More than half of the 300 hotel investors surveyed worldwide by CBRE Hotels Research intend to buy more in 2024 than in 2023, while only 14 percent expect to buy less.
According to CBRE's Global Hotel Investor Intentions Survey 2024, plans for increased hotel investment across regions are based on expectations of higher returns, price adjustments, distressed opportunities and a lower cost of capital. Nearly 75 percent of respondents say they are most attracted to opportunistic and value-add hotel assets in 2024.
In the U.S., upper-upscale and upscale/upper-midscale are the most popular chain-scale targets in 2024. Canadian investors favor lower- and middle-price tier chain scales, while higher-price tier properties are preferred in Europe, Mexico, Central America and the Caribbean.
Resorts are the most attractive hotel property type for investors in the U.S., Mexico, Central America and the Caribbean. Central business districts are the most attractive submarkets for European and Canadian investors, while Asia Pacific and European investors particularly favor those in gateway cities.
In the U.S., gateway markets like New York and Washington, D.C. topped the list of cities expected to outperform in 2024, along with leisure-focused markets like Miami, Charleston and Austin. In Europe, investors favor gateway markets like London and Madrid. Among Mexican markets, Los Cabos, Cancun and Mexico City are expected to have the strongest performance in 2024.
According to the report, CBRE Hotels Research is cautiously optimistic about hotel market fundamentals this year, as outlined in its 2024 Global Hotels Outlook report. Following a 33 percent drop last year, CBRE Hotels Research expect investment activity to pick up in the second half of 2024 due to highly anticipated Federal Reserve interest rate cuts.
More than half of Americas region investors said they are mostly targeting hotels affiliated with globally recognized brand families (Marriott, IHG, Hilton, Rosewood, etc.), while the highest percentages of European and Asia Pacific investors said they are mostly targeting vacant-possession1 hotels. U.S. and European survey respondents showed a preference for hotels affiliated with globally recognized brand families. However, more than half of Asia Pacific investors said they are more likely to target independent hotels for short-term investment.
Full-service remains the most preferred hotel concept globally, favored by 38 percent of survey respondents. However, U.S. investors expressed more interest in limited-service (40 percent) than full-service (32 percent), followed by extended-stay (21 percent). Interestingly, approximately one-third of Asia Pacific, Mexican and Central American investors favor hotel-branded residential properties.
Upper-upscale and luxury hotels are the most preferred hotel classes globally by 45 percent and 39 percent of surveyed investors, respectively. There are some preference variances between the regions; for example, more Canadian investors said they favor mid- and low-priced hotel classes than the global survey average, while U.S. investors prefer upscale and upper-midscale properties. However, all hotel classes scored high, with over 50 percent of investors finding them either somewhat or most attractive.
Almost half of all surveyed investors find resort markets the most attractive locations for hotel investment. Resort locations are most favored by U.S., Mexican, Central American and Caribbean investors, while urban locations are most favored by European, Canadian and Asia Pacific investors.
High costs remain the biggest challenge for investors this year: borrowing costs (52 percent of those surveyed), labor costs (44 percent) and construction costs (26 percent). Geopolitical risks were among the top three concerns for investors from Europe, Asia Pacific, Mexico and Central America.