Global Hotel Investor Sentiment Survey - Research Hotels & Hospitality July
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
July | 2021 Research Hotels & Hospitality Global Hotel Investor Sentiment Survey
Global investor profile
48% private equity, institutional investors,
and investment fund entities
Regions typically sourced for funds
22% hotel operators
13% developers
22%
North America
29% Europe
9% high-net worth individuals/family office 20%
Southeast Asia
4% asset mangers
16% 13%
Rest of the world* Global*
4% REITs
*Rest of world pertains to funds sourced from emerging countries.
Global pertains to funds sourced from across the world.
2 Global Hotel Investor Sentiment Survey | July 2021
Global hotel investment activity picking up, albeit a staggered
regional market recovery is expected
Global hotel investment activity in H1 2021 reached $30 billion, representing a strong increase in sales activity of
66% year-over year, and only 4% less than the level achieved over the same period in 2019. The level of activity
Major takeaways
observed during the first half of 2021 was primarily driven by an extraordinary boost in portfolio activity driven
by entity-level deals, including The Blackstone Group’s acquisition of Borne Leisure in the United Kingdom for
a rumored $3.9 billion and The Blackstone Group and Starwood Capital Group’s acquisition of Extended Stay of
America for $6.0 billion in the Americas. The Americas accounted for nearly 70% of total global hotel investment
51%
of investors responded that they
volume in H1 2021, as the region benefited from a high proportion of the population being vaccinated and would employ a substantially
demand ramping up faster than expected upon cities lifting their restrictions. Activity across APAC and EMEA increased to aggressive
remained more subdued given lower vaccination rates, recent COVID-19 outbreaks and renewed lockdown and investment acquisition strategy Europe, North America, and
in 2021, up 16 percentage points Southeast Asia emerged as
travel restrictions.
from 2019 and 2020. the top three regions for hotel
investment in this year’s survey.
Nevertheless, with the pace of hotel investment activity expected to accelerate in H2, we decided it would
be an appropriate time to survey global hotel investors to further understand their evolving investment
appetite, expectations around the industry’s recovery timeline, and industry outlook.
71%
of investors revealed that they
Global hotel investment volume 2016 - H1 2021 will be net buyers in 2021.
In 2021, the Americas and
$90
EMEA observed surveyed cap
rates compress 18 and 42 basis
$80 points, respectively relative to
$77
prior year survey expectations,
$71 Access to the debt capital while in APAC, surveyed cap
$70
$67 markets may present a challenge rate expectations remained
Global Hotel Investment Volume ($in billions)
$64 to consummating transactions, largely unchanged.
with 44% of hotel investors
$60
indicating that for existing or
new acquisitions, their access to
$50 debt financing compared to pre-
COVID-19 is weaker.
$40
Sustainable operating
70%
programming named one of
$29 $30 the top three operational
$30
priorities over the near-term by
of investors anticipate their hotel investors.
$20 $18 property/portfolio RevPAR will
return to 2019 levels in three to
four years.
$10
$0
2016 2017 2018 2019 2020 H1 202 0 H 1 2021
Americas APAC EMEA
3 Global Hotel Investor Sentiment Survey | July 2021
Hotel investment appetite growing with investors keen to capitalize
on unique opportunities in the market
Investors expressed a renewed sense of Expected acquisition levels Global hotel acquisition sentiment
optimism surrounding hotel investment 100% $751 - $1 billion $751 - $1 billion 100%
Passive
activity, as evidenced by their higher expected $751 - $1 billion $501 - $750
$501 - $750 million
Passive
Passive
90%
acquisition levels. In fact, 29% of investors million
24% 90%
29%
indicated that they are interested in acquiring 80% $251 -$ 500
$251 - $500
million
Moderate
80% Moderate
over $200 million worth of assets, up from 25% million
in 2020. These expectations are influenced by 70% 70% Moderate
the enhanced level of clarity we now have on $501 - $750
the industry’s recovery. 60% million
$100 - $250
60% Active
$100 - $250
million Active
million
Moreover, 51% of investors responded that 50% 50%
Active
they would employ a substantially increased
40% 40%
to aggressive investment acquisition strategy Substantial
in 2021, up 16 percentage points from pre- 30%
$251 - $500
million 30%
COVID-19 and 2020 levels. Investors believe
that in today’s lodging market, more attractive 20% $100 - $250 under $100 under $100 20% Substantial Substantial
buying opportunities will emerge relative to 2019 million million million
and 2020, due to the industry’s growth slowing 10% under $100 10% Aggressive
million
as it entered its tenth consecutive year of growth Aggressive Aggressive
0% 0%
and the onset of the pandemic, respectively.
