A survey of major global investors has demonstrated an overall positive outlook for the hospitality sector, despite macro-economic challenges.
Whilst the overall index score in the Hospitality Investor Sentiment Survey Q3 2023 has fallen 0.7 points to 51.2, it’s score of 50.0 implies a steadfast, ongoing confidence. This is despite the survey revealing a polarised views among investors, revealing different interpretations of the macro environment and market opportunities available.
For the first time since the survey was relaunched the index score for urban investments has fallen in direct correlation with an increasingly negative outlook on corporate demand. Meanwhile, investors are seizing opportunities within the resorts market where the average price of a holiday is up more than 30% against pre-pandemic pricing across the top five destinations.
Marking the highest score since the survey’s relaunch, the appetite for risk has surged, driven by necessity rather than choice as macro-economic factors such as ‘stubborn’ inflation rates and employment challenges, continue to significantly influence investor decision-making.
In contrast to Q2 2023, investors in Q3 agree that the availability of investable stock is on the rise, hitting a high score. The increase in opportunities to purchase at discounted rates can be attributed to the current instability within the economic landscape. Although investors face challenges such as high tender price levels and limited development finance options, the sentiment towards development opportunities remains negative yet stable. Whether this comes to fruition, however, hinges on the stability and continued focus on hospitality investments which has seen a decrease this quarter.
Investors are also predicting that whilst revenue growth is expected to continue into the last quarter of 2023, they believe that the pressures of profitability are to remain an ongoing issue faced by the hospitality industry.
Joe Stather, VP market lead, operational real estate at Questex Hospitality, said “The overall index score suggests that leading investors, on balance, still see the outlook for hospitality investment in a positive light. However, delving into the individual questions, we have never seen such a polarised set of responses, as different funds interpret, and are impacted by, the macro volatility and relatively high interest rate environment in different ways. Most investors do concur that there will be more stock coming to the market in the latter part of this year, a prospect which many industry stakeholders will be looking forward to.”
The latest edition of the quarterly survey is launched ahead of the Annual Hotel Conference (the AHC) taking place in Manchester Central Convention Complex on 11-12 September.
