Investors entering the sector in new ways as outlook remains positive

A positive outlook for tourism and hotel operating revenues is pushing non-traditional hotel investment sources to enter the sector as they search for yield. Hotels are directly benefiting from robust consumer spending, increased traveller numbers from emerging markets and solid economic fundamentals. The latest data reveals double-digit RevPAR growth in key gateway markets, including Paris, Rome, Madrid, Berlin, Beijing, Hong Kong and Toronto.

There are now more ways in which investors can enter the sector, with increases in debt lending and M&A activity complementing direct acquisitions of assets. Debt funds, in particular, are emerging as a major source of financing for hotels in the U.S., as other lenders such as banks become more risk-averse.

Americas drives global hotels investment

Over the first nine months of 2018, hotel investment volumes reached US$43.3 billion, 5% down on 2017. Activity was driven by the Americas, which posted a 9.2% year-on-year uplift, with the U.S. accounting for 90% of volumes. Continuing positive economic sentiment in the U.S., combined with the prolonged RevPAR growth cycle, is encouraging domestic investment – which now accounts for 85% of overall national volumes.

While the U.S. stood firmly in the top position in terms of investment volumes, the UK, Germany and Spain followed close together. Combined, these markets accounted for 65% of EMEA investment.

Japan rounds off the top five global hotel investment destinations, recording a 15% increase year-on-year. China overtook Australia to rank second in the Asia Pacific region, with volumes reaching US$1.2 billion as domestic buyers focus on local opportunities.

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