Pre-COVID-19 2020 2021 Pre-COVID-19 2020 2021
4 Global Hotel Investor Sentiment Survey | July 2021Europe, North America, and Southeast Asia will be top of mind as
investors seek hotel investment opportunities
As investors look to deploy an increased level of capital Expected investment activity by region
70%
towards hotel assets, Europe, North America, and Southeast 100%
Asia emerged as the top three regions for hotel investment 2%
in this year’s survey. Investor interest in North America 3%
16%
is spurred by an increasing proportion of the population 90%
3%
being vaccinated, loosening COVID-19 restrictions and 6% of investors will be net buyers
strong domestic consumer travel sentiment in the United 2%
States. Across Europe and in particular, the U.K., vaccination 80%
10% 4%
rates are improving, which bodes well for the acceleration Nearly
50%
of domestic demand. Investors in Europe are looking at 12%
70%
the lodging industry more holistically and evaluating less
15%
dense and remote markets for investment as they aim 2%
to diversify their strategies. Southeast Asia, on the other 6% of investors expect the best
60%
hand, is grappling with a resurgence of COVID-19 cases, investment opportunities to
with vaccination rates largely trailing Europe and the emerge across full-service hotels
United States. Investors however remain optimistic for a 50% over the next six months
strong rebound in recovery and an eventual opening of the 25%
Southeast Asian markets to inbound tourism, in particular to 29%
the lucrative Chinese market. The region’s key resort markets 40%
are set to also benefit from the pent-up leisure demand and
buyers continue to monitor opportunities in this space.
30%
Nearly 60% of investors also indicated that Europe and North
America are the top two regions where they will be divesting
20%
assets, which should accelerate the pace of transaction 34%
activity in H2 2021. The survey results suggest that there will 29%
be more product available in the market for those investors 10%
seeking to expand their hotel portfolios. Moreover, across
different hotels types, investors expect the best investment
opportunities to emerge across the full-service sector. 0%
Investors are likely to find the deepest discounts in pricing Invest Divest
across this type of lodging product relative to other hotel
Europe North America Southeast Asia
types, such as select-service and economy hotels. Unlike
full-service hotels, the performance of select-service and North Asia Australasia South America
economy hotels was less impacted during 2020, as these Middle East Africa Other
hotels were able to fill rooms with first-responders, essential
workers and transient leisure demand and tend to operate
more efficiently with leaner staffing models.
5 Global Hotel Investor Sentiment Survey | July 2021Global investor cap rate expectations compressed an average
of 30 basis points in 2021
In 2020, amid limited hotel trades coupled Investor surveyed cap rate expectations
with a zero/negative cashflow environment,
investors struggled to underwrite hotel
acquisitions. The high level of uncertainty
8.5%
resulted in increasing cap rate expectations, APAC
8.0%
with JLL’s HISS – which was administered
four months after the beginning of the global
COVID-19 pandemic – revealing an average
increase of 120 basis points globally relative 6.9%
EMEA
to 2019. In this year’s survey, investor cap rate 7.3%
expectations compressed an average of 30
basis points globally, driven by a decrease in
cap rates in the Americas and EMEA. 8.3%
Americas
8.5%
5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0%
H1 2021 2020
6 Global Hotel Investor Sentiment Survey | July 2021Limited access to debt financing may be an obstacle to
increased transaction activity
While investor sentiment has improved Access to debt financing relative to pre-COVID-19 Change in all-in cost of debt
significantly in the first six months of 2021,
approximately 43% of hotel investors surveyed
indicated that for existing or new acquisitions, 4% 5%
their access to debt financing compared 5%
11%
to pre-COVID-19 is weaker. Additionally,
those who can access debt noted that their
all-in cost of debt has changed relative to
pre-COVID-19, with 70% of those surveyed Worse +50 to 100 bps
20 %
experiencing some level of increase in pricing. 43% 44%
13% Same 0 to 50 bps
Much worse No change
Better 0 to -50 bps
Much better -50 to -100 bps
29% 26%
7 Global Hotel Investor Sentiment Survey | July 2021Pace of hotel investment recovery tied to improvement
