Global Trends in the Hotel Industry in 2014

Global Trends in the Hotel Industry in 2014

It is expected that transactions and the evolution of new projects in the global hotel industry will take off in the next 12 month, also encouraged by investors in search of new opportunities of investment in this sector, as the EY-Global Hospitality Insights Top Thoughts for 2014 shows.

What was in 2013

After some years of slow recuperation and limited investment budgets, the global hotel sector has proven to have a strong appetite for improvement in 2013, a tendency that will continue and even will intensify in 2014. The EY report, Global Hospitality Insights, presents the 13 key-tendencies that are expected to have a major impact in the hotel industry this year and it anticipates a consolidation of the economical fundamentals in this sector that will stand at the basis of solid financial performances in 2014. And the most important thing, hotel companies now have more access to varied credits and sources of capital, coming from the public and private area, making the continuation of the growth possible.

What will 2014 bring

“We are expecting 2014 to be a reference year for the hotel industry”, says Michael Fishbin, global director at EY Hospitality. “EY anticipates that for this year a growth of the average rental rates and the occupancy of rooms in more markets and more segments of industry, things that will lead to the consolidation of the economical basis, attracting a growth of the acquisition prices of turnkey hotels, especially in the cities known as holding important points of connexions with other destinations, but also in the secondary hotel market.”

Acceleration of the capital markets

In the context of the appearance of a small number of new hotels and some transactions in the last five years, investors of a global level have accumulated an impressive appetite, but also a raised level of capital for new transactions. This has led to an intensification of the activities on the capital markets and an increase of the borderline capital flow. Looking for investments of high quality in the stable markets, Asian investors have dominated hotel transactions at a global level in 2013 and seem determined to hold the same raised level of activity in 2014 as well. It is estimated that investments that come from China and Singapore, together, will represent more than 60% of the total capital that will be invested in the hospitality industry outside of Asia in 2014.

Development opportunities

Among the global investment opportunities, the development of hotel units represents a new point of interest. Developers concentrate on answering demands coming from actual and potential clients for the development of the hotel units with limited services, type A member firms of Ernst & Young Global Limited all-inclusive resorts or alternative units, like hostels.

The development activity of hotel units is increasing on more markets of the world, especially in cities with ports or airports that make the connection with other destinations. In this context, developers operating in Asia and in the sub-saharian African markets are among the main beneficiaries of the raised access to credits and capital.

Posted by Melanie Mendoza on Saturday July 26 2014, 9:44 AM EDT. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0