PERSPECTIVE
THREE REASONS HOTEL TRANSA could pick up in the medium
Contributed by OPHELIA MAKIS , JLL HOTELS & HOSPITALITY GROUP
Following the unparalleled effects of COVID-19 on the lodging industry , U . S . hotel investment volume reached a full recovery in each of the past two years buoyed by accelerating fundamental performance . In 2021 , liquidity surged to $ 39.5 billion , an increase of 50 % relative to 2019 . The subsequent year , in 2022 , liquidity reached an even higher point at $ 42.4 billion , reflecting a 60.8 % increase relative to 2019 and achieving the second-highest annual total in U . S . history .
The relative strong performance occurred despite capital market dislocation impacting the second half of the year driven by the outbreak of the Ukraine-Russia war , geopolitical tensions between the U . S . and China and macroeconomic volatility stemming from a rise in interest rates and inflation .
With many of these headwinds intensifying in early 2023 , we expect the velocity of short-term hotel transaction activity to remain subdued . That said , there are three catalysts on the horizon that should ultimately spur hotel transactions over the mediumterm :
1 . MOUNTING FINANCIAL PRESSURE Since the start of 2022 , the all-in cost of debt for hotel loans has increased meaningfully as a result of the Fed ’ s monetary tightening . With $ 50-plus billion in hotel securitized debt slated to mature over the next four years , and many owners grappling with other financial constraints including PIP requirements following nearly three years of deferred maintenance , some owners will find it
34 hotelsmag . com May 2023