Key Takeaways
- • Marty McDaniel, chairman and CEO of The Northstar Companies, argues that family offices considering direct hotel ownership must underwrite the operating business, not just the real estate, because management, labor, brand obligations, revenue execution and capital reinvestment can change returns quickly.
- • Citing UBS's Global Family Office Report 2026, McDaniel notes alternative assets account for 42 per cent of family office allocations and 77 per cent of surveyed families still have an active operating business.
- • Citing CBRE, US hotel demand grew 1.7 per cent year-over-year in Q2 2026 against 0.4 per cent supply growth, with ADR up 4.4 per cent and RevPAR up 5.7 per cent.
- • Citing JLL, US hotel transaction volume reached $24 billion in 2025, up 17.5 per cent year-over-year, with about $88 billion of hotel loans scheduled to mature through 2027, creating refinancing and capex pressure.
- • McDaniel concludes hotels can be compelling direct investments when the operation is underwritten with the same rigor as the real estate, and that governance, leading indicators and timely capital decisions separate strong outcomes from weak ones.
Summary
A hotel can look like conventional real estate to a family office, with land, a building, a brand flag and comparable sales. Marty McDaniel, chairman and CEO of The Northstar Companies and a hotelier with 38 years of experience, argues that in practice a hotel behaves more like an operating company that owns expensive real estate. Management depth, labor, franchise obligations, revenue execution and reinvestment can alter the return profile quickly even when the property and market appear sound.
McDaniel cites UBS's Global Family Office Report 2026, which reports that alternative assets account for 42 per cent of family office allocations and that 77 per cent of surveyed families still have an active operating business. He argues that many such investors understand operating risk, but that the mistake is assuming a hotel can be managed with the passivity of a leased building. Traditional real estate diligence asks whether the market supports the asset; hotel diligence must also ask whether the operating team can convert that market into profitable demand. He cites CBRE data showing US hotel demand rose 1.7 per cent year-over-year in Q2 2026 while supply grew 0.4 per cent, with ADR up 4.4 per cent and RevPAR up 5.7 per cent, while noting that these market gains do not translate equally across all hotels.
McDaniel sets out five questions a family office should answer before buying directly: who is accountable for revenue strategy, whether labor is scheduled to demand, the true condition of the building, which brand or property-improvement obligations are coming, and whether management can explain how the underwritten cash flow will be produced. He describes deferred capital as a quiet risk that eventually surfaces as pricing, guest-score, labor and franchise problems. He links this to JLL data showing $24 billion of US hotel transaction volume in 2025, up 17.5 per cent, and about $88 billion of hotel loans scheduled to mature through 2027, which he says will create buying opportunities alongside undercapitalized operating businesses.
In McDaniel's view, patient family office capital can fund renovations without forcing a short-term exit, but it still requires disciplined operating oversight. Effective owners, he writes, govern the operator without micromanaging, track a small set of leading indicators, make capital decisions early, and treat management depth as part of the asset. He cites JLL's expectation that constrained supply, stronger debt-market liquidity and private-equity interest will support a new hotel investment cycle in 2026. McDaniel concludes that family offices should not avoid hotels but should underwrite the operation with the same rigor as the real estate.
McDaniel cites UBS's Global Family Office Report 2026, which reports that alternative assets account for 42 per cent of family office allocations and that 77 per cent of surveyed families still have an active operating business. He argues that many such investors understand operating risk, but that the mistake is assuming a hotel can be managed with the passivity of a leased building. Traditional real estate diligence asks whether the market supports the asset; hotel diligence must also ask whether the operating team can convert that market into profitable demand. He cites CBRE data showing US hotel demand rose 1.7 per cent year-over-year in Q2 2026 while supply grew 0.4 per cent, with ADR up 4.4 per cent and RevPAR up 5.7 per cent, while noting that these market gains do not translate equally across all hotels.
McDaniel sets out five questions a family office should answer before buying directly: who is accountable for revenue strategy, whether labor is scheduled to demand, the true condition of the building, which brand or property-improvement obligations are coming, and whether management can explain how the underwritten cash flow will be produced. He describes deferred capital as a quiet risk that eventually surfaces as pricing, guest-score, labor and franchise problems. He links this to JLL data showing $24 billion of US hotel transaction volume in 2025, up 17.5 per cent, and about $88 billion of hotel loans scheduled to mature through 2027, which he says will create buying opportunities alongside undercapitalized operating businesses.
In McDaniel's view, patient family office capital can fund renovations without forcing a short-term exit, but it still requires disciplined operating oversight. Effective owners, he writes, govern the operator without micromanaging, track a small set of leading indicators, make capital decisions early, and treat management depth as part of the asset. He cites JLL's expectation that constrained supply, stronger debt-market liquidity and private-equity interest will support a new hotel investment cycle in 2026. McDaniel concludes that family offices should not avoid hotels but should underwrite the operation with the same rigor as the real estate.
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