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Insight Comment |
Investors tempered their optimism for the hospitality sector during the last quarter of 2021, according to a new report by Hospitality Insights and ABP Invest.
The move coincided with the arrival of the Omicron Covid-19 variant as well as renewed inflationary pressures.
The proportion of investors expressing a strongly positive sentiment for the next 12 months has continued to reduce from 36% in Q2’21 to 19% in Q3’21 and 11% in Q4’21. There’s still plenty of optimism in the sector, it’s just come of highs of earlier in the year.
The median amount of dry powder within hospitality capital has continued to rise over the quarters, and is currently at 40% - the highest since the assessment began nearly two years ago.
Commenting on some of the major trends in the report Thanos Papasavvas, founder and chief investment officer, ABP Invest, said: “Over three quarter of Institutional Investors, PE firms and private property companies expect economic conditions to improve in the ensuing 12 months with two thirds of investors preferring the higher risk/return segments of value-add and opportunistic; the highest ratio since the inauguration of this quarterly assessment in March 2020. Furthermore, at a more idiosyncratic level, family offices have shifted their top preference away from hotels towards serviced apartments as the most attractive segment for 2022.”
The topic of inflation is likely weighing heavily on investors’ minds and Papasavvas believes it is here to stay.
“In line with the report we put together last summer, we see inflation being sticky and remaining elevated as opposed to the Federal Reserve’s initial outlook of ‘transitory’ before having readjusted its rhetoric and inflation expectations,” he said.
A version of the latest Hospitality Investor Sentiment Assessment can be downloaded here.