Hospitality investment has become an increasingly attractive asset class for investors in recent years. The hospitality sector, including hotels, resorts, restaurants, and other leisure properties, offers stable cash flows and high yields compared to other real estate classes. As the travel and tourism industry continues to grow globally, there is rising demand for hospitality assets from investment companies, real estate firms, private equity firms and other institutional investors. This article will examine the key players in hospitality investment, emerging investment trends and opportunities.
Major hospitality investment firms and their strategies
Some of the top hospitality investment companies globally include real estate giants like Blackstone Group, which owns stakes in hotel chains like Hilton and La Quinta. Blackstone has deployed over $50 billion in hospitality real estate. Another key player is Brookfield Asset Management, which has over $60 billion in hospitality assets. Brookfield focuses on acquiring quality assets rather than brands. Other notable companies are GIC, QIA, APG Group, Citadel Investments etc. These mega investment firms typically acquire trophy assets and portfolios in prime locations and gateway markets. They leverage their large capital, operational expertise, brand relationships and global footprint to enhance returns.
Rising capital flows and investment volumes
According to JLL’s annual Hotel Investment Outlook 2022 report, global hotel investment volumes reached $121 billion in 2021, doubling from 2020. The Americas saw volumes of $52 billion, followed by EMEA at $43 billion. US and UK were top countries. Investment activity is further expected to rise 10-15% in 2022 as travel demand picks up. Another key trend is the surge in fundraising by private equity firms and investment managers focused on hospitality assets. For instance, Wheelock Street Capital closed a $2 billion fund in 2021 dedicated to hotels. Highgate Hotels also raised $1.5 billion for resorts and leisure assets. This availability of large dry powder signals rising capital flows into hospitality.
Opportunities in alternative hospitality assets
While hotels have traditionally attracted significant investment, alternative hospitality assets like senior living, student housing, medical lodging and glamping resorts are also gaining interest. For example, Ventas invested over $1 billion in university-based housing in 2021.““ These assets can provide stable yields as well as lower volatility compared to hotels. Investors are also looking at distressed opportunities and recapitalizations to acquire assets at favorable valuations amid economic cycles. Conversion of unused office and retail assets into boutique hotels, aparthotels or flexible spaces is another emerging opportunity.
In summary, hospitality is gaining momentum as an asset class among leading global investment companies who are deploying record capital into hotels, resorts and other hospitality properties. Though hotels continue to attract lion’s share of investments, alternatives like senior housing and student accommodation are also emerging as attractive segments. The growth of travel demand globally will likely result in a secular rise in investment activity going forward.