Los Cabos Hotels in Late 2026: What a Softer Economy Actually Means for This Market

The global economy has gotten a little dicey. The ten year treasury just touched 5%, diesel is running about $6 a gallon, and tourism seems to be softening in markets around the world, not just here. So it is a fair question to ask right now: does any of that change the case for owning a hotel in Los Cabos? The short answer is not as much as you would think, and the numbers explain why.

The 2025 baseline

In 2025, hotels across Los Cabos averaged 71% occupancy and an average daily rate of $445 a night. To put that in perspective, a market like Orlando, Florida runs an average daily rate of around $130 a night. Cabo has the most expensive hotel rooms in Mexico, and if you moved this market into the United States, you would probably need to look at Manhattan or Hawaii to find comparable rates. That is the baseline this whole conversation starts from.

What 2026 looks like so far

We are heading into the fourth quarter of 2026, and tourism does appear to be down a bit, in line with what other markets are seeing. My own estimate, without anything official to back it up yet, is that occupancy this year lands closer to 60%, a real step down from 71%. Average daily rates look like they are holding up better than occupancy. Luxury properties in particular tend to stay booked regardless of what the broader economy is doing, so I would not expect much movement in rate even with occupancy softening.

That distinction matters for anyone underwriting a deal right now. A slower year on occupancy is not the same thing as a weaker market on price. Sellers who point to five year average daily rates are still telling a mostly accurate story. Buyers who assume this year's occupancy dip means the asset is worth less across the board are missing that the two numbers are not moving together.

The seasonal swing still holds

Regardless of the year over year softness, the shape of the calendar has not changed. March is the strongest month for occupancy at 83%, with December and January close behind. December is the most expensive month to book a room, averaging $553 a night, driven by Christmas and New Year's travel and by families renting entire villas and vacation homes for the week. On the other end, September is the slowest month of the year, with occupancy dropping into the low 50s and sometimes below. August and September are the two months most affected by kids going back to school in the U.S. and Canada, and peak season generally kicks back in around October 15th.

Any hotel valuation in this market needs to be built on that full cycle, not on a snapshot from March or December. A property that looks incredible over the holidays and empty in September is still the same asset, and the underwriting should reflect both ends of that swing.

Institutional capital is still moving in, softer economy or not

This is the part of the story that has not changed with the broader economic picture, and arguably it is the more important one. A Mexican FIBRA, the local equivalent of a publicly traded REIT, recently purchased the Secrets Hotel in Puerto Los Cabos for $200 million. That same property had been shopped off market at $300 million as recently as two years ago, when a Spanish group I know of, through an agent on my team, was looking at it at that price.

A separate hotel on Medano Beach was marketed around that same $300 million figure. If you use the Puerto Los Cabos sale as the reference point, that Medano Beach property is probably closer to a realistic $200 million once real institutional capital gets involved, rather than the number a seller originally had in mind.

That gap between what sellers ask and what disciplined buyers actually pay is the real story right now. Institutional buyers tend to underwrite more conservatively than an owner who has held an asset for years and has a number in their head. As the broader economy gets more uncertain, sellers who were holding out for optimistic numbers are more likely to start entertaining offers that are grounded in the actual data, not a valuation pulled out of thin air.

The Cape Hotel is another useful data point here. It sold in 2018 for $125 million. Adjusted for today's occupancy, rates, and room count, that same asset would likely be valued closer to $200 million now. It remains one of the more iconic properties in the market and continues to generate strong income through the condo towers it manages on owners' behalf.

Why this still makes sense as a play right now

A softer macro environment is usually the moment when more realistic pricing starts to show up, not less. Institutional buyers, priced in dollars, are already active here, and there is a lot of capital sitting on the sidelines in the U.S. looking for exactly this kind of asset. If sellers keep coming back down from $300 million toward $200 million as the broader economy cools, this is likely to be a better entry point for serious buyers than it was two years ago, not a worse one.

If you are exploring buying or selling a hotel in Los Cabos and want to talk through where the real numbers land, reach out to me directly.

Fletcher Wheaton fletcher@remexico.com