Aided by easier and cheaper travel, global tourism has experienced two decades of almost uninterrupted growth. According to the World Bank, the number of international departures more than doubled between 1997 and 2017, from 687m to 1.57bn per annum. With the global middle class estimated by the US-based think tank Brookings Institution to be expanding by as many as 160m people per year until 2021, it is perhaps unsurprising that almost half of the growth in tourist numbers was accounted for by departures from lowand middle-income countries, which increased from 121m in 1997 to 564m in 2017. Significant growth was also recorded in the number of arrivals to low- and middle-income countries, increasing from 163m to 515m over the 20-year period, underlining the rapid development of their tourism industries.

With more people on the move than ever before, there is a clear need for sufficient tourist infrastructure, such as hotels. Speaking at a November 2017 conference in Florida, Douglas Quinby, senior analyst at Phocuswright, an international travel market research firm, announced that the global travel industry reached $1.6trn in gross bookings in 2017. Additionally, STR Global, an international hotel market data and benchmarking firm, reported in 2018 that the number of hotel rooms globally had risen by 17.7% since 2008 to 17m in 2018. These rooms were provided across more than 184,000 hotels, a rise of 8.4% from 2008 levels.

Investment Landscape

According to the “Hotel Investment Outlook 2019” report by global real estate consultancy JLL, in 2018 cross-border hotel investment accounted for $9.6bn, some 14% of the global hotel investment total of $67.7bn. Europe received the largest amount of cross-border investment that year, with a majority of the $4.9bn coming from Asia and the Middle East. North America received the second-highest amount, at $3.1bn. Cross-border investment is expected to increase in 2019, driven in part by rising inflows to Europe; North America directing its attention towards Asian markets; and investors looking to expand their asset portfolios and invest outside of primary markets.

In addition to the traditional approach of direct hotel acquisitions, there have been notable increases in both debt financing and mergers and acquisitions activity. This has opened up the sector to more non-traditional players, such as insurance companies, pension funds and private equity firms. These actors have been attracted by the relatively high yields on offer, given the low interest rate environment that prevailed for much of the past decade. Such generalist investors accounted for approximately 70% of total hotel sector investment between 2014 and 2018, and JLL expects this figure to continue trending upwards.


Globally, the hospitality sector tends to be cyclical, driven by both macroeconomic trends and its own internal dynamic – strong demand leads to high occupancy and positive financial performance, which in turn triggers a supply response leading to an increase in available rooms. This puts occupancy rates and financial performance under pressure, dampening investment and causing the cycle to repeat. In 2018 global occupancy rates rose to around 66% and hotel room construction accelerated, suggesting that the sector is currently in the latter stages of the cycle.

Despite this, JLL forecasts that global hotel investment will remain steady in 2019 at $67.2bn. With the global economy facing trade disputes, higher interest rates and a slower Chinese economy in 2019-20, there could be knock-on effects on business travel and disposable income, clouding the hotel investment picture over the medium term. Reasons for optimism remain, however. The UN World Tourism Organisation forecasts the number of international tourist arrivals will reach 1.8bn by 2030, constituting an average growth rate of 3.3% per year between 2010 and 2030. Moreover, an expanding middle class in emerging and developing economies is likely to underpin longer-term demand for hotel rooms globally, barring any near-term headwinds.