The lodging sector experienced a strong comeback in 2022, with many countries experiencing occupancy figures just shy of those registered before the pandemic. Despite a troubled macroeconomic scenario, analysts expect 2023 to provide equally satisfying results. Consequently, global hotel investment will increase exponentially, making this year one of the most promising for cross-border transactions.
2023 “most exciting year”
The latest report from JLL on the global hotel investment outlook this year paints a very rosy picture. Its conclusion reports that “2023 is shaping up to be one of the most exciting years for the global lodging industry” on the back of opportunities and innovations in the accommodation industry.
Hotel performance in 2022
The JLL report opens with a look at the lodging sector last year. It finds that the industry showed resilience, with RevPAR results in many regions close to pre-pandemic levels.
The Americas fared particularly well, and their RevPAR performed ahead of 2019 with a 108% increase. In Brazil, for example, RevPAR rose by over 33% in the year to September.
Resort markets delivered the best performance, while those reliant on business travel still have some ground to cover. However, RevPAR in cities such as Los Angeles, Paris and Dubai now stands at 2019 levels.
In terms of transactions, APAC and the Americas took centre stage along with the luxury sector. The Americas “showed notable growth”, while high-profile luxury assets saw their second highest level ever.
In addition, total trades reached their highest ever in 2022. According to JLL, this record shows “the growing appeal for smaller cheque sizes as sellers look to expand their buyer pool”. Expect more of the same in 2023
Top themes for hotels in 2023
JLL expects this recuperation to continue throughout this year. “The global hotel industry is on track for a full recovery with the reemergence of international travel,” it says, despite macroeconomic headwinds.
The report identifies three key trends for this year: solid investment opportunities, the resilience of international travel and redefined hotel experiences.
Strong investment opportunities
On the back of an excellent 2022, JLL forecasts more of the same this year as pent-up demand for travel remains in place. The reemergence of China as both a tourist destination and source of tourists opens up even more possibilities this year.
Hotels are particularly well placed in terms of inflation since they can adjust their rates according to changes in the cost of living. According to JLL, hotel owners will continue to “closely monitor inflation” to achieve higher profitability.
Economic challenges during 2022 led to less expansion in the sector during 2022. For example, annual supply in the Americas grew by just 0.7%. However, these circumstances present “an opportunity for investment”.
Redefining hotel experiences
Lives have changed considerably since the pandemic and these transformations also affect the hotel industry. A particular highlight is spending more time in a destination, perhaps combining work with a vacation.
Digital nomads provide one example of this mix, with some locations catering directly for this market. They include Flecheiras on the Ceará coast in Brazil, where high-end resort hotels provide kitesurf enthusiasts with the chance to spend several months on a workcation.
The world’s younger generations, namely Millennials and Gen Z, currently account for nearly half of the global population. According to JLL, they desire “to travel purposefully in a tech-enabled world”. As a result, hotels need to adapt to these demands.
Global hotel investment in 2023
JLL forecasts another bullish year for “smaller cheque sizes”. It also recommends investors be “nimble” in 2023 because they will have the chance to purchase “quality assets and grow their portfolios”.
At BRIC Group, we also believe that 2023 is an exciting year for the global lodging industry. As a result, we’re offering the chance to invest in a Radisson suite at The Coral, one of those “smaller cheque size” opportunities.
(Source: JLL)
