Dive Brief:
- In the third quarter of 2024, global hotel transaction volume reached $42.1 billion, up 13.6% year over year, according to JLL’s Global Hotel Investment Trends Q3 2024 report obtained by Hotel Dive.
- Large transactions, specifically, are on the rise, the report found. In the third quarter, there were 29 hotel transactions valued at $250 million-plus globally, 13 more than for the same period last year, per JLL.
- For the remainder of the year and beyond, “multiple stress points and robust fundamentals” will catalyze hotel transactions, according to JLL. In the U.S., hotel investment is expected to snowball in 2025 spurred by additional anticipated interest rate cuts, according to JLL Hotels & Hospitality Group Americas CEO Kevin Davis.
Dive Insight:
While “ongoing macroeconomic volatility” has suppressed short-term hotel deal volume, global hotel investment volume is expected to grow between 15% and 25% in 2024, JLL forecasted.
Driving the growth will be robust hotel performance coupled with a substantial amount of impending debt maturity on the horizon, significant “dry powder” (cash reserves or liquid assets) on-hand and rising capital expenditure needs, according to JLL.
Investors are particularly optimistic about urban markets, which have seen hotel performance soar globally due to an increase in group and corporate demand, the report detailed. During Q3 earnings calls, hotel CEOs attributed strong quarterly results to heightened group travel, with Marriott’s Anthony Capuano noting the strength of the group segment is “a really encouraging sign.”
U.S. investors are turning to urban and other high-barrier-to-entry markets because they can acquire quality assets at a significant “discount-to-replacement,” or for less than they could develop the same hotel, JLL noted in its H1 2024 U.S. Hotel Investment Trends report, published in August.
New York City followed London as the second largest global market for hotel transaction volume in Q3, totaling $1.6 billion in hotel deals, JLL’s Q3 report detailed. Notable deals in NYC in the quarter included Gencom’s reported $300 million acquisition of Thompson Central Park Hotel and Host Hotels & Resorts’ $265 million 1 Hotel Central Park buy.
Hotel investment is expected to ramp up in the remainder of this year and into 2025, JLL’s Davis said during a panel at this year’s Lodging Conference in Phoenix, noting that anticipated rate cuts will catalyze U.S. hotel deals. Other hotel leaders echoed Davis’ sentiment, with Extended Stay America CEO Greg Juceam saying 2025 will be an “explosive” time for hotel investment.
The EMEA region will see the largest hotel transaction volume growth in 2024 followed by the Americas and APAC, according to JLL. Buyers who are “well-capitalized and less reliant on leverage” will have an advantage in the market, the firm noted.
