M id A tlantic Real Estate Journal — May 2025 — 3
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M id A tlantic R eal E state J ournal
By Tyler Foresta & Joe Latina, SIOR, LMT Commercial Realty, LLC/CORFAC International Real estate slowdown in hospitality: A perspective on travel declines and investment hesitancy
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acroeconomic and geopolitical shifts have a direct im-
We are seeing this translate into longer listing periods, increased demand for conces-
citing political uncertainty, tighter visa regimes, and now, softening demand metrics. The Retail Leasing Dilemma Leasing retail space, espe- cially in hospitality-adjacent corridors, has become increas- ingly challenging and com- plex. Many retailers that once thrived on international tour- ism and business travel have shifted strategies or paused expansion altogether. Urban retailers that traditionally counted on hotel guests for foot traffic are now struggling with high costs and underwhelming sales metrics.
Moreover, prospective re- tail tenants are being much more selective and cautious. Many retail tenants are now requiring shorter lease terms, flexible exit clauses, and sub - stantial tenant improvement allowances (TIA). National credit tenants appear to be downsizing footprints or fo- cusing on drive-to suburban markets with more predictable customer flows. Local opera - tors, on the other hand, face their own set of hurdles; tight labor markets, inflationary input costs, and supply chain volatility—all of which make
committing to a multi-year lease in a softening urban core an unattractive proposition. From the landlord’s side, expectations haven’t always realigned with market reali- ties. Some are slow to adjust asking rents or are unwilling to accommodate the newer, more defensive lease structures that tenants are demanding. This mismatch often leads to longer vacancy periods and friction during negotiations, requiring brokers to step in as educators and mediators to bridge the gap between perception and continued on page 8
pact on com- mercial real estate, often materializing in the form of vacant prop- erties, stalled leases, and overly cau- tious, risk-
sions, aggres- sive repric- ing and much longer due diligence pe- riods, espe- cially for as- sets directly reliant on in- ternational
Tyler Foresta
Joe Latina
averse investors. The recent downturn in international travel to the U.S., as high- lighted by the U.S. Travel As- sociation’s latest data, presents a sobering reality for those of us working to place tenants and buyers in hospitality and travel-related business and real estate opportunities. Travel Contraction and the Real Estate Ripple Effect In March of this year, in- ternational arrivals to the U.S. experienced a 14% year- over-year decrease; this is not merely a tourism statistic—it’s a flashing red signal for the hospitality real estate sector. The sharp decline in travel from traditionally reliable feeder markets such as Canada (down 26%), Western Europe (down 17%), and Asia (down 25%) translate into fewer “heads in beds” and less foot traffic for urban core retail. The lack of robust travel de- mand to backstop income pro- jections has made hospitality investors’ appetites very tepid; this has many hotel operators pausing expansion, with many even considering disposition. This uncertainty has signifi - cantly affected the desirability, and in many cases, the value of such assets. When buyers are facing reduced revenue per available room (RevPAR) trends or when forward book- ings are down, as flagged by Hyatt and Host Hotels, many of these investors are taking a wait-and-see approach. Buyers Are Hesitant, Tenants Are Selective The current travel slowdown comes at a time when many institutional and private in- vestors are already reeling from higher interest rates and tighter lending and under- writing standards. With the hospitality sector now facing a projected $21 billion loss in travel-related exports and the U.S. now running an uncharac- teristic $50 billion travel trade deficit, confidence in the near- term outlook is shaky at best.
tourism, convention travel, or gateway city footfall. Inter- national investors, once stal- warts in U.S. hospitality deals, have also begun to pull back,
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