NewGen: Tariffs, trade tensions drive up PIP costs
‘Extended-stay assets rank among the most in-demand listings’
Trade tensions and tariffs have impacted the hotel transaction landscape, driving up property improvement plan costs as many case goods and FF&E were previously sourced from overseas, said Suraj Bhakta, CEO and chief legal officer of NewGen Advisory.
Vishnu Rageev R is a journalist with more than 15 years of experience in business journalism. Before joining Asian Media Group in 2022, he worked with BW Businessworld, IMAGES Group, exchange4media Group, DC Books, and Dhanam Publications in India. His coverage includes industry analysis, market trends and corporate developments, focusing on retail, real estate and hospitality. As a senior journalist with Asian Hospitality, he covers the U.S. hospitality industry. He is from Kerala, a state in South India.
Tariffs and PIP Inflation Challenge U.S. Hotel Transactions
TRADE TENSIONS AND tariffs have impacted the transaction landscape, as many case goods and FF&E were previously sourced from overseas, said Suraj Bhakta, CEO and chief legal officer of NewGen Advisory, a national brokerage firm. The market also is seeing a sharp rise in PIP costs.
The severity depends on the asset, but much of the case goods—furniture, bedding and more—were sourced internationally.
“While developers can explore other countries with lower tariffs, the reality is it’s affecting projects already underway,” said Bhakta, speaking to Asian Hospitality on the sidelines of AAHOA’s 2025 Convention and Trade Show.
With global supply chains in flux, Bhakta said the uncertainty is being priced into valuations.
“It’s a moving target—one day a tariff is on, the next it’s off,” he said. “But right now, there’s no question it’s having an impact.”
Bhakta, who co-founded the firm nearly a decade ago with Principal and Managing Broker Dinesh Rama, said NewGen’s growth reflects the reach and agility today’s market demands.
He called extended-stay hotels “the hottest segment in the market,” citing their operational efficiency and leaner staffing requirements.
“You can rent rooms at similar rates as traditional hotels, but with lower overhead,” he said. “You don’t have to offer full amenities, and that’s a cost saver.”
“Buyers light up when they hear it’s extended stay. There’s always a line of interest,” Bhakta said.
On broader market conditions, Bhakta acknowledged the recent dip in deal volume.
“In 2022, we saw close to 4,700 transactions. That dropped to 2,500 in 2023, and we’re trending toward 1,700 this year,” he said. “Even a PIP that might have cost $500,000 earlier in the year could now be $650,000 or more. That’s real money coming out of buyers’ pockets, so naturally it affects pricing. It’s not just operational—it’s changing how deals are underwritten.”
“There’s still a lot of capital on the sidelines. Investors are getting antsy—they’re ready to deploy capital,” he said.
The biggest challenge, he added, is the ongoing disconnect between buyer and seller expectations.
“The bid-ask gap has been wide, but sellers are starting to adjust,” Bhakta said. “Replacement costs are so high, it just doesn’t pencil to build new, especially in midscale and economy segments.”
NewGen specializes in hospitality and lodging assets, from bed-and-breakfasts in small markets like Sedona to high-rise urban properties under major flags.
“Dinesh has been in the business for more than 30 years,” Bhakta said. “We started with just a few agents, and now we have 29 agents nationwide, 26 broker licenses, and we’ve closed deals in 44 states. We’ve worked hard to remove boundaries for our agents—brand or location doesn’t matter.”
“We’re very vertical,” he said. “Our team is diverse, and we’ve built a reputation for not being like other brokerage houses. We stay current with technology and modern marketing strategies.”
NewGen remains a strong supporter of AAHOACON, which Bhakta called “the best place to connect buyers and sellers.”
“It’s where the most ownership comes together in one place,” he said. “My message to our agents is simple: If you’re not here, you’re not serious about selling hotels.”
The return of major brands to the event—such as Marriott and Hilton—signals renewed momentum.
“That’s a solid indication we’re headed in the right direction,” Bhakta said.
