A survey of hospitality investors from around the globe shows signs of growing confidence in the hotel sector and suggests the market is readying itself for a surge of activity following a three year slump.
The overall index score in the Hospitality Investor Sentiment Index Q2 2023 revealed an increase of 3.7 points from last quarter to 51.9. The most positive set of results since the survey was relaunched in early 2022.
Signs of greater confidence in both leisure and corporate accommodation demand were present in the survey of senior decision makers at the world’s leading investment firms. For leisure, confidence rose by 12 points to 58.6 while the position of investors on corporate demand followed a positive trajectory from Q1 2023 and rose from 59 to 61.4 points.
The biggest focus for investment remains on urban markets with interest in resorts rising slightly. However, while the market may be readying itself for a flurry of activity, investors are concerned that the increased competition for stock could push up prices.
The survey also noted investors are increasingly positive about the prospects for revenue growth over the next 12 months, with respondents whose capital originated in Asia and Europe (excluding the UK) the most positive. Growth was expected from all revenue streams, including food and beverage and MICE, as well as hotel bedrooms.
The latest edition of the quarterly survey is launched just ahead of the International Hospitality Investment Forum (IHIF), which takes place in Berlin on 15-17 May.
Under the headline theme, Fortune Favours the Bold, IHIF 2023 will bring together 2,400 forward-thinking professionals, including investors, owners, operators and developers to forge deals, network and glean valuable insight from experts in economics, investment, development, asset management and hospitality.
Joe Stather, VP market lead, operational real estate at Questex Hospitality, said:
“The overall index score tipping into positive territory is a clear signal of increased optimism investors as operational fundamentals continue to improve and there is an expectation of increased hospitality returns.
“The significant upturn in the sentiment regarding consumer demand, regarding both the corporate and leisure segments, has resulted in greater investor interest in full-service hotel stock, but as in previous quarters, the limited availability of stock and pricing remains an issue for some buyers and with above-average inflation underpinning high interest rates in the short term, the challenges around debt are going to leave some investors struggling to make acquisitions stack up.”