SPECIAL REPORT
HOLD ONTO YOUR HAT . THE ‘ DIAMOND AGE ’ OF TRAVEL IS GOING TO CREATE A SURGE IN TRAVEL DEMAND AND ROBUST KPIS FOR HOTEL ASSETS , CREATING ELEVATED VALUATIONS AND TRANSACTION ACTIVITY .
– GUY LANGFORD , DELOITTE ask . “ Domestic tourism really drove the hotel sector in 2021 , but the return of international travelers might be a welcome COVID booster .”
In Asia Pacific , Guichardo says , 2021 investment activity was on track to reach US $ 7 billion by yearend , which was in line with expectations . She adds that transaction volume is expected to increase in 2022 , stemming from a renewed confidence as borders gradually reopen and new capital sources emerge . Private Equity is expected to continue to chase hotel opportunities in Japan and Australia , with new pools of capital emerging from EMEA that are on the hunt for lodging acquisitions . In addition , China ’ s “ three red lines ” campaign is expected to drive a wave of hotel sales as cash-strapped developers divest non-core assets to improve balance sheets .
In Europe , 2021 investment activity rebounded compared to 2020 (+ 26 %) through the first three quarters , Guichardo continues . However , sales volume remained down , -38 % compared to 2019 . She says the appetite for acquisition is high and transaction volume is expected to increase in 2022 , driven by a renewed interest from international investors , particularly coming from Asia Pacific and the Middle East . There is significant pent-up demand for real estate investments , with US $ 86 billion in dry powder in September 2021 , driven by private equity .
Investment activity in the United States was strong through the first three quarters of 2021 , up 327 % and up 15 % over same-time 2020 and 2019 , respectively , according to JLL data . Transaction volume is expected to accelerate further in 2022 driven by the anticipated return to pre-COVID demand levels stemming from corporate and group travel , particularly in gateway markets , Guichardo says . “ There remains a potential for distress to emerge in the market ( US $ 31 billion worth of hotel loan debt will mature 2022-2025 ), which will also fuel activity , as evidenced by Starwood Capital ’ s recent US $ 10 billion opportunistic fund closing ,” she says .
When asked what types of deals are most likely to get done in 2022 , Guichardo points to the fact that through the third quarter of 2021 portfolio deals had accounted for 47 % ( US $ 19.4 billion ) of global hotel transaction volume . This follows the 2020 trend in which portfolio deals contributed 43 % of all investment activity , up from 39 % the year prior . “ This trend is expected to continue in 2022 as consolidation across the industry continues ,” she says . “ While a deal the size of Blackstone ’ s
54 hotelsmag . com January / February 2022