Hotel Cap Rates: Full Service vs Limited Service
Hotel cap rates run about 8% to 8.7% in 2026 surveys, the highest of the major property types. Full vs limited service, how hotel NOI works, and value at each rate.
By the CapRateCalculator.co team
Hotel cap rates run about 8% to 8.7%, the highest of the major commercial property types. HVS puts stabilized hotels at 8.0% to 8.5%, with an industry average near 8.5% and first-quarter 2026 deals averaging 8.6%. The USRC mid-2026 hotel investor survey split it by type: full-service hotels at 8.0% and limited-service at 8.7%.
Hotel cap rates by type
| Type | Cap rate | Source |
|---|---|---|
| Stabilized hotels overall | 8.0% to 8.5% | HVS, May 2026 |
| Full service | 8.0% | USRC mid-2026 survey |
| Limited service | 8.7% | USRC mid-2026 survey |
HVS expects average cap rates to rise in the second half of 2026. The USRC survey had limited-service rates 20 basis points lower than before and full-service flat.
Value at hotel cap rates
| Cap rate | Value of $2,000,000 NOI |
|---|---|
| 8.0% | $25,000,000 |
| 8.5% | $23,529,000 |
| 8.7% | $22,989,000 |
Why hotels trade at higher cap rates
A hotel’s lease is one night long. Revenue per available room, or RevPAR, moves with business travel, tourism, events and new supply, and it can fall quickly in a downturn. Operating costs are heavy: housekeeping, front desk, food and beverage, franchise fees and a management company. Buyers ask for more yield to carry that risk.
Full-service hotels have restaurants, meeting space and more staff. Limited-service hotels are simpler to run, which is part of why their cap rates moved differently in the 2026 surveys.
How hotel NOI is calculated
Hotel statements follow their own format. Start from total revenue, subtract departmental costs, undistributed operating expenses, a base management fee and fixed charges like property taxes and insurance. Most investors then deduct a reserve for furniture, fixtures and equipment, often around 4% of revenue, before arriving at the NOI they cap.
Leaving out the management fee or the reserve can overstate NOI by several percent of revenue. That is a bigger error than a quarter point of cap rate. The pro forma cap rate guide covers how to check projected income, and the cap rates by property type guide shows where hotels sit against everything else.
Sources: HVS U.S. Market Pulse, May 2026, which also reports the USRC mid-year 2026 hotel investor survey.
Frequently asked questions
What is a typical cap rate for a hotel?
About 8% to 8.5% for stabilized hotels, according to HVS, with deals in the first quarter of 2026 averaging 8.6%. The USRC mid-2026 investor survey put full-service hotels at 8.0% and limited-service at 8.7%.
Why are hotel cap rates higher than other property types?
A hotel is an operating business. Rooms are rented nightly, so income moves with travel demand, and labor, management fees and brand standards take a large share of revenue. Buyers want a higher yield for that volatility than they need for an office or apartment building on long leases.
Is hotel NOI calculated differently?
Hotel NOI is usually taken after a base management fee and a reserve for furniture, fixtures and equipment, often around 4% of revenue. Check whether a quoted NOI includes both before comparing it with a survey cap rate.