Asia Pacific will see an 80% increase in global hotel investment activity in 2022.

In 2022, about 80% of investors expect to be net buyers, according to the most recent global hotel investor sentiment survey by JLL’s Hotels & Hospitality Group.

In the fourth quarter of 2022 and into 2023, hotel investment in Asia Pacific will continue to rebound as more investors look to invest the most money they have since the pandemic began.

As fundamentals continue to improve, analysis by JLL reveals that hotel investors have expressed a renewed desire to increase exposure to the industry. A little over 20% of investors, up from 7% in 2021 and 16% in 2020, said they would invest between $501 million and $1 billion or more in the hospitality industry.

Nihat Ercan, Sen. Nihat Ercan: “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. 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.

The top three hotel investment markets, according to respondents, were Boston, London, and Tokyo, indicating a resurgence of investor interest in urban markets. While Tokyo is recovering more slowly than other markets due to progressively tighter border controls, high levels of domestic demand are the main driver of Tokyo’s recovery. The number of room nights sold as of July 2022 increased 66% in comparison to the same period in 2021, with upscale hotels contributing the most to this growth. Tokyo’s performance recovery will be aided by muted supply growth over the next two years, with a compound annual growth rate (CAGR) of 0.9%.

In addition, the nearly 20% depreciation of the Japanese Yen against the US Dollar and Japan’s low-interest rate environment will continue to increase the demand for foreign investment in the short- to medium term.

57% of investors believe that traditional hospitality property types, such as full-service and select-service hotels, will present the best investment opportunities over the next six months. In addition, 82% of investors said they are looking for value-added investment opportunities, and 34% of investors said they are interested in hotels with vacant possession or no liens on them.

Given the global economic headwinds, it is anticipated that hotel fundamentals will continue to improve, albeit at a slower rate. The pace of recovery will vary by region. The recovery will be further aided by significant unmet demand for travel and experiences as well as rising corporate and group demand. It is anticipated that investors will continue to show a keen interest in the industry, with transaction volume increasing in the medium term.

Since its inception in 2000, the international hotel investment community has referred to JLL’s Hotel Investor Sentiment Survey, the only survey of its kind that is truly global. Between July and August 2022, responses for JLL’s most recent survey were gathered. This study compiles more than 7,800 data points from hotel investors on anticipated future yield levels, operating performance benchmarks, and cap rate trends.