As the vaccine programme has advanced worldwide, tourism activity has increased exponentially. By February this year, more and more countries were reopening their borders to international travellers after months of closure. One of the sectors reflecting these trends is hotel investment, widespread over the last few months.
As a result, hotel merger and acquisition (M&A) has risen worldwide since the second half of 2021. A recent interview with key players in hotel M&A explains how the return to tourism makes a compelling case for hotel investment in 2022.
Great expectations for hotel investment in 2022
On the back of high transaction levels in 2021, analysts predict that this year will follow a similar pattern. “The general sentiment is that 2022 will be a strong transaction year,” commented Geraldine Guichardo, global head of research for hotels at JLL.
She pointed out that total sales reached US$41.4. billion between January and September last year, up 86% in the year and just 20% below 2019, prior to the pandemic. The figures exceeded expectations and as a result, lead those in the sector to forecast high volumes in 2022.
World travel and tourism back on track
Recent research from the WTTC would appear to back the general optimism in the hotel sector. According to the WTTC, travel and tourism will contribute US$8.6 trillion this year, a figure that approaches levels seen in 2019 (US$9.2 trillion). In addition, the sector is expected to create 330 million jobs, just 1% below 2019.
“Our latest research clearly shows that there is light at the end of the tunnel,” said Julia Simpson, President of the WTTC. “2022 is certainly more positive in terms of both jobs and the economy.”
Diamond age of travel
Based on the predictions for the tourism sector, many analysts believe that 2022 will see a surge in travel. “Hold onto your hat,” said Guy Langford, an M&A partner at Deloitte, who believes we are about to see the ‘Diamond Age’ of travel.
“It is going to create a surge in travel demand and robust KPIs for hotel assets,” he explained, adding that the uptick will also create “elevated valuations and transactional activity.”
Hospitality industry poised for new growth cycle
Continuing the wave of optimism, Avington Group believes that the hospitality industry is “at the beginning of a new 7-9-year cycle of growth”. Moreover, the company considers that the hotel sector is well-positioned to “thrive in a post-Covid world” as the vaccine programme advances and travel restrictions gradually disappear.
Avington Group highlights the luxury hotel sector as one of the segments already experiencing an uptick in activity. As examples, it cites the record prices for high-end resorts paid by investors and the recent acquisition of a controlling stake in Four Seasons Hotels & Resorts for US$10 billion for the interests of Bill Gates.
New hotel investment at The Coral
The Coral Resort in Flecheiras in Northeast Brazil has just launched its latest investment product, 5-star hotel suites at the first Radisson hotel in the region. Investors earn 6-8% guaranteed rental income per annum for 12 years, from just US$145,250 (€127,750). Find out more about this hotel investment in Brazil.
(Sources: WTTC, Hotels)
