Global Hotel Investment Outlook 2022

The global lodging industry demonstrated its resilience in 2021, following the drastic and immediate shock demand observed in 2020 with the onset of the COVID-19 health crisis. Increasing vaccination rates, tremendous amounts of government economic stimulus, coupled with lockdown fatigue elevated lodging demand to unexpected heights, helping accelerate the industry’s recovery. At year-end 2021, the proportion of RevPAR recovered relative to 2019 by region ranged from 50% to 79%, with the Americas leading the way. That said, performance was uneven with markets heavily dependent on business and group demand more slowly progressing towards a full recovery than markets reliant on leisure demand. Similarly, markets that historically relied on international demand faced greater challenges than those dependent on domestic demand.

In 2022, the make-up of demand and the progression of the recovery will continue to be top of mind for hotel owners, operators, and investors. Additionally, the industry will have to navigate operational hurdles brought on by labor shortages, rising inflation, supply chain issues and the impact on service levels given the difficulties operating in such an environment. With ESG evolving beyond corporate statements, sustainability will also be a key focus as failure to commit to both short and long-term sustainability goals have the potential to decrease asset value, increase operational costs, and discourage consumer demand. Furthermore, the lodging industry will have the opportunity to capitalize on the growing trend of “hotelization of commercial real estate” as traditional real estate sectors rethink how individuals experience their spaces. At the same time, markets that are leveraging the current operating environment to transform and augment their position in the tourism marketplace stand to see outsized demand and investment growth. With an increasing number of investors eagerly seeking assets that can generate income and simultaneously serve as a formidable hedge against inflation, the lodging industry will benefit from the plentiful capital on hand ready for deployment.

Key Takeaways

1. Global transaction volume increased 131% year-over-year, totaling $66.8 billion in 2021

2. Investment dollars to chase markets that have augmented their profile since the pandemic

3. Post-covid headwinds threaten operating margins and may hinder RevPAR growth

4. The industry’s commitment to sustainability can lead to higher asset values, decreased operational costs, and increased consumer demand

5. Physical use of spaces to evolve with growing trend of hotelization of commercial real estate and blurring of sectors