billion.

FFO has rebounded from -$2.3 billion in 2020 to $3.7 billion in 2024. Dividends paid have also recovered from $1.3 billion in 2020 to $2.3 billion in 2024. These figures represented a dividend payout ratio of 58%, which leans towards the lower end on a sector basis. At the upper end, data centers pay out 98% and health care distributes 91%. The only sector with a lower payout ratio is telecommunications at 55%. As of the fourth quarter of 2024, Nareit’s REIT Industry Tracker indicates that the payout ratio of the FTSE Nareit All Equity REITs Index was 69%.  

$80 billion: U.S. lodging/resorts REITs owned $80 billion in total property holdings as of the fourth quarter of 2024, according to Nareit’s REIT Industry Tracker, and those holdings tended to skew towards more premium properties.

5%: As of the fourth quarter of 2024, lodging/resorts REITs had a debt to EBITDA of 5%, compared to the 6% of the FTSE Nareit All Equity REITs Index, according to Nareit’s REIT Industry Tracker.

2%: Lodging/resorts REIT share repurchases represented 2% of equity market capitalization in the fourth quarter of 2024, the highest percentage among REIT property sectors, according to Nareit’s REIT Industry Tracker.

Below is a list of Nareit member companies from the lodging/resorts sector.