Global Hotel Investment Volume Hits $30B in H1
The best investment opportunities over the remainder of the year will be in the full-service hotel sector.
Global hotel investment hit $30 billion in the first half of the year as the sector continues its post-COVID recovery, with some experts suggesting the pace will continue to quicken in the second half of the year.
JLL’s Global Hotel Investor Sentiment Survey showed sales volume gains of 66% year-over-year, and just 4% less activity than in the first half of 2019. More than half of investors surveyed by the firm say they will employ a more aggressive investment acquisition strategy this year, and 29% showed interest in over $200 million worth of assets.
Europe, North America and Southeast Asia are investor favorites thus far this year, with Asia Pacific drawing serious institutional investor interest. Hotel transactions in the region hit $3.7 billion in the first half of the year. And as vaccine rollouts accelerate in North America, JLL says the market is ‘opportunistic’; same goes for Europe, where investors are cheered by increasing vaccination rates and the availability and lure of less-dense markets.
Full-service hotels will probably post the largest discounts, according to JLL’s survey, while select-service and economy hotels were less impacted by the pandemic. Nearly half of those surveyed indicated that the best investment opportunities over the remainder of the year will be in the full-service hotel sector.
Cap rate expectations compressed an average of 30 points globally so far this year. By contrast, in 2020 cap rates increased an average of 120 basis points over prior year numbers.
Nearly three-quarters of those surveyed say their property or portfolio RevPAR will return to 2019 levels in about three to four years. And accordingly, “investors are keen on operational changes and re-evaluating strategy,” JLL notes in the report. Going forward, investors will likely focus on profitability improvement measures, like service and amenity offering evaluations and labor optimization, ESG initiatives, and guest-facing and back-of-house technology implementations.