One thing is certain: Beyond carrying a melody, that Taylor Swift sure can put heads in beds. Her Eras Tour killed, not only in arenas across the globe, but in hotels: Swifties, young and old, need a place to stay when they aren’t Swifting, after all. Her tour not only broke records, but it also literally shifted local economies and, undoubtedly, was responsible for basis-point RevPAR gains from Miami to Mumbai.
A shame there won’t be a repeat performance.
Still, the hotel industry had much else to cheer in 2024 with even better prospects for 2025, according to the just-released JLL Hotels and Hospitality Research’s Global Hotel Investment Outlook 2025. One of the most salient findings is that consumers continue to prioritize travel, though the composition might be changing five years clear of the COVID pandemic. While leisure travel was the highest makeup of demand coming right out of COVID, it is now moderating, but stepping in to fill the void are group, corporate and international travel, which JLL predicts will accelerate meaningfully and fuel anticipated 3% to 5% global RevPAR growth in 2025. This should only improve with many companies mandating full-time, back-to-office mandates that can further fuel business travel.
Performance, JLL noted, will remain uneven across regions, with Asia-Pacific likely to see the largest growth driven by the continued recovery of Chinese travelers, which has lagged globally up to now. What to watch for? Muted supply growth, which remains below historical levels, but will benefit hotels particularly in urban markets and other high barrier-to-entry markets.
Though RevPAR has historically been the biggest measure of performance success, hotels, from select-service to full-service, are no longer just places to sleep and benefit from many different streams of revenue as the lines between work, life, and travel become increasingly blurred. “Hotels have morphed into the new ‘third place’ as they extend beyond just places to sleep,” said Zach Demuth, global head of hotels research, JLL Hotels & Hospitality Group, who contributed to the report.
What’s the Deal?
Hotel transactions lagged in 2024, but 2025 could see a meaningful pickup. Global hotel investment volume reached $57.4 billion in 2024 and while an increase of 7%
relative to 2023, it was the third-lowest total since 2012. It’s not surprising: Central banks rolled back interest rates, but they remained obstinately high, “making it challenging for investors to finance high-dollar trades and forcing many to the sidelines,” the JLL report noted. Global hotel transaction volume remains 17% behind historical levels.
Why, then, optimism for 2025? A clearer picture, JLL believes. It argues that core inflation is falling to central bank targets, the product of monetary easing, though promised tariffs by President Trump could upend this rosier picture. Further clarity is crucial for investors as they look to underwrite potential acquisitions, wrote JLL, and should help to precipitate hotel transaction activity. JLL expects global hotel investment volume to improve in 2025, likely exceeding 2024 by 15% to 25%, with “irreplaceable” luxury hotels and properties within the select-service and extended-stay sectors remaining favored by investors. Cash-rich Middle Eastern and U.S. private equity investors will likely be the most acquisitive, JLL predicts, targeting assets across Europe and Asia, respectively.
On Brand
Hotel brands will continue to play a pivotal role in the growth and expansion of the hospitality industry. In fact, lodging companies are increasingly spreading their dominion in areas outside traditional lodging and into adjacent spaces, such as outdoor and adventure accommodations—Marriott International’s recent deal for Postcard Cabins, Hilton’s AutoCamp partnership and Hyatt Hotels Corp.’s Under Canvas alliance evidence of this shift. “We expect the hotel brands to increasingly invest broader in the travel space to capitalize on the growing ‘experience economy,’” Demuth said.
Meanwhile, to appease Wall Street, lodging C-corps and franchisors are increasingly turning to conversions as a mode for growth against a still tepid new-construction landscape. “Amid a challenging and high-cost construction environment, hotel brands are increasingly using their balance sheets to fuel net unit growth, a key driver of shareholder value,” Demuth said, noting that while Hilton and Hyatt were the most aggressive in 2024, others are expected to follow suit in 2025 as global hotel supply will grow only 2%.
At the same time, JLL expects further hotel brand consolidation in 2025, coupled with private equity OpCo investments, with third-party management companies, non-traditional lodging brands and hotels in the lifestyle sector “likely to attract the most capital.”
Mr. Robot
One of the larger themes not just in hospitality but omnipresent is the role of artificial intelligence in daily life. PwC estimates that AI could add $15.7 trillion to the global economy by 2030. The amount of data available to lodging companies makes the hotel industry ripe for AI disruption, though JLL still believes that the biggest contribution, for now, is in streamlining back-office operations, and not as much customer-facing applications. “Hospitality is an inherently people-centric industry,” Demuth said. “Our belief is that AI should be implemented to help optimize back-of-house operations.”
This type of application, JLL posits, can improve overall profitability by improving labor models, optimizing food costs and mitigating food waste and promoting predictive maintenance that can help avoid costly PIPs. “While not as flashy as consumer-based AI, these systems can have a material impact on the broader industry,” Demuth said.
