International Hotel Investment: Outlook to 2025
2025 is anticipated to be a pivotal year in the hotel industry, providing new opportunities for investors and market participants. The JLL's Global Hotel Investment Outlook report predicts that global capital's role in this sector will increase by 15-25% compared to 2024. This reflects the industry's strength and its adaptability to evolving traveler needs and an ever-shifting economic landscape.
2024 Results: A Return to Expansion
Despite economic challenges, 2024 saw significant recovery in the hotel sector. Worldwide hotel visits reached 4.8 billion, an increase of 102 million from 2023. RevPAR rose by 4%, surpassing pre-COVID levels by 17-26% in some areas. In terms of investments, 2024 recorded $57.4 billion in transactions, a 7% rise from the previous year. However, the number of deals is still below historical peaks due to fewer portfolio transactions and smaller average deal sizes.
In Italy, investment volume hit 1.7 billion euros, and when including property conversions into hotels, the figure reaches around 2 billion. Investors showed particular interest in Rome, where luxury hotels have been the focus of major transactions since 2019.
Key trends for 2025
Lifestyle hotels
The hotel industry is increasingly creating spaces that blend work, leisure, and entertainment. Lifestyle hotels, unlike traditional ones, generate up to 40% of their revenue from ancillary services such as restaurants, spas, shops, and cultural activities. This segment is drawing major investors looking for innovative business approaches.
Growing influence of emerging players
Countries with booming economies like India and Saudi Arabia will lead investment initiatives. Saudi Arabia's Vision 2030 aims to transform the nation into a major tourism center. Large-scale projects like Diriyah Gate and NEOM plan to welcome 150 million tourists — 7.8 times more than in 2019. These areas are becoming not only investment destinations but also key contributors in the global hotel market.
Artificial Intelligence in the Hotel Industry
AI is increasingly vital in hospitality. Hotels are employing smart management systems, customized services, and process automation. Algorithms in machine learning assess guest behavior, forecast their preferences, and fine-tune pricing, thereby enhancing customer satisfaction and boosting business profits.
Forecast for 2025: Investment Directions
Analysts project that US markets will drive growth, followed by Europe, the Middle East, and Asia Pacific. Luxury and premium services, as well as major cities with high entry barriers, continue to be the most appealing segments. International investment is set to rise, notably from Middle Eastern funds and US companies investing in Europe and major US cities.
"The hotel sector is experiencing a profound transformation, with technological advances and adaptability in meeting changing consumer tastes being critical to success. Investors are increasingly drawn to the hotel field, particularly in redevelopment and rebranding," said Claudia Bisignani, Head of Hospitality at JLL. "Despite challenges related to capital expenses, we anticipate that this trend will persist into 2025, affirming the attractiveness of the hotel industry as a durable and lucrative investment category."
