Global Hotel Investment Activity Resilient Despite Economic Uncertainty And a Staggered Regional Market Recovery
JLL surveyed global hotel investors to understand their evolving investment appetite, expectations around the industry’s recovery timeline and industry outlook.
Hotel investors expressed a strengthened appetite as fundamentals continue to recover with 20% of investors indicating they will deploy between $501 million to $1 billion+ worth of capital into the hospitality sector, up from 7% of investors in 2021 and 16% in 2020. This is the highest proportion of investors wishing to deploy this level of capital since the pandemic started.
This year’s survey showed London, Tokyo and Boston emerged as the top three markets for hotel investment, pointing to the resurgence of investor interest in urban markets. Over the next six months, 57% of investors anticipate the best investment opportunities to emerge across more traditional hospitality property types, including full-service and select-service hotels. Furthermore, 82% of investors indicated that they are targeting value-add investment opportunities, and 34% of investors are interested in vacant possession or unencumbered hotels.
In reviewing the hospitality industry’s performance through August year-to-date (YTD), the Americas region benefited from robust demand levels following the end of all testing and quarantine travel restrictions for domestic and international visitors and captured more than 60% of the $42 billion total global hotel investment volume. Activity across APAC and EMEA remained more subdued given ongoing COVID-19-related travel restrictions and the devastating Russia/Ukraine war.
Although the pace of recovery will vary by region, lodging fundamentals are expected to continue recovering, albeit at a more protracted rate given global economic headwinds. Significant pent-up demand for travel and experiences coupled with increasing corporate and group demand will help further drive the recovery. Investor interest in the sector is expected to remain strong with transaction activity picking up in the medium term.
JLL’s Hotel Investor Sentiment Survey includes responses from July to August. It represents a compilation of 7,800+ data points from hotel investors on future hotel operating performance expectations, yield requirements and future cap rate trends.
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