Revival in Global Hotel Industry: A Surge in Deals Expected in 2024

2024 is poised to witness a significant acceleration in global hotel dealmaking, with projections estimating a surge of 15% to 25% over the previous year's figures, potentially surpassing the $58 billion mark. This resurgence is primarily attributed to a more favorable financing landscape, as highlighted by JLL Hotels & Hospitality, a renowned investment advisory firm. Skift's exclusive preview of JLL's 2024 global hotel investment outlook report sheds light on this emerging trend, a striking contrast to the industry's recent struggles.

The year 2023 marked a challenging period for hotel transactions, recording the second-lowest figures in a decade, eclipsed only by the extraordinary circumstances of 2020. The pandemic's long shadow, coupled with escalating interest rates, resulted in cautious behaviors among buyers and sellers. However, as these rates stabilize, a renewed confidence is expected to invigorate the market.

JLL identifies several key factors contributing to this anticipated boom. First, the imminent life expirations of private equity funds necessitate capital deployment, sparking investment opportunities. Additionally, hotel owners in markets slow to recover from the pandemic, such as San Francisco, Bangkok, and Mexico City, are facing imminent loan maturities, potentially leading to asset sales. Furthermore, the pandemic-induced deferral of capital expenditures has left many properties in need of investment, presenting an attractive proposition for potential buyers.

The focus of investor interest is likely to be centered around major gateway cities like London, Los Angeles, Paris, New York, Sydney, and Tokyo. Notably, London is expected to attract significant attention due to its pent-up demand, as evidenced by a 64% decrease in deals from the long-term average last year. The most coveted properties are anticipated to be landmark luxury, select-service, and extended-stay hotels, with North America and Europe leading the growth in transaction volume. Asia's recovery, while ongoing, lags behind these regions.

Another noteworthy trend is the major hotel groups' heightened dealmaking activity, driven by the slowed supply of new hotels due to increased construction costs and supply chain and labor disruptions. These groups are likely to focus on converting existing properties to their brands, competing over a limited pool of desirable properties and potentially turning to portfolio acquisitions for net rooms growth.

In summary, the global hotel industry is at the cusp of a transformative phase, marked by a resurgence in dealmaking activities. This shift reflects a broader recovery and adaptation post-pandemic, setting the stage for dynamic changes in the hospitality landscape in 2024 and beyond.