The global hotel industry demonstrated resilience in 2024 despite ongoing challenges. While the Americas, Europe, and the Middle East have fully recovered with RevPAR growth between 17% and 26%, Asia Pacific still lags 10% behind 2019 levels.
Global resort and leisure-focused markets, which led the recovery post-Covid-19, are experiencing a normalisation in demand due to slowing consumer spending and reduced savings. In contrast, urban markets have seen significant growth in demand, driven by increases in group, business, and international travel.
As we entered 2025, the global hotel industry was at a critical juncture. Five years after Covid-19, hotel demand has largely recovered, albeit with some exceptions. The traveller profile has notably shifted since 2019. While leisure travel has been the primary driver of post-Covid demand, JLL anticipates this segment to moderate in 2025 as consumer savings contract. Conversely, group, corporate, and international travel, which have lagged, are expected to accelerate significantly, potentially driving global RevPAR growth of 3% to 5%.
Regional performance will remain uneven. APAC is likely to see the largest growth, driven by the continued recovery of Chinese travellers following recent visa facilitation measures. Europe, which benefited from the Paris Olympics and Taylor Swift's Eras Tour in 2024, may see more modest growth in 2025. Growth in the Americas is expected to be similarly subdued, with gateway cities benefiting from returning Asian travellers while resort performance normalises due to slowing discretionary spending.
Existing hotels in most global markets are expected to benefit significantly from a slowdown in new hotel supply, with those in urban cores and high barrier-to-entry markets seeing the largest gains.
Despite variations in hotel performance, consumer prioritisation of travel, especially for authentic experiences, remains strong. As the boundaries between living, working, and leisure continue to blur, traditional hotel brands are likely to expand into new verticals, with non-traditional lodging and branded residences attracting investor interest.
A new era of opportunity in European hospitality
Turning our attention to Europe, the hotel investment landscape here is set for a transformative year in 2025. Although transaction volumes in the region have yet to fully recover to 2019 levels, 2024 was the strongest year since the pandemic, reaching €21 billion – a 45% uplift compared to the prior year. There's potential for further growth in transaction volume, with a real possibility of returning to pre-pandemic levels in 2025.
After years of uncertainty, the sector is showing strong signs of recovery and growth, driven by renewed investor confidence and evolving market dynamics.
European hotel investment volumes
Source: JLL Hotels & Hospitality
While the UK maintains its position as a primary destination for hotel investment, there's been a notable uptick in interest for Mediterranean markets, particularly Spain, Italy, and Greece, driven by their solid performance and stability. Looking ahead, there appears to be significant headroom for greater liquidity throughout Europe, especially considering the recent period of subdued activity and supply constraints.
Offshore capital played a significant role during 2024. Europe has always been a net beneficiary of cross-border capital and there's been a notable presence of first-time buyers, private equity, and family offices all keen to secure hotel assets across the region. Our analysis shows that there were 110 first time buyers in Europe in 2024, equating to a third of total liquidity.
Large-scale transactions are also making a significant comeback, with deals valued above $100 million now comprising 60% of total liquidity—a level not observed in three years. This surge in high-value investments not only stimulates overall dealmaking activity but also reflects growing confidence in the hospitality sector as a desirable asset class. Complementing this trend, recent findings from JLL’s Hotel Investor Sentiment Survey indicate a widespread expectation of more favourable financing conditions, with 95% of respondents anticipating that the cost of capital will either hold steady or narrow meaningfully. Transaction activity, particularly in Continental Europe has been fuelled by interest rate cuts in 2024 and pressure on interest margins, leading to high liquidity in the debt markets.
Economic factors continue to play a crucial role in shaping investment decisions. The focus on interest rates remains paramount, with investors keenly watching for easing of benchmark rates and the subsequent impact on capital stacks. In the UK, attention is centred on assessing the financial implications of the Autumn Budget and the medium-term impact of business rates on the sector. Across continental Europe, the primary considerations revolve around strategies for stimulating economic growth and revitalizing domestic markets.
In terms of asset strategies, urban investments are taking centre stage, with increased attention on various property types including office conversions, extended stay properties, and select service hotels. The focus on existing assets has intensified due to challenges in new development. Over the past decade, we have seen hotel supply across EMEA grow at an average rate of 3.6% annually. However, over the next five years, we expect growth to be around 130 basis points lower than the long-term average as construction costs, labour shortages, heightened utility costs and increased interest rates for development financing continue to limit the pipeline. Value-add investors continue to dominate the hotel buyer landscape, though core capital is gradually re-entering the market. This resurgence includes new players in the core segment seeking diversification, recognizing attractive opportunities, aiming to capitalize on the current stage of the market cycle, or investing on behalf of separate accounts.
Looking beyond 2025, the outlook for the hotel sector in Europe remains positive. The region's major gateways, which rely heavily on international tourism, are poised for healthy growth in liquidity, performance, and branded hotel supply. As the catalysts increase for travellers to visit and spend in these locations, there's strong conviction that the sector will not only recover but exceed pre-pandemic volumes in the near term, provided macroeconomic conditions remain favourable.
To find out more, download our Global Hotels Investment Outlook 2025 here: https://www.jll.co.uk/en/trends-and-insights/research/2025-global-hotel-investment-outlook