According to JLL's Hotels & Hospitality Group's latest Global Hotel Investor Sentiment Survey, approximately 80% of investors plan to be net buyers in 2022.
Hotel investment in Asia Pacific will continue to recover in the fourth quarter of 2022 and into 2023 with more investors looking to deploy the highest levels of capital since the pandemic started.
Analysis by JLL shows that hotel investors expressed a renewed appetite to increase exposure to the sector as fundamentals continue to recover. Approximately 20% of investors indicated they will deploy between $501 million to $1 billion+ worth of capital into the hospitality sector, up from 7% of investors in 2021 and 16% in 2020.
"The recovery of Asia Pacific's hotel sector has accelerated in the past few months as travel restrictions ease, which is translating into an uptick of renewed investor interest in the space despite some of the broader economic headwinds. Our projection of $10.7 billion in total hotel investment in Asia Pacific for 2022 remains unchanged, backed by improving sentiment on the long-term fundamentals of the industry in this region in the coming years," says Nihat Ercan, Senior Managing Director, Head of Investment Sales, Asia Pacific, JLL's Hotels & Hospitality Group.
According to respondents, London, Tokyo and Boston emerged as the top three markets for hotel investment, pointing to the resurgence of investor interest in urban markets. While interest in Tokyo comes as it is recovering at a slower pace than other markets due to gradual border control restrictions, the primary catalyst behind Tokyo's recovery is high levels of domestic demand. Room nights sold as of July 2022 grew 66% relative to the same period in 2021, with the upscale hotel segment accounting for the highest growth. Muted supply growth over the next two years, with a compound annual growth rate (CAGR) of 0.9%, will further Tokyo's performance recovery.
Moreover, the depreciation of the Japanese Yen versus the US Dollar by nearly 20%, as well as Japan's low interest rate environment, will continue to boost foreign investment demand in the near-to-medium term.
Over the next six months, 57% of investors anticipate the best investment opportunities to emerge across traditional hospitality property types, including full-service and select-service hotels. Furthermore, 82% of investors indicated that they are targeting value-add investment opportunities, and 34% of investors are interested in vacant possession or unencumbered hotels.
Although the pace of recovery will vary by region, hotel fundamentals are expected to continue recovering, albeit at a more protracted rate, given global economic headwinds. Significant pent-up demand for travel and experiences coupled with increasing corporate and group demand will help further drive the recovery. Investor interest in the sector is expected to remain strong, with transaction activity picking up in the medium term.
JLL's Hotel Investor Sentiment Survey is the only truly global survey of its kind and has been referenced by the global hotel investment community since its inception in 2000. Responses for JLL's most recent survey were collected from July to August 2022. This survey represents a compilation of 7,800+ data points from hotel investors on future hotel operating performance expectations, yield requirements and future cap rate trends.