Hospitality sector performance strengthens

Despite geopolitical uncertainty throughout the course of 2017 the strengthening global economy has helped boost international tourism, with all three regions registering an increase in the number of arrivals and hotel operating performance registering a corresponding improvement in many markets.

Hotel transaction volumes lower despite investor confidence

Solid economic fundamentals together with promising hotel performance have helped strengthen investor confidence. However, the lack of properties available for sale in some markets has contributed to a 17% drop in global hotel investment volumes over the first nine months of 2017.

Investment volumes were largely flat in EMEA, supported by increases in the UK and Spain. The Americas continued to account for nearly half of global hotel transactions volumes and the largest amount of offshore capital but posted a decline of 23%, mostly due to a drop in portfolio transactions. Asia Pacific also saw volumes fall (by 26%), with limited stock availability leading to a drop in both single-asset transactions and portfolio sales.

Investment driven by a diversified group

The investment landscape is being driven by an increasingly diverse group, with institutional investors and Asian capital now growing their footprints in the hotel market.

While investment funds and private equity firms dominated the global hotel investment landscape in the third quarter, buyer composition differed in all three regions. In the U.S., investment from REITs has increased from 10% in 2016 to 30% over the first nine months of 2017. In EMEA, institutional investors are now a key buyer group, taking up 24% of hotel deals over the course of 2017, and in Asia Pacific HNWI and hotel operators represented 22% and 12% of deal flow respectively.

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