Appetite for hotel investment on the up

Appetite for hotel investment on the up

The latest Global Hotel Investor Sentiment Survey reveals buoyant demand in a sector making a consolidated recovery. The Americas present a particularly solid investment area and account for over 60% of global volumes in the year to August. And investment levels show strengthened appetite at the high end of the scale.

Strengthened appetite for hotel investment

The latest JLL report on global hotel investment finds a booming sector with a big appetite for larger operations. Activity in the year to date (YTD) August totalled US$42 billion, slightly below the same period in 2021 when investors put US$47 billion into hotels.

However, the JLL report also reveals that 20% of investors will put US$501 million to US$1 billion of their capital into hotel investment this year. The figure is up by 13% on 2021 and by 4% on 2020. In addition, almost 80% of investors claimed they would be net buyers this year.

Americas strongest area for hotel investment

The Americas saw the most robust investment demand YTD in August this year. The region took over 60% of the total US$42 billion in hotel investment volume in the first eight months.

According to JLL, the region “benefitted from robust demand, following the end of all testing and quarantine travel restrictions”. Q1 transaction volumes were particularly significant in the Americas.

Progress to full recovery

The hospitality industry has experienced consolidated recovery over the last 12 months. “The pace at which group and business demand is returning in most parts of the world is encouraging and unexpected, which will help boost demand levels to new heights,” says the report.

As a result, some regions are now experiencing higher Rev/PAR than before the pandemic. This is the case in the Middle East and the Americas. In the former, Rev/PAR in the YTD in July this year was 111% compared to the same period in 2019. In the latter, it stood at 105%.

High expectations for the rest of 2022 and beyond

JLL points out the differences in the speed of recovery in regions but emphasizes that “lodging fundamentals are expected to continue recovery”. The company bases this prediction on “significant pent-up demand for travel and experiences”. As a result, it expects investor interest to “remain strong with transaction activity picking up in the medium term”.

The report ends with a forecast of resilience in the sector. It suggests that hotel owners, investors and operators “that remain nimble” are the best positioned to “identify opportunities to drive value for their hotel portfolios”.

Another report echoes the sentiment of optimism for the hotel sector. In September, S&P Global Market Intelligence found that hotel real estate investment trusts had the most positive reactions in Q2 this year.

About the report

The Global Hotel Investor Sentiment Survey is carried out annually and the latest edition contains over 7,800 data points. The majority of respondents were private equity and institutional investors (52%) or developers (26%.

(Source: JLL)