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In the pursuit of portfolio diversification with an attractive risk-return profile, Hotel Real Estate
Investment Trusts (REITs) have garnered considerable interest as an investment vehicle. The
accessibility of REIT markets, combined with stable returns for investors makes the hotel REIT
sector a compelling area for study. This master thesis investigates the influence of four
macroeconomic factors (interest rate, inflation rate, tourist arrival growth, and market risk
premium) on the financial and operational performance of U.S. hotel REITs across a 12-year
period (2012-2024). Four performance metrics were also chosen—Total Returns, Funds from
Operations (FFO), Debt-to-Equity Ratio, and Dividend Yield—to evaluate the impact of the
selected macroeconomic variables, drawing on a dataset of 400 quarterly
observations. Separate regression models were used to assess the relationship between each
macroeconomic variable and the selected performance metrics. The findings revealed a
statistically significant positive relationship between interest rates and Total Returns. Tourist
arrival growth also saw a direct positive relationship with FFO. Conversely, the inflation rate
illustrated an inverse relationship with FFO. The market risk premium yielded mixed results,
while it significantly impacted Total Returns, its influence on operational performance was
rather statistically insignificant. These findings contribute to the existing literature and provide
empirical insights into the sensitivity of hotel REITs in the U.S. to macroeconomic fluctuations.
Such insights are valuable for real estate managers, policymakers and investors, both
domestically and internationally.
