Skift Take

Global hotel transactions hit the second lowest in a decade last year – only the exceptional 2020 pandemic year was worse.

Global hotel dealmaking will speed up in 2024 thanks to a more positive financing environment, exceeding 2023’s unusually low level by 15% to 25%.

Expect at least $58 billion in deals this year, according to JLL Hotels & Hospitality. During the past five years, this investment advisory firm has helped trade more than $60 billion in hotel assets. Skift got an exclusive early look at a report that JLL will release this week.

UPDATE: JLL has released its 2024 global hotel investment outlook.

Hotel Dealmaking to Surge

JLL believes 2024 will see a hospitality transaction boom for a few reasons:

  • Some private equity funds will be reaching their life expirations when they’ll have to disburse money back to investors. So they may be eager to deploy their capital while they still have it.
  • Many hotel owners are underwater in markets that have struggled to recover from the pandemic, such as San Francisco, Bangkok, and Mexico City. They face impending loan maturities and may seek salvation through asset sales.
  • Many hotel owners deferred capital expenditures during the pandemic and have been short of the cash to make necessary property improvement plans. They’re looking for buyers to take problem properties off their hands.

2023 Was an Abysmal Year for Hotel Dealmaking

Global hotel transactions hit the second lowest in a decade last year – only the exceptional 2020 pandemic year was worse. Rising interest rates caused many buyers and sellers to wait. Most believe debt costs won’t climb any higher and may perhaps moderate.

YearTransaction Volume, Billions

Hot Hotel Markets for Asset Sales

JLL believes that hotels in major gateway cities will see the most investor interest: London, Los Angeles, Paris, New York, Sydney, and Tokyo.

Pricing will strengthen. Last year, the single-asset price per hotel guestroom key in cities was $301,000 — 8% behind 2019 levels. But after a few years of sellers holding out for the ideal prices they want, more liquidity is expected in the market this year as sellers face pressure to exit their investments and buyers become more willing to pay a premium.

London, in particular, may draw interest from investors because of pent-up demand, given that only $867.8 million worth of deals happened last year, down 64% from the long-term average.

Landmark luxury, select-service, and extended-stay properties will be the most favored. Investors in North America and Europe properties will lead growth transaction volume, with Asia’s recovery ongoing but lagging.

Major hotel groups will also likely do an above-average level of dealmaking.

The supply of new hotels has slowed because of rising construction costs and ongoing supply chain and labor disruptions, so hotel groups are looking at persuading owners of existing properties to convert to their brands. However, hotel groups are all fighting over the same properties to convert. So they will face pressure to seek net rooms growth through acquisitions of portfolios.


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Tags: future of lodging, hotel deals, jll

Photo credit: The exterior of the Edwardian-style London hotel Radisson Blu Edwardian Bloomsbury Street. Source: Starwood Capital Group.

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