The pandemic was difficult for hotels, with lockdowns and health concerns keeping people from traveling too far from home. When and whether they’d recover was questionable.
But the turnaround for the luxury end of the sector has been noteworthy.
Zach Demuth, JLL’s Global Head of Hotel Research, says that the global hotel liquidity finished at $51 billion last year, noting that more than 20% of the single-asset liquidity was derived from luxury assets. It was one of the highest ever recorded in the hotel sector, according to JLL data.
Now, he says, “Global investors are setting their sights on the luxury sector.”
Rising demand can be attributed to two main drivers: the improved performance of luxury hotels and appealing profit margins. Due to higher profits, returns for luxury hotels are also unrivaled compared to recent history.
Luxury hotels are likely to see strong performance this year again, according to JLL’s Global Hotel Investment Outlook. This prediction is fueled by the intermingling of everyday living with travel and a spike in global wealth, subsequently expanding the client base.
“Luxury, in its current interpretation, has veered away from traditional formalities,” says Marc Socker, who manages a real estate and hospitality portfolio and co-CEOs the Maybourne Hotel Group. “Instead, it has evolved to be more culturally and demographically inclusive, underscoring a significant departure from old-fashioned exclusivity.”
Listen to Marc and Zach talk about what’s next for luxury hotels on Trends & Insights: The Future of Commercial Real Estate.
