Uncertainty and cautiousness plagued hotel investor interest in 2020 due to the COVID-19 pandemic. However, the global lodging industry is eager to move forward. According to JLL Hotels & Hospitality’s annual Hotel Investment Outlook, the industry’s resilience has shaped new experiences and demand from consumers. It has also introduced a wave of trends that have been accelerated as hotel leaders quickly shifted operations and strategy to navigate through one of the most transformational and economically challenging times in modern history.
The Global Outlook
Hotel liquidity was down more than 60% from 2019 levels, with nearly 50% of all transactions closing within the first three months of the year. Although challenging to navigate through a zero cash-flow environment, lenders were accommodating by granting forbearance agreements where possible.
Private equity groups and institutional investors took advantage of assets that were made available for sale and drove liquidity in 2020 by accounting for 54% of total volume. Approximately 21% of global hotel investments were in resort markets signaling the current investment appeal of less dense markets. Resort investment interest is expected to be a catalyst in driving hotel investment volume upwards of 35% from 2020 levels.
The pandemic will undoubtedly have long-term implications on the industry, over the short-term the following are trends to keep top-of-mind:
- Private equity groups and high-net-worth individuals will continue to be active investors of hotel assets in 2021
- The “manchise” structure is on the rise as hotel parent brand companies evolve from traditional management agreements
- Consumer preferences will drive hotel room redesigns and the acceleration of technology advancements
- Pressure to prioritize real estate investments grounded in environmental, social and governance (ESG) principles will take precedence globally