of lodging fundamentals
Survey results revealed that the top two Occupancy recovery analysis by region
indicators that investors are monitoring as
80% 90%
a signal to participate more actively in the
hotel investment space are a wide dispersion 70% 79% 80%
of a vaccine and occupancy within 60% to
70%
70% of 2019 levels. In the Americas, where 60%
69%
a higher proportion of the population is
Proportion Recovered
60%
56%
vaccinated and domestic leisure travel 50%
Occupancy
remains red hot, investors are much more 50%
40%
optimistic surrounding the pace of activity, 40%
with 70% of investors expecting activity to 30%
increase in Q3 and Q4 2021. Investors in APAC 30%
were slightly more conservative in their hotel 20%
20%
investment expectations, with 61% of those
surveyed expecting activity to increase in the 10% 10%
second half of 2021 driven by sales activity
0% 0%
in Australia, Japan, China, Thailand, and Americas APAC EMEA
the Indian Ocean. As the APAC region’s most YTD June '21 Occupancy YTD June '19 Occupancy Proportion Recovered
liquid investment market in the first half of Source: JLL Research, STR
2021, China continues its impressive rebound
as a result of increased domestic leisure and
Q3 2021 Q4 2021 Q1 2022 Q2 2022
corporate travel coupled with the country’s
encouraging economic recovery. Similarly,
EMEA
in EMEA, recent outbreaks and renewed
lockdowns are hampering investor sentiment
and as such, the recovery of hotel investment APAC
is expected to be more protracted.
Americas
8 Global Hotel Investor Sentiment Survey | July 2021Top three hotel investor operational priorities
1 2 3
While hotel investors are closely monitoring
the RevPAR recovery profile of their hotel
portfolios, many are also keen on making
operational changes that can strategically
drive value over the long-term and serve as Profitability improvement Sustainable operational Guest facing and back
a hedge against any future demand shocks measures, including programming of house technology
to the industry. As such, throughout the service offering/amenity implementation
COVID-19 pandemic, hotel owners and reduction and labor
investors have been hyper-focused on asset optimization
management. We expect this approach to
continue with investors noting the following to
be their top three operational priorities:
Nearly
70%
of investors anticipate their
property/portfolio RevPAR will
return to 2019 levels in 3-4 years.
9 Global Hotel Investor Sentiment Survey | July 2021Final
Contributors
thoughts
Gilda Perez-Alvarado
Global CEO
JLL Hotels & Hospitality
gpa@am.jll.com
Over the past year, the lodging industry has made tremendous strides and Mike Batchelor
is inching closer to a full recovery. As vaccination rates around the world CEO, APAC
continue trending up, we expect to see significant improvements in both JLL Hotels & Hospitality
leisure, business, and group demand. These positive trends will translate mike.batchelor@ap.jll.com
into an accelerated pace of hotel investment activity. It is true that the road
ahead will be challenging as hotels adapt to post-COVID-19 guests’ needs
and hire new employees in a complex labor market. Nevertheless, hotel Will Duffey
owners, investors and operators that remain nimble and embrace this new Managing Director, EMEA
JLL Hotels & Hospitality
era can find ways to creatively drive value for their hotel portfolios. william.duffey@eu.jll.com
About the survey Nihat Ercan
JLL’s Hotel Investor Sentiment Survey is the only truly global survey of its kind and has been referenced by the global Senior Managing Director, APAC
hotel investment community since its inception in 2000. Responses for JLL’s most recent survey were collected during May JLL Hotels & Hospitality
and June 2021. This survey represents a compilation of 7,800+ data points from hotel investors on future hotel operating nihat.ercan@ap.jll.com
performance expectations, yield requirements and future cap rate trends.
Jones Lang LaSalle © 2020 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to
Jones Lang LaSalle and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains
the property of Jones Lang LaSalle and shall be kept confi dential. Reproduction of any part of this document is authorized only to the
extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of Jones Lang LaSalle. All Geraldine Guichardo
information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof. Global Research
JLL Hotels & Hospitality
geraldine.guichardo@am.jll.com
10 Global Hotel Investor Sentiment Survey | July 2021You can also read
