Lodging recovery accelerates as restrictions ease

Global Real Estate Perspective May 2022

Lodging demand continued to gain steam in Q1 with most major countries lifting travel restrictions. While the recovery continues to favor leisure and resort destinations, urban markets are now seeing greater momentum in their revival as more employees return to the office and mask mandates/vaccination requirements across restaurants and live entertainment venues are removed. 

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

In the U.S., the industry observed continued strength in leisure and resort destinations such as Tampa, Miami and Phoenix in the first quarter. Urban markets continued to exhibit greater momentum in their recovery as COVID fears abated and employees returned to the office. Across Europe, performance improved significantly as several countries eased travel restrictions and business travel picked up. The pace of Asia Pacific’s recovery slowed in the quarter, reflecting increasing COVID cases and renewed travel restrictions.

In early 2022, investor sentiment has become even more positive as hotel fundamentals improve and midweek business travel finally rebounds. However, owners and investors will continue keeping a pulse on inflation, higher energy prices, COVID variants, rising interest rates and increasing concerns regarding slower growth and/or a recession. Nevertheless, the outlook for 2022 is positive, with the industry better positioned today than it was a year ago. 

Future trends: Faster than anticipated recovery

Outlook for 2022: The lodging industry’s recovery will continue to accelerate in tandem with robust economic growth and increasing international visitors. Both urban and resorts markets are expected to benefit from the return to office and the growing hybrid work environment, which has resulted in an emerging new demand segment, ‘bleisure’ (business travelers that add a leisure component to their trip). More M&A activity is predicted, particularly among operators looking to grow in scale.

Long-term: Consumers’ insatiable appetite for experiences, travel and hospitality will fuel high levels of demand as international borders fully reopen and business travel’s revival accelerates. This, coupled with continued resilience in leisure demand and a relatively muted supply pipeline, will enable the lodging industry to recover earlier than anticipated, making for greater investment opportunities in the sector.