The four factors driving hotel investment in 2022

The four factors driving hotel investment in 2022

As travel gets back on track, the hospitality industry is recovering. Hotels all over the world have seen occupancy rise during the first five months of this year, and as a result, investors have keen eyes on the sector. But what’s driving hotel investment in 2022? 

At the recent International Hospitality Investment Forum, analysts discussed the return to travel and what it means for hotel investment this year. As a result, they identified four key trends that they believe will shape investors’ decisions in 2022. 

Hotel investment on the up 

The Forum consensus was that investors have money to spend on hotels after two years of the pandemic. Consequently, there’s pent-up cash waiting in the wings this year.

Up until now, many hotels have relied on financial support from their governments and not needed to sell. However, analysts believe this situation will reverse during 2022 as interest rates on loans rise. 

Hotel spending to increase 

After two challenging years when cost-cutting shaped most hotels’ experiences, operators and managers are now turning their attention to spending. This capital expenditure will focus on adding value to hotel facilities, particularly in the luxury sector. 

Change in guests’ habits 

The pandemic has undoubtedly reshaped lifestyles across the planet, and as a result, our priorities and preferences have changed. Not only do travellers want more flexibility, but the working from home trend has led many to combine holidays with work. 

“People want a hybrid version of the life they had before the pandemic,” said Nick Jones, CEO of Soho House Group. 

One of the consequences of the change is that people have more disposable income. This increase has led to a significant uptick in holiday spending, particularly in the luxury sector. As a result, many establishments are upgrading facilities to meet the emerging demand, making investment in high-end hotels more attractive. 

Loans available for hotel investment in 2022

The pandemic turned traditional lenders against the hospitality sector and those looking to invest in hotels were often refused loans. However, analysts believe that this situation is now changing direction because of the shift in the travel and tourism sector.

The World Travel & Tourism Council report released in May predicted that the industry would experience full recovery by next year as it grows by 5.8% annually. As a result, the International Hospitality Investment Forum believes that buyers will find it easier to obtain loans for hotel investment in 2022. 

(Source: International Hospitality Investment Forum)