Hotel investors backed by 2021 exchanges, Colliers reports

Investors expect domestic tourism to return to positive numbers in the third quarter of 2022, with overall growth expected in 2023, according to Colliers 2022 Hotels Investment Review.

Colliers found that investor sentiment weighed 29.5% in favor of positive trade from the fourth quarter of 2019.

Colliers National Hotel Manager Karen Wales said while the Omicron has slowed performance in the first quarter of this year, confidence and hotel bookings are expected to increase in the second half as vaccination rates rise. .

“We expect a similar level of deal flow in 2022 as seen in 2021,” Wales said.

“The emergence of the Omicron variant will only drive the number of cases forward and lead to increased levels of triple vaccination, so although there is some short-term pain expected in the first trimester, this should help bolster the confidence in the second quarter and beyond.

“A tsunami of pent-up demand for business and leisure travel has the potential to generate above-average returns in the near term before growth normalizes to levels that were evident before the pandemic, but with a greater proportion of global travel pushed towards the ‘safe’ perception of destinations like Australia.

Impressive exchanges in 2021

Data from Colliers shows that the Australian hotel market has grown significantly in trade in 2021.

Despite the disruption caused by lockdowns and border closures in 2021, transaction volumes ended well above the long-term average of $1.6 billion. A total of $2.87 billion in assets traded in 60 transactions in 2021, up 197.5% from 2020, making it the second highest year on record for total volumes sold.

This was helped by an increase in cross-border activity, increased consumer confidence as vaccination rates increased, and businesses and investors shifting to a “living with COVID” mindset.

Excluding hotels purchased for conversion, the average price per transaction reflects a 99.5% increase over 2020 to $325,000 per room.

Investment capital was predominantly domestic, a marked change from the past decade, accounting for 55.8% of total deal volume.

Colliers Hotel Director Gus Moors is confident the Australian investment market will continue to grow in 2022.

“The opportunity to invest in previously tightly held key capital should also generate significant interest as the sector recovers and Australians start to explore again,” said Moors.

Nicholas E. Crittendon