Global Hotel Investor Intentions Survey 2024

• Over half of the 300 hotel investors surveyed worldwide by CBRE Hotels Research intend to buy more in 2024 than in 2023, while only 14% expect to buy less.
• Plans for increased hotel investment across regions are based on expectations of higher returns, price adjustments, distressed opportunities and a lower cost of capital.
• Nearly 75% of respondents say they are most attracted to opportunistic and value-add hotel assets in 2024.
• In the U.S., upper-upscale and upscale/upper-midscale are the most popular chain-scale targets in 2024. Canadian investors favor lower- and middle-price tier chain scales, while higher-price tier properties are preferred in Europe, Mexico, Central America and the Caribbean. Upper-upscale properties are the most popular investment chain scale among Asia-Pacific investors.
• Resorts are the most attractive hotel property type for investors in the U.S., Mexico, Central America and the Caribbean. Central business districts (CBDs) are the most attractive submarkets for European and Canadian investors, while Asia-Pacific and European investors particularly favor those in gateway cities.
• In the U.S., gateway markets like New York and Washington, D.C. topped the list of cities expected to outperform in 2024, along with leisure-focused markets like Miami, Charleston and Austin. In Europe, investors favor gateway markets like London and Madrid. Among Mexican markets, Los Cabos, Cancun and Mexico City are expected to have the strongest performance in 2024.

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CBRE Hotels Research is cautiously optimistic about hotel market fundamentals this year, as outlined in our 2024 Global Hotels Outlook report. Following a 33% drop last year, we expect investment activity to pick up in the second half of 2024 due to highly anticipated Federal Reserve interest rate cuts.

Figure 1: Global Hotel Investment Volume & Share of Cross-border Capital

CBRE’s inaugural Global Hotel Investor Intentions Survey of more than 300 investors from the Americas, Europe, Asia-Pacific and the Caribbean casts a positive outlook on global hotel investment in 2024. More than 50% of surveyed hotel investors plan to buy more this year than last, while only 14% expect to buy less. Investors from the U.S., Mexico, Central America and Europe are the most optimistic about increased investment activity.

Figure 2: Investor Intentions for Hotel Acquisition Allocations

Cross-border investment is an important source of hotel capital. Approximately 20% of survey respondents invest cross-regionally. We believe the percentage of intra-regional investors, (i.e., U.K. investments in Spanish or French hotels) is considerably higher. Given the positive sentiment among investors, CBRE Hotels Research expects that the cross-border capital share of total global hotel investment will increase in 2024.

Figure 3: Percentage of Investors Engaging in Cross-regional Hotel Investment

Other key findings of our survey include:

• More than half of Americas region investors said they are mostly targeting hotels affiliated with globally recognized brand families (Marriott, IHG, Hilton, Rosewood, etc.), while the highest percentages of European and Asia-Pacific investors said they are mostly targeting vacant-possession¹ hotels. U.S. and European survey respondents showed a preference for hotels affiliated with globally recognized brand families. However, more than half of Asia-Pacific investors said they are more likely to target independent hotels for short-term investment.

¹ Either the property is vacant and not operating as a hotel or there is a lease/management in place that terminates upon sale.

Figure 4: Branded Hotel Share of Total Supply in 2023 & Share of Surveyed Investors Targeting Branded Hotels in 2024

• Full-service remains the most preferred hotel concept globally, favored by 38% of survey respondents. However, U.S. investors expressed more interest in limited-service (40%) than full-service (32%), followed by extended-stay (21%). Interestingly, approximately one-third of Asia-Pacific, Mexican and Central American investors favor hotel-branded residential properties.

Figure 5: Percentage of Hotel Concepts as Investment Target by Region

• Upper-upscale and luxury hotels are the most preferred hotel classes globally by 45% and 39% of surveyed investors, respectively. There are some preference variances between the regions; for example, more Canadian investors said they favor mid- and low-priced hotel classes than the global survey average, while U.S. investors prefer upscale and upper-midscale properties. However, all hotel classes scored high, with over 50% of investors finding them either somewhat or most attractive.

Figure 6: Attractiveness of Hotel Types for Investment Globally

• Almost half of all surveyed investors find resort markets the most attractive locations for hotel investment. Resort locations are most favored by U.S., Mexican, Central American and Caribbean investors, while urban locations are most favored by European, Canadian and Asia-Pacific investors.

Figure 7: Attractiveness of Hotel Locations for Investment Globally

High costs remain the biggest challenge for investors this year: borrowing costs (52% of those surveyed), labor costs (44%), and construction costs (26%). Geopolitical risks were among the top three concerns for investors from Europe, Asia Pacific, Mexico and Central America.

