Investor sentiment for hotel product was “cautiously optimistic”, according to JLL Hotels & Hospitality’s annual Hotel Investment Outlook.
The group reported that global hotel transaction volumes in 2019 reached $66bn, but liquidity fell by 6%, with a 10% to 15% drop forecast this year.
JLL said that generalist investors who invested in multiple asset classes would continue to be the largest hotel investor group due to their mandate to deploy capital. Generalist investors took part in 70% of investment volume in 2019 versus nearly 60% a decade ago. International capital was also forecast to be a key provider of global liquidity, with capital outflow volume expected to rise across North America, Europe and Asia.
The group pointed to the rise of affordable lifestyle hotels, with changing guest demands and increased competition from the alternative accommodation space fuelling hotel parent companies’ interest in smaller, more technology-focused hotels located in urban areas. Over the past five years, the affordable lifestyle brand sector has seen the total global number of rooms more than double.
“While we expect global hotel transaction volumes in 2020 to trend slightly downward from last year, investors will continue to pursue areas of opportunity as the market remains relatively strong,” said Mark Wynne-Smith, global CEO, JLL Hotels & Hospitality. “Furthermore, the evolving nature of the sector with the rise of the hospitality operating model, affordable lifestyle hotels, and new investors to the space are key industry trends that will provide exciting opportunities for the sector as we begin a new decade.”