IHG launched its 20th global brand, Ruby, in the U.S.
The brand offers serves city-centers and urban locations with restrictions.
It focuses on major urban markets with new-build, conversion, and adaptive reuse.
IHG HOTELS & RESORTS introduced Ruby Hotels, its 20th global brand, to the U.S. It is designed to fit in city centers and urban locations with entry barriers and space constraints.
The company’s growth plan will focus on major urban markets and include new-build, conversion and adaptive reuse projects, IHG said in a statement.
“Ruby is a brand built for the future of hospitality,” said Jolyon Bulley, IHG's CEO for the Americas. “Its success in Europe speaks to the growing demand for flexible, lifestyle-focused hotels in highly traveled locations. Ruby’s U.S. introduction will complement our premium portfolio and offer owners a differentiated product with strong economics and scalable growth potential. We’re encouraged by the initial interest and buzz around Ruby, which reinforces our confidence in its appeal and ability to thrive in this market.”
Ruby, founded in Germany in 2013, joined the IHG portfolio earlier this year and has 34 open or pipeline hotels in European cities. The U.S. launch reflects IHG’s plan to grow the brand to more than 120 hotels in the next decade and more than 250 in 20 years.
Lauren Krostue, Ruby's vice president for global brand management, said Ruby allows IHG to connect with a new type of traveler—those who value unique stays at an accessible price point.
"In bringing Ruby to the U.S., we will retain what’s made the brand so special in Europe—including its unique design and operating model—while localizing certain elements to reflect market needs," she said. "We look forward to introducing the Ruby experience to a new group of owners and guests and showcasing what sets the brand apart in the increasingly popular ‘urban micro’ segment.”
IHG nearly doubled global conversion signings from 2023 to 2024, with conversions representing about 60 percent of openings and 40 percent of signings in the first quarter of 2025.
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Announcement of $100,000 H-1B visa fee triggers panic among Indian professionals.
The fee applies only to new petitions.
IT companies are reportedly reviewing staffing and travel.
THE TRUMP ADMINISTRATION’S announcement of a $100,000 fee for new H-1B visa petitions, effective Sept. 21, reportedly triggered panic among Indian H-1B holders. Many rushed to book last-minute flights, resulting in fully booked planes and higher fares.
The move caused anxiety among IT employees whose work depends on U.S. assignments, according to India Today.
However, the U.S. Citizenship and Immigration Services later clarified that the fee applies only to new petitions, not existing visa holders, providing some relief but not ending widespread uncertainty.
Airports and travel agents reported a surge in cancellations and rescheduling requests, while families of visa holders faced disruptions during the festive season.
Friday’s announcement sparked further confusion, culminating in chaotic scenes aboard an Emirates flight from San Francisco to Dubai, AeroTime reported. The plane was held on the tarmac for three hours as H-1B holders tried to determine if they could re-enter the U.S. The policy change created confusion over who would be affected.
India’s external affairs ministry said the fee could have humanitarian consequences “by disrupting families.” The Indian government said it “hopes these disruptions can be addressed by U.S. authorities” and emphasized that the exchange of skilled workers has “contributed enormously” to both nations, The Guardian reported.
H-1B visas are valid for three years and can be renewed for another three. The Trump administration says the increased fee helps U.S. companies stay competitive and create more jobs. However, Indian stakeholders raised concerns about its impact on the IT sector, citing potential disruptions to operations and project timelines. IT companies are reportedly reviewing staffing and travel while managing higher compliance requirements.
“Service exports have finally been dragged into the global trade and tech war,” Madhavi Arora, chief economist at Emkay Global Financial Services, wrote in a note on Sunday, according to CNN.
Arora also suggested the policy could have an unexpected upside for India, potentially bringing talent back home. While it could concentrate top professionals within India’s largest tech firms, it could also “catalyze India’s transformation into a more powerful global innovation and delivery hub.”
