Strong performance kickstarts 2023

Global Real Estate Perspective May 2023

The hotel sector continues to recover, with global Revenue Per Available Room (RevPAR) through the first two months of 2023 surpassing the same period in 2019 by 6.8%. Recovery is strongest in the Middle East, followed by the Americas and Europe. While Asia Pacific remains the only region not yet back at pre-pandemic levels, performance has accelerated significantly over the past three months, underpinned by China’s reopening. The surge in global pent-up demand is expected to accelerate further throughout the year driven by sustained leisure travel and growth in business and group demand.

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

Despite ongoing macroeconomic headwinds, hotel performance across the Americas continues to improve, with all subregions exceeding 2019 RevPAR performance. The hotel industry in Europe has also demonstrated resilience, with its RevPAR now recovered above 2019 levels. Following China’s reopening domestic tourism has surged, lifting Asia Pacific’s RevPAR recovery to 89.6%. With China’s 2022 tourism spending US$149 billion lower than in 2019, the lifting of travel restrictions is expected to play a major role in boosting hotel performance recovery in the region and in the broader global market.

Future trends: Rise in non-traditional hotel offerings

Short-term: Global lodging fundamentals remain robust, with RevPAR so far this year surpassing 2019 levels by 6.8%. Performance is expected to continue to grow throughout 2023, particularly in gateway and urban markets as international borders are now fully reopened. Muted supply growth, particularly in the Americas and Europe, will create opportunities to drive rates further, allowing hotels to increase profitability and mitigate ongoing margin pressures.

Long-term: Consumers’ increased prioritization of immersive travel experiences coupled with the acceleration of business and group travel will bring lodging demand to new highs. This will fuel investment activity and inspire innovation, especially in the luxury segment, as consumer preferences evolve. Traditional hotel brands have already started diversifying their offerings, such as adding residences, yachts and private membership clubs, to capture a greater share of travelers' spending.