Hospitality & Tourism Investment: Forces for the Future

Lauro Ferroni. Senior Vice President, Research and Strategic Advisory, JLL

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The travel and tourism sector generates nearly 10% of economic output and supports 1 in 11 jobs in the global economy, making it a critical global industry. JLL examines several sweeping global trends, and how they stand to impact the future of hotel investment.

Role of Chinese capital in the global hospitality industry

Having only made large outbound investments starting in 2012, Chinese investors have quickly become a major force to reckon with in the global hospitality industry. The increase in outbound travel spend of Chinese travellers has been closely correlated with Chinese investors’ purchase of assets in the sector. Mainland Chinese’ investments in hotel real estate and hospitality companies outside of China grew by a compound annual growth rate of 130% from 2012 to 2016. Last year, Chinese outbound investment in hotel real estate was the largest spend on hotel transaction stemming from any one country other than the United States.

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Evolving physical spaces changing how people travel

The globe’s approximately 16.5 million hotel rooms have been joined by several million home sharing listings. At the same time, hotel occupied room nights are at all-time highs, suggesting that the home sharing model is leading to new, induced demand.

Endurance against the odds amid a new world order

With headlines about travel restrictions abounding and the world making sense of resurging populist movements, the hotel investment community asks itself where we will go from here. But travel is here to stay; mature economies will continue to spend increasing amounts on travel and emerging powerhouses — despite renewed political pressures and slowing economic growth — cannot keep a lid on double-digit growth in outbound travellers. These forces stand to underpin tourism and travel markets, and as goes the flow of people, so do investors’ capital flows.

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