Meanwhile, U.S. Citizenship and Immigration Services data for fiscal 2025, show Amazon as the top H-1B recipient, securing about 10,000 visas.
The recent 50 percent tariff imposed by the Trump administration on India was also met with backlash from the country.
The H-2B visa program protects U.S. jobs and wages, according to AHLA citing a study.
It allows hotels and resorts to meet travelers’ needs while supporting the economy.
It provides foreign workers for seasonal jobs when domestic workers are unavailable.
THE H-2B VISA program does not harm U.S. jobs or wages but increases pay and supports the labor force, according to an Edgeworth Economics study. Citing that study, the American Hotel & Lodging Association said the program enables hotels and resorts to meet travelers’ needs while supporting the workforce and economy.
The Edgeworth study for the H-2B Workforce Coalition found the program allows businesses to hire foreign workers for seasonal jobs when domestic workers are unavailable. It showed no evidence that increases in H-2B visas reduce U.S. employment or wages. Instead, each H-2B worker supports three to five local jobs and areas with more H-2B workers saw wages grow 1.6 percent faster.
“Areas that hired more H-2B workers under the higher visa cap saw greater job and wage growth among U.S. workers,” said Steve Bronars, partner at Edgeworth Economics, citing findings consistent with an earlier analysis by the U.S. Government Accountability Office.
Ashley McNeil, AHLA’s vice president of federal government affairs and chair of the H-2B Workforce Coalition, said the new analysis underscores the H-2B program’s clear value to local communities.
“The hotel industry, which is still 200,000 workers short compared to pre-pandemic levels, relies on legal guest worker programs to augment our workforce, particularly to address seasonal demands,” McNeil said. “Access to the H-2B visa program has been critical in allowing hotels and resorts of all sizes to meet travelers’ needs, while supporting the local workforce and economy.”
The program has also helped businesses manage peak-season labor shortages, easing the workload for full-time employees. Landscaping accounts for nearly 40 percent of certified H-2B workers. Hotels and motels account for 8.67 percent, support activities for forestry 6.3 percent and seafood processing and packaging 5.65 percent.
“This study reaffirms what our members have long recognized: despite extensive recruitment efforts, there remains a critical shortage of U.S. workers willing or available to fill temporary positions that are currently being filled by H-2B workers,” said Arnulfo Hinojosa, COO of the Federation of Workers and Employers of America and vice chair of the H-2B Workforce Coalition. “H-2B workers allow seasonal businesses to operate at a higher capacity and create more U.S. jobs.”
Meanwhile, President Donald Trump recently signed a proclamation raising the H-1B visa fee to $100,000 annually, a move that could affect Indian professionals in the U.S.
The use of AI agents hotels must rethink customer loyalty, a FAU study finds.
The paper proposes strategies as AI becomes the main booking channel.
Researchers warn of ethical and privacy issues.
HOTELS MUST RETHINK how they build and maintain loyalty as artificial intelligence systems make travel decisions and bookings for consumers, according to a study by Florida Atlantic University. The rise of artificial intelligence agents will complicate hotel customer loyalty management.
“AI agents will be the new gatekeepers of loyalty,” said Anil Bilgihan, FAU College of Business professor of hospitality management. “The question is no longer just ‘How do we win a customer’s heart?’ but ‘How do we win the trust of the algorithms advising them?’ Hotels need to prepare for a future where a guest’s preferred brand may be decided before they even open their phone.”
As consumers use AI agents to search for hotels, check availability, compare prices, analyze reviews and make bookings, decision-making will shift to the algorithm, creating loyalty to the agent or its ecosystem rather than to the brand, the report said.
Bilgihan said AI is not influenced by traditional advertising and sorts options based on algorithmic criteria.
“Imagine a traveler asking their AI agent to book a hotel in Miami within a certain budget, with a pool and strong reviews,” he said. “If your hotel doesn’t appear in that recommendation set, you may never be considered. Hotels must design loyalty programs, digital visibility and service experiences that appeal to both human guests and the AI systems filtering choices on their behalf.”
