According to a recent report published by Jones Lang LaSalle Incorporated (JLL), a UK-based global real-estate and investment management services company with offices in 80 countries, global investment in hotel projects will reach almost €50 billion in 2024. Whilst the figure represents a slight increase over 2023 (6.8%), it is still a decrease of around 22% compared to 2021 and 2022 (with global investments of €65.7 billion and €65.53 billion respectively). In any case, investment in 2024 is a far cry – at 41% – from that of 2015, when a spectacular €84.65 billion marked the peak of the last decade. Still, last year’s investment was almost 45% more than in 2020, the worst year of that period, when the pandemic paralysed the world.
But not only is there a gradual recovery in global investment in hotel and resort projects, according to JLL data, but the profile of deals has also changed. Whereas in 2015 large portfolios and corporate operations dominated (with investment averages much higher than today), in 2024 79% of transactions were individual assets, with an average deal size of only around €39 million, “22% below historical averages”. If anything, “Select-service and luxury assets were the most favoured”, as investors seem to prefer smaller investments in “irreplaceable hotels with in-place cash flow”. These data would reflect the lasting impact of high interest rates and risk aversion in capital markets.
In terms of sales, and in global numbers, the global hotel industry reached 4.8 billion room nights in 2024, or 102 million more than the previous year. This growth pushed revenue per available room (RevPAR) by 4%, albeit with regional gaps: Asia-Pacific remained 10% below pre-pandemic levels, while Europe and the Americas (Latin America, Canada and the United States) already exceed them by 26% and 17%. By 2025, RevPAR growth is projected to be between 3% and 5%, driven by corporate tourism and the recovery of Asian travellers.
Turning to global investment, according to the JLL report, the Asia-Pacific and Europe regions have been the main contributors to recent growth, while the Americas have shown some decline. The data shows specifically that this geographic area experienced a 15% decrease in hotel investment volume in 2024 compared to 2023. This contrasts with growth in the Middle East, Africa and Europe (36%), and Asia-Pacific (15%). The decline is mainly attributed to the delay in the Fed’s (US Federal Reserve) interest rate cuts and lower institutional capital activity compared to previous years.
Looking ahead, there seems to be reason for optimism. Investment, driven by improving financial conditions and the return of some major players to the market, is expected to grow by 15-25% by 2025. In this respect, two markets stand out in particular: India and Saudi Arabia. The former, with its huge population and growing middle class, is set to become one of the world’s largest tourist outbound destinations. On the other hand, with only 400,000 rooms at present (17% of them operated by global brands), it plans to add 100,000 new ones by 2030. The second, through ambitious projects such as those promoted by the ‘Vision 2030’ initiative, seeks to position itself as a leading global tourist centre. For its part, it aims to welcome 150 million tourists per year by 2030, with 102,000 additional rooms under development.
However, global hotel supply will grow by only 2% in 2025, well below the historical average of 4.2%. This will benefit properties “in urban cores and other high barrier-to-entry markets”. By this, the report refers to cities such as London, New York, Tokyo, Singapore and Madrid, which will attract more investment in 2025 precisely because they are established markets with stable demand. However, building new hotels in them is expensive and complex, a situation that protects the value of existing assets and will therefore encourage “investors to target top urban gateway markets”.
We will add a note on the impact of AI (artificial intelligence), which is expected to optimise labour costs – estimated to be around more than 50% of operational expenditure – thanks in part to predictive maintenance and labour scheduling based on occupancy predictions. At the same time, AI will enable guest experiences to be personalised, for example through effective management of travel recommendations.
From a general point of view, however, the global hotel industry is moving forward, but at a measured pace. Perhaps it has learned the lessons of the years of exuberance and is now prioritising sustainability over growth at all costs. The coming years are likely to show an industry that is more diversified, more technological and, above all, more aware of its strengths and limitations.
Source: Jones Lang LaSalle Inc.
