JLL’s latest Global Hotel Investor Sentiment Survey has signalled “strong growth ahead for the industry”.

After three years of slow market conditions driven by economic instability, disruptions in capital markets and increasingly volatile geopolitical tensions, “a renewed sense of investor optimism appears to be on the horizon for the hotel market”.

JLL’s annual Hotel Investor Sentiment Survey paints “an optimistic picture for the future”. It found a record 80% of investors intend to maintain or increase their capital investment in the hotel sector over the coming year – the highest total ever recorded in the survey since it began in 2000.

The hotel industry has shown “promising indicators of revival this year”, according to JLL, and 2024 has seen “a notable increase” in new investors entering the hotel sector, with a record 27% of YTD September investment volume driven by first-time buyers. Investment activity has also strengthened in recent months, with YTD Q3 liquidity reaching $40.9 billion, an increase of 10.2% relative to 2023.

Meanwhile, foreign investment has soared to its highest level in three years, with Europe taking the majority share. Overall foreign investment has reached $7.4 billion so far in 2024, with Europe attracting $5.2 billion of this – an impressive 70%.

Robust operating performance

Global investors are expecting to deploy even more capital in 2025. Many cited European cities as the most desirable places for investment, with 78% planning to deploy the bulk of their hotel investment capital into city-based assets. The survey identified Lisbon, London, Madrid, and Zurich as among the most appealing targets for US and Asian investors, while European investors are also drawing their sights back home and expect to be primarily focused on domestic investments.

Will Duffey, head of EMEA hotels at JLL, said: “While hotel volumes have reported strong growth to date, signalling a period of renewed optimism, they're still some way off the 2019 peak… Falling interest rates and the stabilising cost of capital have been a significant driver of the change, with the robust operating performance of the sector also catching investors' eyes. Key urban centres are likely to be the main beneficiaries of this investment impetus, and the sector in European cities could be set for a significant period of volume growth as we look ahead to 2025.”

JLL’s research found that despite challenges like rising costs and geopolitical uncertainties, Europe’s fundamentals are strong, attracting an increase in cross-border activity in 2024. About 64% of cross-border hotel investors cite value-add opportunities as their primary investment strategy over the next 12 months. The survey also showed a strong preference for luxury and extended-stay assets, which are likely to be the largest recipients of capital over the next year.

Herpreet Kaur Grewal