Uncertainty and cautiousness plagued hotel investor interest in 2020 due to the COVID-19 pandemic, however, the global lodging industry is eager to move forward. According to JLL Hotels & Hospitality’s annual Hotel Investment Outlook, the industry’s resilience has shaped new experiences and demand from consumers. It has also introduced a wave of trends that have been accelerated as hotel leaders quickly shifted operations and strategy to navigate through one of the most transformational and economically challenging times in modern history. Download your copy of the report today.
After enduring a dramatic shock to performance, the global lodging industry is eager to move forward. The global lodging industry experienced a transformational year in 2020 following the onset of what became a global pandemic with the spread of COVID-19. The pandemic has brought havoc and devastation to every part of the world. At the time this report was written, COVID-19 has caused the deaths of two million people globally. Thousands have lost family members, jobs and a sense of purpose. Not making light of the toll on human lives, the pandemic has also taken a toll on the global economy with prognosticators expecting a decline of 4.4% in 2020. Worldwide, hotels were forced to close with lodging demand drastically retracting and bottom lines plummeting. 2020 also saw the highly anticipated Airbnb, Inc (Airbnb) IPO come to fruition. The impact of 2020 on the hotel and hospitality industry will endure for years to come and in many ways redefine the travel experience of tomorrow.
Throughout 2020, global hotel investors were plagued with uncertainty as travel restrictions and mandatory lockdowns drove down both leisure and business travel. Leisure travel proved to be a stronger segment of demand throughout the pandemic as travelers experienced lockdown fatigue and planned ‘last minute’ trips, escaping to drive-to destinations. With advancements being made around a vaccine, leisure demand is expected to recover more quickly, as corporate and meeting travel demand remain challenged given the rise of virtual meetings and working-from-home arrangements. Moreover, with pressure mounting for global companies to more
aggressively adopt environmental, societal and governance (ESG) principles, many are expected to reduce their travel budgets to help lower their carbon footprints and reallocate funds to fullfiling ESG goals. In a post-covid-19 world, we could see the make-up of corporate demand return with a reduced number of trips but longer lengths of stays.
These shifting demand dynamics create a sense of urgency for hotel operators to redefine today’s hotel lodging experience to better fit the needs of both leisure and corporate travelers. Everything from the size of the hotel room to technological features need to be reimagined to best capture a demand base looking for a seamless and contactless experience. Individual, private and comfortable spaces that can accomodate longer stays and enhance work productivity will be preferred. Hotels are expected to be one of the fastest commercial real estate sectors to recover once a vaccine is made widely available. As such, investors who enter the market now will be best positioned to reap the benefits of the industry’s recovery.
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