Hotel Deals to Soar — Exclusive Look at JLL Forecast

Global hotel investment is poised for a comeback this year after years of pandemic-driven turbulence, with JLL’s Hotels & Hospitality group projecting 15% to 25% growth in transaction volumes.

Skift got an exclusive preview of an outlook report that JLL's research division will publish this week. JLL has a notable perspective because the brokerage has helped trade more than $60 billion in hotel assets over the past six years.

Hottest Markets

JLL predicts three cities should benefit from the broader shift toward city-center hotels, with improved performance luring institutional capital.

• London

• New York City

• Tokyo

However, building new hotels in these and other major cities typically costs more than buying existing ones, so expect more conversions of existing hotels and offices than new construction.

The Context

The hotel industry finds itself at a key inflection point, JLL's analysts said.

• Global hotel investment volume in 2024 was $57.4 billion, the third-lowest annual figure since 2012. 

• Hotel investment levels are 17% below the historical average.

• While this year's deal volumes may jump at least 15%, the rebound in institutional investment in hotels won't be uniform. Urban markets will heat up, while resort areas will cool off.

• Lower interest rates could fuel more hotel investment.

• JLL will be watching for increased mergers and acquisitions activity by the major hotel groups, too. Acquisitions and partnerships with existing property portfolios will be key as organic supply growth, especially new construction, slows to just 2%, well below historical averages.

• Business travel remains 20% below pre-pandemic levels in many key cities like San Francisco. However, international inbound visitation may soon regain 2019 levels. If these markets improve in performance, that may reignite investor interest.

• Emerging markets like India and Saudi Arabia are becoming major players in domestic hotel development, drawing in capital. India aims to quadruple hotel rooms by 2030, while Saudi Arabia targets 150 million tourists by then.

• AI adoption is moving from nice-to-have to must-have across industries. In the short term, that may fuel the construction of data centers — and the dealmaking to build hotels near such projects.

• To be sure, a black swan event could upset optimistic forecasts. For instance, a minority of investors worry that a global trade war and the potential continuation of U.S. stimulus (either through tax cuts or government spending) might drive rates up over the long term — and hurt hotel investment.

Two-Track Recovery

Not everyone will benefit from the predicted boom in hotel investment, JLL said.

The global hotel industry faces a stark bifurcation in 2025. Urban gateway markets are poised for a rebound while resort properties, the pandemic-era stars, face a slowdown.

JLL's analysts recommend that hotel investors consider assets that typically maintain operational (and thus cost) discipline. Given their lean operating models, extended-stay and select-service properties in non-urban, non-resort markets seem relatively low-risk bets.

JLL's analysts also argue that the lines between hotels, homes, and offices have permanently blurred.

They say some savvy investors will develop properties that can serve multiple purposes — think extended-stay hotels that double as co-working spaces or lifestyle properties that attract both travelers and locals.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

Read the full methodology behind the Skift Travel 200.