While describing 2024 as “another challenging year in many respects,” JLL described the global hotel industry’s 2024 performance as “resilient” overall in its Global Hotel Investment Outlook for 2025.
Through November, global hotel demand reached 4.8 billion room nights, 102 million more than 2023, resulting in growth in revenue per available room of 4 percent. Though RevPAR grew in all regions, performance remains uneven, with Asia Pacific still lagging 10 percent behind 2019 levels while the Americas, Europe and the Middle East have all fully recovered, with RevPAR growth ranging from 17 percent to 26 percent.
The COVID Effect
Global resort and leisure-heavy markets, which were generally the first to recover following the worst of the COVID-19 pandemic, have started to see some normalization in demand underpinned by slowing consumer spending amid some contraction in savings.
“The average American consumer is somewhat pinched from an economic perspective, and yet we continue to see travel be prioritized—maybe not to the degree it was in 2022 and 2023 but still, still quite strong,” Zachariah Demuth, the global head of hotels research in JLL's Hotels & Hospitality Group, told Hotel Management. “People want to travel—despite all of the headwinds that would suggest otherwise.”
Five years post-COVID, hotel demand has broadly recovered (with some notable exceptions) though the composition of today’s traveler looks markedly different than it did in 2019. While leisure travel has been the primary driver of hotel demand post-COVID, JLL expects this segment to moderate in 2025 as consumer savings broadly contracts.
Conversely, group, corporate, and international travel, all of which have generally lagged, will accelerate meaningfully, and fuel an anticipated 3 percent to 5 percent global RevPAR growth. “In the immediate aftermath of COVID, all we had was leisure travel,” Demuth said. “Group travel was a foreign concept.” Whereas group travel had generated between 20 and 25 percent of global hotel demand, that demand dropped nearly to zero during the worst of the pandemic, he said. “Now we're starting to again see things shift back to the norm.”
Looking Ahead
Performance is likely to remain uneven across regions, the report claimed, with the APAC region likely to see the largest growth driven by the continued recovery of Chinese travelers following the recent implementation of increased visa facilitation measures. Europe, which benefited significantly from the Paris Olympics and Taylor Swift’s Eras Tour in 2024, will likely see more modest growth in 2025.
Growth in the Americas will be similarly muted, with gateway cities likely to benefit from the return of inbound Asian travelers while resort performance normalizes amid slowing discretionary consumer spending. Existing hotels in nearly all global markets are likely to “meaningfully benefit” from a material slowdown in new hotel supply, the report said, with those in urban cores and other high barrier-to-entry markets to see the largest gains.
“RevPAR is still growing, but not the way it was growing in ’21, ’22 [and] ’23,” Demuth said, noting that this growth is similar to the stretch from 2017 to 2019. “That's not a bad thing,” he added, describing the slowdown as “normalization” for the industry. “No industry can grow double digits every single year. That's just not possible.”
Demand for urban markets has accelerated “significantly,” fueled by the growth in group, business and international travel. JLL expects urban hotel performance to grow even further in 2025 with London, New York and Tokyo likely to attract the most investor interest. “Investors like to invest where demand is, or where demand is going,” Demuth said, describing the three cities as “forever markets.”
But while these markets are valuable for investors, he expects to see more acquisitions rather than new-build projects. “It would cost you twice as much to build a new hotel in New York today as it would to buy one,” Demuth said. “Same can be said for London, and same can be said for Tokyo.” The COVID-era disruptions are still driving up the cost of construction materials, he explained, and the cost of labor—“particularly construction labor, particularly in urban markets, whether it's unionized or not”—is still rising. “And so those three factors together make it really hard, if not impossible, to build. And again, even if you could get the permitting, the expense, you're talking two times the cost of otherwise acquiring.”
New Verticals
JLL expects traditional hotel brands to increasingly expand into new verticals, with non-traditional lodging and branded residences likely to garner the most investor interest. India, now the world’s most populous country, will soon become one of the largest outbound travel markets globally providing hotels with a new type of traveler and investors with increased opportunities to deploy capital.