Global hospitality insights – Top thoughts for 2014
Following years of a slow and stubborn recovery, the global hospitality sector entered 2013 with a strong appetite for growth. Building on momentum gained in the prior year, renewed investor confidence and pent-up demand for trades propelled growth within the global lodging sector, fueling an increase in transaction activity and worldwide improvements in hotel operations.
After years of facing constrained capital budgets, hotel owners refocused investment in their portfolios to maximize growth in
occupancy and rate. Across the globe, significant improvements in lodging fundamentals also captured investor attention, signaling renewed assurance in hotel investments. Furthermore, increased transaction activity, including the re-emergence of IPOs, was observed throughout the year for both single-asset and portfolio trades, primarily driven by active global capital markets and heightened investor sentiment for deals.
Despite vast improvements, the industry continued to face certain key challenges over the course of 2013 that threatened hospitality performance across the globe: governmental interruptions and rising debt levels in the US, constrained capital markets in Europe, the threat of violent political events in the Middle East and Africa, and slowed growth momentum in select Asian economies.
Even with these external challenges, an undeniable vigor emerged within the lodging industry during 2013, positioning the global
sector for further growth in upcoming years. In 2014, the investment and optimization of capital will remain top of mind for industry players. Investors will continue to gain access to a variety of capital sources across debt, equity, public and private platforms.
Acquisitions in gateway international cities will continue to remain top-of-mind for investors, but a renewed interest in secondary and resort markets is positioned to gain traction in the short term. Cross-border capital flow, led by conglomerates, family businesses and state-owned enterprises in the Middle East and Asia, is also anticipated to increase as international investors seek portfolio diversification and prime assets in stable economies.
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