Figure 8: Top Challenges for Global Investors

U.S. investors have generally positive sentiment about the hotel market this year, with half of those surveyed planning to increase their hotel investment. This is being driven by expectations of higher total returns and favorable price adjustments. For those who plan to buy less this year, dispositions to strengthen the balance sheet, along with securing and servicing debt, are the top concerns.

Figure 9: U.S. Investors’ Buying Intentions

The most favored location types are central business districts (CBDs) and resorts, while upper-upscale and upscale/upper-midscale are the most popular chain-scale targets in 2024. We expect RevPAR growth of 4.1% for urban locations, with increased group, business and international travel. We also expect consistent leisure demand and modest ADR gains to support 2.0% RevPAR growth for resort locations.

Figure 10: Most Attractive by Chain Scale – U.S.

Figure 11: Most Preferred Location Type – U.S.

Figure 12: Hotel Acquisition/development Intentions by Service Offering – U.S.

Increased borrowing costs and labor expenses are the most challenging issues this year, followed by higher insurance costs. These costs are likely to pressure margins further in 2024. While we expect traditional hotel demand and pricing may be tempered by competition from alternative sources like cruise lines, short-term rentals and outdoor lodging, U.S. investors do not appear as concerned with this competitive encroachment, with 29.5% identifying competition from alternative sources as a challenge.

Figure 13: Major Challenges for Real Estate Investors in 2024 – U.S.

Major urban markets like New York and Washington, D.C. are expected to have the strongest hotel market fundamentals in 2024, along with leisure-focused locations like Miami, Charleston and Austin. Given limited new hotel supply and restrictions on Airbnb units, New York City is 2024’s most attractive investment market, followed by Miami, Charleston and Boston. Perhaps because more distressed assets could enter the market and make pricing more favorable, investors indicated interest in San Francisco—a market that has lagged in recovery since the pandemic.

Figure 14: Markets With Highest Investor Interest – U.S.

Canadian hotel investors fall into two broad categories: those with hotels as their core business, accounting for more than 75% of their investment portfolio, and those with hotels as a value-added business, accounting for less than 25% of their portfolio. Almost all investors expect their hotel allocation to remain about the same as in 2023, with only small increases or decreases based on opportunities. Those who expect an increase cite favorable total return prospects as the main driver, while those who expect a decrease cite declines in gross operating profit and difficulty in securing and servicing debt.

Figure 15: Portfolio Allocation to Hotels – Canada

While most Canadian investors indicate that they plan to invest domestically, those who are considering cross-border investment generally favor the U.S., Caribbean, Mexico and Central America.

Figure 16: Hotel Investment by Region – Canada

Central business districts (CBDs) and the suburbs are the most attractive locations for Canadian hotel investors this year. Upscale, upper-midscale and midscale/economy are the most attractive hotel chain scales, while extended-stay is the most attractive hotel type.

Figure 17: Most Preferred Location Type – Canada

Figure 18: Most Attractive by Chain Scale – Canada

Increased borrowing costs/cost of capital and labor costs are seen as the biggest challenges for Canadian investors this year. Renovation and remodeling costs are also seen as a significant challenge.

Figure 19: Major Challenges for Real Estate Investors in 2024 – Canada

Ninety-five percent of surveyed European investors expect to either maintain or increase their hotel investments in 2024. This intention is supported by the perception that a pricing floor for hotels has largely been established, as well as by optimistic total return prospects.

Figure 28: European Investor Buying Intentions

Twenty-eight percent of respondents cited price adjustments as the primary reason to increase their hotel asset allocations this year. This suggests a belief that prices have bottomed out, with 21% of respondents citing more optimism about total return prospects.

Sixteen percent of respondents view distressed opportunities as a compelling reason to increase hotel asset allocations, as some hotel owners are facing higher refinancing costs and a need to divest for immediate cash flow.

Figure 29: Reasons to Increase Hotel Asset Allocations in 2024 – Europe

Increased borrowing and labor costs were the two biggest challenges cited by European investors this year. Geopolitical conflicts rounded out the top three concerns, since they can significantly affect the fundamental demand drivers behind hotel operating performance.

Figure 30: Major Challenges for Real Estate Investors in 2024 – Europe

A majority of respondents (63%) indicated a preference for full-service hotels, with limited-service significantly trailing at 17% and extended-stay selected by only 6%. The stabilization of hotel room rate growth and the reduction in the average length of stay in extended-stay hotels appear to be affecting sentiment for this segment.

