81% of hotel investors expect to be net buyers: JLL

GLOBAL REPORT – With global RevPAR up 10.2% relative to 2019, it should come as no surprise that JLL’s latest Global Hotel Investor Sentiment Survey reveals that 81% of hotel investors plan to be net buyers over the next 12 months, which is the highest total ever recorded going back to the origin of this report in 2000.

Despite robust fundamental performance, global hotel investment volume has been subdued, underpinned by widespread macroeconomic headwinds, namely high debt costs and capital market dislocation. While some of these headwinds persist and others may arise, investors remain optimistic with most expecting to be net-buyers over the next year and looking to deploy increased capital into the hotel sector. Look for the global lodging industry to remain resilient and attract increased investment, including increased foreign investment, over the next 12 months.

JLL’s report suggests that urban markets are back in favor as 84% of investors expect to deploy the bulk of their capital into these markets with London, New York City and Tokyo emerging as the most appealing. Investors are also gravitating towards luxury and select-service hotels.

Buyers should also be prepared pay more for assets despite challenges that current owners face as JLL reports that 61% of investors expect hotel pricing on a per key basis to increase over the next year.

JLL also noted a surge in first-time buyers post-COVID, signaling attractive investment opportunities in U.S. hotels. JLL is tracking 1,000 first-time buyers into the hotel sector over the past three years, up about 50% from the three-year period prior.

While current owners are closely monitoring the RevPAR recovery profile of their hotel portfolios, many are also aware of the broader challenges in the market that will impact the sector’s performance, liquidity, and their ultimate ability to transact. The top three challenges investors shared in this year’s survey are:

• Cost of capital
• Rising insurance costs underpinned by growing climate risk
• Deferred capex, with many brands reinstituting PIPs

To download the complete report, click here.