Among the emerging trends: blending of live-work-play
spaces, rising influence of emerging markets, and transformative AI adoption in
hospitality.
JLL reported that global hotel investment volume reached
$57.3 billion in 2024, a 7% increase from 2023, but remained 17% below
historical levels driven by historically limited portfolio volume and
significant declines in average deal size. The global increase was fueled by
growth in APAC and EMEA, while the Americas transaction volume declined
modestly for the second consecutive year.
Private equity remained the most active hotel buyer
globally, with a notable increase in investments from high-net-worth
individuals, REITs and first-time hotel investors. JLL said this trend is
expected to continue in 2025 and beyond, with cross-border investments likely
to rise as U.S. investors capitalize on a strong dollar and cash-rich Middle
Eastern investors look to deploy capital into Europe and select U.S. cities.
Global hotel investment volume increase will be catalyzed by impending loan maturities, deferred capital expenditures, private equity fund-life expirations, and moderating RevPAR in some markets, with the Americas expected to see the largest growth followed by EMEA and APAC.
JLL Hotels & Hospitality
JLL added that the 2025 global hotel investment volume increase
will be catalyzed by impending loan maturities, deferred capital expenditures,
private equity fund-life expirations, and moderating RevPAR in some markets,
with the Americas expected to see the largest growth followed by EMEA and APAC.
The luxury and select-service sectors will continue to be
most favored and liquid in 2025, according to JLL, with urban cities and high
barrier-to-entry markets expected to attract the most investor interest. It
added that foreign investment should also accelerate further as some investors
look to capitalize on strengthening currencies. Cash-rich Middle Eastern and
select U.S. private equity investors will likely be the most acquisitive,
targeting quality assets across Europe and Asia, respectively.
JLL said it believes slowing new supply in 2025 will spur
hotel brands to continue to use their balance sheets to fuel net unit growth, a
key driver of shareholder value. It said to look for increased hotel brand
M&A and private equity investment in third-party management companies,
non-traditional lodging brands and hotels in the lifestyle sector.
“We are hopeful that improved liquidity in the debt and
equity markets will allow those segments to return to their traditional
contributions toward overall sales activity,” said Daniel Peek, president,
Americas, JLL Hotels & Hospitality Group.
Key themes to watch in 2025
JLL identified three key themes that will impact the
marketplace this year.
- The boundaries between living, working, and
playing are blurring, with lifestyle hotels emerging as the new "third
place." This shift is driving expansion into branded residences and
alternative accommodations as hotels capitalize on the growing experience economy.
- Emerging markets, particularly India and Saudi
Arabia, are set to play increasingly significant roles in shaping future travel
trends, creating new opportunities for development and investment.
- Strategic implementation of AI will be crucial
for optimizing hotel operations, enhancing guest experiences, and addressing
ongoing labor challenges.
"The hotel industry stands at a transformative
crossroads, where embracing technological innovation and adapting to evolving
consumer preferences will be key to unlocking unprecedented value and shaping
the future of hospitality,” said JLL’s CEO for the Americas, Kevin Davis.
Added JLL’s Global Head of Hotels Research Zach Demuth, “Global
real estate investors are increasingly gravitating to the hotels sector
evidenced by near historic levels of first-time capital invested in 2024. We
expect this dynamic to continue throughout 2025 as hotels emerge as a preferred
asset class driven by outsized yields, robust operating performance and
favorable supply dynamics.”