Worldwide: In the latest Hospitality Investor Sentiment Index from Questex, investors are looking to focus on opportunities within the corporate and urban markets for 2024.
Corporate business is expected to bounce back in 2024 with confidence growing 4.6 points to an index score of 52.8 in Q4 2023.
By contrast, while leisure travel is expected to remain strong, socio-economic and climate change issues are leading investors to predict slower growth in this sector. Confidence in leisure demand in the next 12 months has fallen by 10.9 points to an index score of 44.4 – the lowest since the survey relaunched.
This shift in confidence means appetite for resort investment has shrunk by six points to 48.5, the lowest it has been this year, whereas focus on urban investments have seen an 11.3 point increase in the last quarter.
The focus on investment in urban markets means investors have returned to limited-service hotels with an 8.3 point increase to an index score of 58.3. Factoring in ESG and the scarcity of prime sites for development, they are also exploring refurbishment and repositioning opportunities as well as adjacent spaces. The proposition of these opportunities have been boosted by the support of local governments. In Rome and Milan for example, municipal authorities have permitted office-led conversion projects enticing global developers into cities.
Joe Stather, VP market lead, operational real estate at Questex Hospitality, said “The Q4 Hospitality Investor Sentiment Index is a good barometer for the type of activity and market environment that we should expect for 2024, barring any social, political or economic curveballs between now and the end of the year.
“In an interesting but not unexpected turn, investors heads are turning to the corporate segment of the market, at the expense of a leisure market which is expected to plateau in 2024. There will likely be lower expectations regarding top line revenues which, with sticky cost inflation, will put even great pressure on profitability.
“With the potentially of slower market growth, and relatively high hurdle rates, we will see asset management remain in sharp focus, with many investors continuing to look to the tech stack and ESG as ways to create incremental income and value.”