Skip to content

Search

Latest Stories

NewGen: Tariffs, trade tensions drive up PIP costs

‘Extended-stay assets rank among the most in-demand listings’

hotel tariffs and trade tensions

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.

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.”

Extended-stay assets are among the most in-demand listings at NewGen.

“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.”

Despite that, Bhakta believes market fundamentals remain strong.

“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.

More for you

Vision Hospitality Hosts Red Sand Project in Chattanooga, Tennessee
Photo credit: Vision Hospitality Group

Vision hosts Red Sand Project against human trafficking

Summary:

  • Vision held its Red Sand Project to combat human trafficking in Chattanooga, Tennessee.
  • It fights trafficking through partnerships, staff training and philanthropic support.
  • Tennessee reported 213 human trafficking cases in 2024, involving 446 victims.

VISION HOSPITALITY GROUP held its fourth annual Red Sand Project with WillowBend Farms to combat human trafficking in Chattanooga, Tennessee. The event brought together organizations working to combat human trafficking, including the Family Justice Center for Hamilton County and the Hamilton County Health Department.

Keep ReadingShow less
Choice Hotels
Photo credit: Choice Hotels International

Choice posts $81.7M Q2 profit, 93K-room pipeline

Summary:

  • Choice Hotels International reported Q2 net income of $81.7 million.
  • Domestic RevPAR fell 2.9 percent due to macroeconomic conditions.
  • Extended-stay portfolio rose 10.5 percent YoY, with a domestic pipeline of 43,000 rooms.

CHOICE HOTELS INTERNATIONAL reported second-quarter net income of $81.7 million, down from $87.1 million a year earlier. Its forecast for the year remained positive, but was downgraded some to account for changes in macroeconomic conditions.

Keep ReadingShow less
Hotel exterior of Motel 6 Las Vegas under G6 Hospitality and Galaxy Hotels partnership
Photo credit: G6 Hospitality

G6, Galaxy aim to grow Motel 6, Studio 6

Summary:

  • G6 Hospitality and Galaxy Hotels Group are expanding Motel 6 and Studio 6 in the U.S.
  • Galaxy said G6 brands outperform others in guest satisfaction and value.
  • One Galaxy hotel generates $8–10M annually; the full G6 portfolio is expected to reach $50M.

G6 HOSPITALITY AND Galaxy Hotels Group are now working to expand the Motel 6 and Studio 6 footprint in the U.S. About 10 Galaxy-managed hotels, totaling more than 1,300 rooms, will operate under the G6 brands, with more to follow.

Keep ReadingShow less
Choice Hotels campaigns

Choice launches campaigns for extended-stay brands

Summary:

  • Choice launched two campaigns to boost bookings across its four extended-stay brands.
  • Based on guest feedback, the campaigns focus on efficiency, cleanliness, value and flexibility.
  • They will run through 2026 across social media, Connected TV, digital display and online video.

CHOICE HOTELS INTERNATIONAL launched two marketing campaigns to increase brand awareness and bookings across its four extended-stay brands. The "Stay in Your Rhythm" campaign promotes all four brands by showing how guests can maintain daily routines, while "The WoodSpring Way" highlights the service WoodSpring Suites staff provide.

Keep ReadingShow less
US Hotel Employee Background Checks
iStock

Survey: Employee background checks up for hotels

Summary:

  • U.S. hotels increased background checks by 36 percent in early 2025.
  • The trend follows President Trump’s immigration policies impacting seasonal labor.
  • Immigrants making up a third of the travel workforce.

U.S. HOTEL HIRING managers requested 36 percent more background checks in the first half of 2025 compared with the same period last year, according to Hireology. The move follows President Donald Trump’s immigration crackdown and proposed visa fee hikes affecting seasonal labor.

Keep ReadingShow less