Views

Lodging fundamentals strengthen

Global Real Estate Perspective November 2022

The lodging industry’s recovery continued to accelerate in the first nine months of 2022, despite increasing global economic uncertainty and deep labor shortages across travel and tourism companies. Year-over-year, hotel occupancy and average daily rate (ADR) across all regions showed growth supported by strong domestic and emerging international travel demand. Urban markets are experiencing greater momentum in their recovery as more employees return to the office, and leisure travelers are once again drawn to restaurants and live entertainment venues.

This article is part of JLL’s Global Real Estate Perspective

Across the Americas, Miami, San Juan, New York, Los Angeles and Boston achieved the highest RevPAR levels in the region during the third quarter. Across Europe, performance has improved markedly. RevPAR in YTD August 2022 was 90% recovered relative to the same period in August 2019 as travel restrictions faded and midweek business demand picked up. In Asia Pacific, the recovery is favoring markets and countries with very few border or Covid quarantine restrictions such as Australia, French Polynesia, Maldives and Singapore.

Future trends: Macroeconomic volatility to slow pace of recovery

Outlook for 2023: Lodging fundamentals remain resilient despite global macroeconomic headwinds, as consumers continue to prioritize travel and business demand returns quicker than expected. Expect the pace of the regional lodging market recovery to slow in Q1 2023 as economic volatility and geopolitical risks begin to weigh on consumer disposable incomes and corporate travel budgets. Recovery will continue progressing, with greater momentum anticipated in the second half of 2023.

Long-term: Consumers’ appetite for experiences, travel and hospitality will bring lodging demand to new heights as international borders fully reopen and business and group travel’s revival accelerates. Hotels are set to benefit from the proliferation of more flexible working arrangements fueling leisure demand. Muted supply pipelines will support the industry’s full recovery expected in 2024–2025. Investor sustainability goals will more directly impact hotel operations, investment and overall real estate value.