The paper proposes a framework for hotels to rethink loyalty strategies as AI agents become the main channel for travel bookings. While emotional branding still matters for humans, marketers should focus on loyalty programs that engage both humans and AI systems, using customer data to tailor experiences, improve algorithmic visibility and design programs appealing to both, the study said.
Researchers also warned of ethical and privacy concerns, including algorithmic bias, limited consumer understanding of how AI agents work and challenges in brand visibility.
“At the end of the day, technology doesn’t replace the fundamentals,” Bilgihan said. “AI may shape how guests discover and book, but the foundation of loyalty will always be the experience once they arrive.”
The paper in the International Journal of Contemporary Hospitality Management was authored by Max Ostinelli, assistant professor of marketing; Ye Zhang, associate professor of hospitality management; Melanie Lorenz, associate professor of marketing and Bilgihan.
New York University’s State of Distribution 2025 found a gap between AI potential and hotel operational readiness, as teams are still developing training, systems and workflows. In May, India’s International Institute of Hotel Management (IIHM) Kolkata launched ‘NamAIste – IIHM HospitalityGPT,’ the first generative AI platform for the global hospitality industry.
More than 70 percent expect a RevPAR increase in Q4, according to HAMA survey.
Demand is the top concern, cited by 77.8 percent, up from 65 percent in spring.
Only 37 percent expect a U.S. recession in 2025, down from 49 percent earlier in the year.
MORE THAN 70 PERCENT of respondents to a Hospitality Asset Managers Association survey expect a 1 to 3 percent RevPAR increase in the fourth quarter. Demand is the top concern, cited by 77.8 percent of respondents, up from 65 percent in the spring survey.
HAMA’s “Fall 2025 Industry Outlook Survey” found that two-thirds of respondents are pursuing acquisitions, 80 percent plan renovations in the coming year and 57 percent are making or planning changes to brand affiliation or management strategies.
“With hopes high for a stronger fourth quarter, hotel asset managers continue to maintain an optimistic outlook,” said Chad Sorensen, HAMA president. “More than 70 percent of our members expect RevPAR to increase 1 to 3 percent and two-thirds are pursuing acquisitions. With 80 percent planning renovations in the coming year, we see an engaged community focused on performance.”
Conducted among 81 HAMA members, about one-third of the association, the survey reports expectations for revenue growth, property investments and acquisitions.
However, the top three most concerning issues were demand, ADR growth and tariffs, HAMA said.
RevPAR growth forecast
Looking into 2026, 72.8 percent expect 1 to 3 percent growth, 18.5 percent expect 4 to 6 percent, 7.4 percent anticipate flat results and 1.2 percent project a decline. Full-year RevPAR projections versus budget are more mixed: 49 percent expect 1 to 3 percent growth, 17 percent expect flat results, 12 percent expect 4 to 6 percent growth, 2 percent expect 7 percent or more and 19 percent expect declines.
Hotel asset managers note several market pressures, the report said. Other concerns include ADR growth at 51.9 percent, tariffs at 34.6 percent, wage increases at 33.3 percent and potential Federal Reserve rate changes at 32.1 percent. Management company performance at 25.9 percent, immigration and labor trends, union activity and insurance costs were also mentioned.
“The industry is at its highest level of concern around maintaining or increasing rates,” Sorensen said. “There’s pressure to build on the P&L going into 2026.”
Performance projections
Confidence in the broader economy has increased since spring, the survey found. Only 37 percent of respondents expect a U.S. recession in 2025, down from 49 percent earlier in the year.
When asked about properties exceeding gross operating profit forecasts, 59 percent of managers expect 0 to 25 percent of their hotels to surpass targets, 25 percent expect 26 to 50 percent, 10 percent expect 51 to 75 percent and 6 percent expect 76 to 100 percent. Additionally, 20 percent reported returning hotels to lenders or entering forced sales since the spring survey.