Growth in worldwide wealth vaults global luxury travel to new heights creating increased investor interest

CHICAGO, May 15, 2023 – The global luxury hospitality industry is undergoing a transformation as luxury hotels have risen in popularity in tandem with rising global wealth and consumers’ increased prioritization on immersive experiences. The number of luxury hotel brands and supply have increased by more than one million rooms over the past 40 years. Investors have taken notice as luxury hotels have become an increasingly institutional investment and changing consumer preferences give rise to new investment opportunities.

As the world becomes increasingly connected and travelers seek personalized experiences, look for luxury hospitality to evolve and grow even further. JLL Hotels & Hospitality Group’s report on The Evolution of Global Luxury Hospitality highlights six key takeaways about the transformative industry:

Growth in worldwide wealth vaults luxury travel to new heights. High net-worth individuals (HNWIs) contribute approximately 36% of the world’s spend on travel and nearly 70% of the spend on luxury travel. As the HNW population grows worldwide, expect luxury travel to accelerate.

Global luxury hotel rates accelerate in tandem with growing demand. As demand for luxury travel accelerates, luxury hotels have benefitted. With nearly all global travel restrictions lifted and demand for luxury travel on the rise, expect luxury hotel rates to remain elevated throughout 2023 as investors and operators look to maximize profitability.

Luxury hotels comprise an increasingly large share of global hotel supply. By 2033, there will be 1.7 million luxury hotel rooms in the world, equating to 7.6% of total hotel supply. Supply and demand for luxury hotels is expected to continue to grow over the next decade.

The growth of stealth wealth has given rise to ultra-luxury hotels. Over the next ten years, 46,000 additional ultra-luxury hotel rooms will open around the world. As the ultra-high net-worth (UHNW) population continues to grow, expect a further increase in ultra-luxury hotels.

Institutional investors gravitate towards luxury hotels underpinned by rising yields. Luxury single-asset hotel liquidity exceeded $10.0 billion in both 2021 & 2022 for the first time since 2015 driven by strong performance in the Americas. Expect luxury hotels to continue to attract high levels of investment, particularly in urban gateway cities, as international travel re-emerges.

Luxury hotels can transform a destination. The luxury tourism industry has boomed from the opening of hotels and resorts in areas such as Costa Rica, Madrid, and the Maldives. As the luxury hotel market evolves, it is likely that hotels will continue to differentiate themselves by offering more personalized and unique experiences that showcase the best of what the destination has to offer.

As the world’s wealth continues to grow, expect the luxury travel segment to transform further as traditional hotel brands look to own the entire traveler experience. Luxury hotels have the potential to transcend beyond simply places to sleep and become an immersive part of life thereby creating new opportunities for investment.

JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totaling $83 billion worldwide. The group’s 350-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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