Figure 31: Hotel Acquisition/development Intentions by Service Offering – Europe

The survey indicates a clear preference among respondents for upper-upscale and luxury hotel segments by 51% and 45% of investors, respectively. The attractiveness of luxury hotels is supported by their robust operating performance in key European markets post-pandemic. Not only have luxury hotels rebounded swiftly, but they have also outperformed the overall market, buoyed by strong pent-up demand.

Figure 32: Hotel Acquisition Intentions by Chain Scale – Europe

CBD assets are the most popular, while gateways dominate preferred cities. London remains the most preferred market, followed by Madrid. Despite the notable new luxury supply in Rome, it remains among the top 10 most preferred European markets. Confirming Greece’s strong positioning over the past five years, Athens now features among the top 10.

Figure 33: Preferred Location Types – Europe

Figure 34: Markets With Highest Investor Interest – Europe

Despite net buying intentions across most commercial real estate sectors remaining subdued in Asia-Pacific (see CBRE’s 2024 Asia Pacific Investor Intentions Survey), nearly 60% of survey investors say they will buy more this year.

Figure 35: Asia-Pacific Investor Buying Intentions

With the rebound in tourism, particularly in Japan, Singapore and Australia, investors have been increasing their allocation to hotel assets within the region. Investors cited pricing adjustments as the biggest reason for increased hotel investment this year. CBRE Research believes most hotels have already undergone substantial price corrections during the pandemic and therefore are at an attractive price point for investors.

Figure 36: Reasons to Increase Hotel Asset Allocations in 2024 – Asia-Pacific

Hotel investors remain focused on gateway cities and resort markets in Asia-Pacific. In gateway cities, investors will target assets with operational flexibility to quickly adjust rates and capitalize on the upswing in tourism, especially in Korea, Japan, Thailand and Australia. Opportunistic investors are also interested in potential co-living conversions of hotels, particularly in Hong Kong SAR, Korea and Japan.

Investors targeting resorts will continue to focus on markets with prolonged periods of strong performance post-recovery and strong mainland Chinese tourist penetration, such as Thailand, Bali and Maldives.

Figure 37: Preferred Location Types – Asia-Pacific

Amid ongoing capital markets volatility, upper-upscale has emerged as the most appealing segment for Asia-Pacific hotel investors. This has been driven by growth in global wealth and a willingness by travelers to spend more on accommodation following the prolonged closure of borders.

As consumer demand has risen, so too has profitability, which has been highly attractive to investors. This trend should continue over the next 12 months as investors target upper-upscale/luxury assets with good cash flow.

Figure 38: Hotel Acquisition Intentions by Chain Scale – Asia-Pacific

While more international hotel brands are entering the Asia-Pacific market, investors indicate a preference for vacant-possession hotels. Although yields for such assets are typically lower, investors indicated they are most attractive due to flexibility of operator selection and potential refurbishment.

Investors cited stable income performance and low exit risks as the primary reasons for acquiring hotels with global brand management agreements. As institutional investors consider increasing their footprint within the hotel sector, the typically long term of global hotel brand agreements is very attractive.

Figure 39: Preferred Hotel Operational Agreement at Acquisition – Asia-Pacific

Among service categories, full-service remains the top choice for Asia-Pacific investors this year, followed by hotel-branded residential development. Investors in markets with strong residential demand like Japan, Australia and Korea will attract hotel-branded residences alongside the growing co-living industry.

Figure 40: Hotel Acquisition/development Intentions by Service Offering – Asia-Pacific

Surveyed investors expect that hotels will have the least repricing pressure of any commercial real estate sector in Asia-Pacific this year.

A rise in international arrivals from key markets hiked Asia-Pacific hotel room rates in 2023, ensuring continued optimism by hotel operators this year, particularly in Japan, Singapore and Korea.

Demand-based pricing has allowed operators to use average daily rates to offset inflationary pressure across the region. Changing rates allows hotel owners to swiftly counteract rising operating costs and mitigate the impact of inflation compared with other sectors, resulting in limited repricing pressure.

Asia-Pacific hotel assets are expected to reprice more modestly than in other regions as more international arrivals and hotel revenue growth offset some of the anticipated headwinds over the next six to 12 months.

Figure 41: Pricing Expectations by Sector – Asia-Pacific

The 2024 CBRE Global Hotel Investor Intentions Survey was derived from our regional investor intentions surveys. Hotels account for more than three-quarters of assets under management (AUM) for approximately 47% of the 300 survey respondents, while 26% have between $5 billion and $10 billion of their AUM in hotels. The surveys were conducted in early 2024.

Figure 42: Percentage of Survey Respondents by Type

Figure 43: Percentage of Survey Respondents by AUM

Figure 44: Percentage of Survey Respondents by Portfolio Exposure to Hotels