Hotel investors, 2022 is your year of profits. Here's why

Did you know that more than $12.5 billion worth of hotels were sold in the first three months of 2022? CoStar Group reports that this is the highest Q1 figure since 2016.

So, if you are a hotel investor, you may finally anticipate great returns in 2022.

Why?

Because widespread vaccinations and travel relaxations led Americans to gradually return to normalcy and travel to the cities and beaches.

Therefore, hotels and the leisure sectors have begun to rebound making hospitality a mainstream asset class.

Kevin Davis, Americas CEO of JLL Hotels & Hospitality, confirmed that 2021 was one of the strongest years in U.S. hotel transaction history. He says, investment volume reached $38.1 billion in the US in 2021—the third-highest total ever.

Hence, as a hotel investor, what can you expect from the industry in 2022?

Let’s have a look at the most important trends contributing to the overall robust growth:

? Hotel values increased by 18% in March this year

?? Hotels are having a smooth journey recovering from the blows of the pandemic, compared to offices and retail properties that are struggling with increasing vacancy rates that may take years to fill

? Upcoming maturity of hotel debt worth $31 billion during 2022-2025 can increase hotel sales

? The prices of hotels for sale are rising faster than hotel profits and recently, the share of delinquent hotel mortgages fell to an all-time pandemic low

? An increased implementation of sustainability may lower operating costs and boost hotel prices and consumer demand

? Hotels can easily tackle inflation because they are the only commercial real estate asset class that can reprice room rates every day

? Private Equity investors returned as the most dominant buyer in the industry, investing $32.5 billion in hotel assets in 2021

Now, which properties and markets should you target for hotel investments in 2022?

???? Resorts and luxury hotels can be your safest bet as you will benefit from pent-up travel. Moreover, rising wages and savings can allow more Americans to splurge on trips

???? Target hotels that cater to holiday demand, rather than those targeted at business markets

???? You may also invest in hotels assets that rely majorly on domestic demand, rather than international tourism

???? Urban lodging remained the most liquid, but the level of activity in 2021 was down 22 percent from 2019 levels

??Expert tip: Hotels in the sunbelt area are investor favorites. Also, hotel revenues have seen a rise in cities like Miami, Orlando, Nashville, and Tennessee attracting investors.

But, you must keep in mind that rising interest rates and higher yields on bonds can also make hotels less appealing to investors, thus, pushing down property values?

Therefore, as a hotel investor, how can you still generate profits in 2022?

?Remember, the key to a winning hotel investment strategy lies in maintaining rate resilience and strategy. Only then will you be able to lower your expenses and preserve your cash flow and asset value.

?Given the labor shortage in the hospitality industry, you must focus on implementing an effective labor strategy. If you want to lower your operating costs and boost your profits, you must make your hotel more tech-enabled and automated, which will bring down your reliance on physical labor.

?Make sure that you are constantly reinventing your hotels and adapting to the changing needs of your customers. Manage and lease flexible spaces to create converted hotels, and implement AI, Virtual Assistants, Chatbots, contactless services, etc to attract more customers.

Did we miss anything else? Keep the discussion going in the comments.

Also, Click the link in the comment to read our blog about US Hotel trends in 2022.