LOS ANGELES — The appetite for hotel deals in the U.S. is high, and timing plus increased confidence in pandemic recovery may lead to a more active hotel transactions field this year, according to Gilda Perez-Alvarado, global CEO for JLL Hotels & Hospitality.

“We still have that wall of capital trying to chase transactions,” she said in an interview with Hotel News Now during the Americas Lodging Investment Summit. “There’s a lot coming. Things are going to pick up.”

While the volume of hotels on the market in the U.S. still lags expectations, Perez-Alvarado said “very interesting and exciting purchases” are happening from buyers, including private-equity giants such as Blackstone and Starwood Capital Group, and also from real estate investment trusts.

Family offices and international inbound investors also are showing interest in U.S. hotels, indicating a confidence boost in the sector.

Hotel transactions pace and volume picked up in 2021 compared to 2020, marked by high valuations and prices per key, with lots of interest in leisure and resort destinations and properties, according to Hotel News Now reporting.

Perez-Alvarado said recent hotel transactions around the world reflect “a flight to quality,” underscored by the importance of a hotel’s location.

Investors are interested in “forever markets,” such as New York City, and also in newer markets that are investing in themselves, such as Miami, she said.

“Investors are asking, ‘Is now the right time to come into New York? Have we started to see a recovery? Are there buildings that can be converted to something else?’” she said.

International investors also are showing renewed interest in markets such as New York City that bore the brunt of pandemic-related shutdowns and demand loss.

“People want to invest, for one, in forever cities that are going to come back,” she said. “And obviously [in] cities that are doing quite well, like drive-to leisure destinations. But most importantly, in cities that are investing in infrastructure. So if you look at Miami, at Berlin, at even a destination like the Maldives, how it’s reinventing itself — people are looking for that.”

While uncertainties around interest rates, inflation and geopolitical tensions still exert influence over hotel transactions, consumer confidence in travel and growing vaccination rates are two factors making visibility a bit more clear for hotel sellers and buyers.

“From a hotel operating fundamental perspective, we have way more clarity,” Perez-Alvarado said. “Our investors are as committed as ever to enter the market. … And those owners who were maybe thinking about selling — they’re now convinced.”

“We’ve moved away from tension as to what is the future of hotels” as an asset class, she said. “Everybody’s expecting a pretty sharp recovery. Now it’s more geopolitical, social and economic issues that we’re dealing with, but I would say all chips are on the table for hotels.”

Institutional investors still dominate the buyer groups for hotels in Europe, looking to deploy capital saved over the past few years.

As they are in the United States, investors in Europe are chasing sun and sand destinations and other places catering to domestic leisure tourism, but Perez-Alvarado said there is also growing interest in “a new hybrid form of hotels” in Europe.

“We’re spending quite a bit of time talking about co-living,” she said. “Combinations of hotel and co-living — that new ‘hotelization’ of real estate.”

The importance hotel investors in Europe place on environmental, social and governance issues is another trend Perez-Alvarado anticipates will jump shores to the United States.

“There’s a lot of focus on the environment — in particular, on green buildings,” she said. “Over here, we’re focused on new-builds. In Europe, we're talking about very well-located hotels that maybe have a lot of quite significant physical obsolescence … and a lot of these institutional investors are chasing those assets. They’re going to buy at the right price, they’re going to invest and reposition the asset, and it will then have a very good effect on the community.”

In Asia, Perez-Alvarado said investors are interested in resorts, as well as hotels that can be converted to housing.

“It’s very, very interesting, with different dynamics,” she said.

For HNN’s full interview with JLL's Gilda Perez-Alvarado, watch the video above.

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