Current economic headwinds and fluctuating market conditions are leading investors and developers to take a more thoughtful approach to future projects, and hotel investments are worthy of consideration given the proven resiliency of the hospitality industry.
While growth projections for the remainder of the year have flattened, brokerage firm JLL highlights strong hotel demand in its May 2025 global real estate perspective. That said, the right asset in the right market can be a solid addition to a diversified portfolio when the time is right.
North Dakota has become a market to watch, outperforming expectations thanks to a resilient demand base, favorable cost and supply dynamics, and growing investor interest in secondary and tertiary markets.
Eric Jacobs, Aimbridge Hospitality
Positive Fundamentals Come Together
North Dakota stands out due to the consistency and diversity of its demand drivers.
The state is anchored by a variety of sectors such as energy (oil and gas markets), particularly in regions like the Williston Basin and regions surrounding Minot, which has created reliable, long-term corporate hotel demand. Other sectors, such as agriculture and healthcare also anchor the region.
North Dakota’s economy is also less exposed to some of the fluctuations that have hit other traditional hotel hubs and leisure travelers as well as regional event attendees bring stable weekend and seasonal traffic. According to Q4 2024 data from the North Dakota Tourism Division, visitation to North Dakota hit a record high of 25.6 million, with visitor spending topping $3.3 billion. That number includes 17.8 million day-trippers, which the Division’s report says signals growing interest in the state’s parks, scenic byways, and cultural festivals and fuels consistent hotel performance.
This influx of travelers led to key increases in travel activity within the state, as cited in the annual report released by the state’s tourism division. Hotel revenues increased nearly 6 percent, reaching $548 million, and airport arrivals were up nearly 9 percent, with more than 1.23 million people flying into the state. These travel trends are part of what potential owners and investors should look for when exploring a potential project with consideration to supply and demand.
Extended-Stay Proves Resilient
Extended-stay and select-service formats have proven to be some of the most resilient hospitality segments during hard times. Those formats are models that cater to value-conscious travelers and long-term guests, and their guests include many contract workers and corporate teams. Their format also often provides a more predictable revenue stream than other concepts.
Aimbridge Hospitality has seen firsthand how these formats do well and thrive in markets like many of the cities in North Dakota, such as places like Fargo, Bismarck, Dickinson, or other cities where people travel for business, medical treatments or other reasons that might require longer stays. These property types have efficient staffing models and lower operating costs, and offer attractive margins for owners. And that is especially true in regions where demand is steady but not necessarily seasonal or luxury-focused, like many of the cities in North Dakota.
SMERFE Segments and the Regional Travel Fuel Demand
One other promising demand segment for North Dakota hotels comes from the social, military, educational, religious, and fraternal events market, also known as SMERFE. These types of events are very prevalent in North Dakota and align with the hospitality infrastructure that exists there. College town hotels benefit from university events, for example, and properties near military bases, like Minot Air Force Base, for example, see demand from military families.
Regional drive-to travel is also gaining ground and helping fuel demand in the area. In fact, because this is a growing trend in the area, the North Dakota Department of Transportation is investing heavily in upgrading and expanding the state highway system such as the US 85 expansion project as well as the I-94 Exit 161 interchange redesign.
As travelers prioritize affordability and convenience, destinations that are within a few hours’ drive are outperforming markets that are air-reliant, making North Dakota on the radar for Midwest road-trippers. For hotel investors, what that translates to is a steady pipeline of leisure demand that is insulated from flight disruptions and the cost of air travel.
Stability and Capital Reallocation
Hospitality is attracting renewed investor interest—especially among institutions that are looking for operationally flexible assets that sectors like office and retail just do not have. Hotels, unlike most real estate categories, operate on daily revenue cycles, which allows operators to adjust pricing and strategy in real-time and have greater adaptability.
Another positive is the diversified revenue streams that range from different types of travel such as business to leisure to longer term stays can also mean that hotels can change or pivot as one segment slows, or others grow. Capital is also flowing more towards secondary and tertiary markets with favorable long-term outlooks and North Dakota also fits into that mold.
For savvy hotel investors seeking consistent inflation-resistant returns, operational stability, and under-the-radar upside, North Dakota might not be making headlines like coastal or gateway markets, but it is certainly worth a closer look.
Eric Jacobs is Chief Global Growth Officer at Aimbridge Hospitality.
