CHICAGO – JLL’s Hotels & Hospitality Group has released their flagship Global Hotel Investment Outlook, which reveals that global hotel performance soared in 2023, reaching a full recovery.
Though 2023 proved to be a challenging year for commercial real estate, marked by geopolitical tensions and capital market dislocation, the lodging industry demonstrated resilience, with RevPAR (revenue per available room) achieving a full recovery and surpassing 2019 levels by 12%.
With considerable available capital, private equity remains the leading buyer of hotel assets worldwide. The year 2023 also witnessed a remarkable rise in new investors joining the industry, as first-time hotel buyers accounted for a record-breaking 19% of global hotel investment volume for the year.
In 2024, the most sought-after hotel assets will continue to be irreplaceable luxury properties, as well as those in the select-service and extended-stay sectors. This trend is spurred by increasing global wealth and the ongoing convergence of living and traveling, respectively.
Themes that will be present in the upcoming year include:
The resurgence of urban market performance and renewed investor interest.
Urban hotels have seen a significant recovery with the reopening of international borders and the return of business and group demand. Cities like London, New York, and Tokyo have become attractive investment destinations. International travel plays a crucial role in urban hotel demand, with a strong correlation between inbound foreign arrivals and urban hotel occupancy. As borders reopen, a surge in urban hotel performance is expected, benefiting both performance and liquidity. Cities that focus on intentional tourism and leverage technology will garner long-term investor interest, with foreign capital likely to be the most acquisitive in 2024.
The evolution and power of hotel brands for consumers and investors.
Global hotel brands have evolved beyond a means of diversifying customer segmentation to now representing a hotel’s value for travelers, operators, and investors. Hotels are integrating into various aspects of consumerism by selling retail products online, creating new revenue streams and fostering customer loyalty. They are also expanding into non-traditional areas such as residences, private member clubs, and yachts to capture the entire travel journey and solidify customer loyalty. This expansion presents investment and innovation opportunities, where investors should carefully consider brand choices as they are buying into an entire ecosystem. As global hotel development slows, look for brand acquisitions to drive shareholder value. Brand consolidation may also occur as traditional brands enter new verticals, and partnerships will be formed to leverage expertise and create shared customer equity.
The rise of sustainable hotel investment and regenerative tourism.
Consumers are increasingly making buying decisions that align with their personal values, with sustainability chief among them. While consumers have been slower to demonstrate a willingness to pay more for sustainable travel experiences, this has begun to change as the industry adopts standardized practices for hotels to communicate their sustainability commitments to travelers during the buying process. This has led to growing opportunities for green hotel investments and a rise in green financing options which has allowed investors to unlock new sources of capital in an otherwise turbulent capital market environment. The rise of sustainable infrastructure and a focus on responsible and regenerative tourism will shape the industry, with hotels investing in initiatives that prioritize the well-being of local communities and the environment.
There is an optimistic outlook for the global hotel industry in 2024. As consumers continue to spend on travel above all else, hotel performance will accelerate further with urban markets likely to lead the charge. Brands that prioritize sustainability, wellness, and authenticity will have an advantage. As capital market conditions improve, most investors expect to be net-buyers over the next 12 months, with cities like London, New York, and Tokyo likely to be the largest recipients of capital. Overall, the report forecasts positive RevPAR growth and opportunities for increased global hotel investment in the coming year.
JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totalling $83 billion worldwide. The group’s 370-strong global team in over 20 countries also closed more than 7,350 advisory, valuation and asset management assignments. Our hotel valuation, brokerage, asset management and consultancy services have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world.
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About JLL
For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.9 billion and operations in over 80 countries around the world, our more than 103,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.
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