Investors have never been more interested in what is now a mainstream asset class, with M&A expected to flood out of this crisis, according to the first quarterly Hospitality Investor Sentiment Assessment, conducted by Questex and ABP Invest.
The survey, which was limited to investors, found that, despite 67% expecting economic conditions to deteriorate in the sector, sentiment towards it remained positive.
There was a preference for developed markets over the next 12 months, from investors, with some also considering emerging markets. Only a small proportion of investors (6.7%) were likely to consider an equal allocation between emerging and developed, with no respondents focusing mainly or solely on emerging markets.
Capital cities were favoured, with London leading the pack.
Thanos Papasavvas, founder & CIO, ABP Invest, said: “It was fortuitous to have conducted the survey amidst the Coronavirus outbreak in March as it provided a unique reference point for quarters and years to come. Despite 67% of investors expecting economic conditions to deteriorate over the next 12 months (compared to 27% who expected them to improve), 53% of investors had a positive or strongly positive sentiment on Hotels with 80% expecting to be net buyers over the next 12 months.”
The survey illustrated that investors in the sector were more buoyant than those in the wider world, with the State Street Global Markets’ global index reporting that global investor confidence - not just property investment - was not much uplifted in May, growing only 0.3 points to a reading of 73.3, where 100 would be neutral.
The slight increase was primarily driven by the European ICI, which rose 6.3 points to 108.6. Meanwhile, the North American ICI and Asian ICI each dropped 0.3 points, to 67.8 and 80.5 respectively.
Marvin Loh, senior macro strategist, State Street Global Markets, said: “The shifting focus from country lockdowns to restarting economic activity allowed the Investor Confidence Index to remain mostly unchanged in May.
“The slowing of Covid-19 cases in Europe and the phased restart of its most impacted economies lifted sentiment by 6 points, recovering most of the losses from the prior few months. Expectations of additional fiscal and/or monetary stimulus from Europe also contributed to the improving tone. However, the North America ICI was minimally impacted, as the progression of the virus is still on a path towards peaking, while concerns remain over reinfections as all US states have at least begun to partially reopen.”
Insight: They’re a cheery bunch, these hotel investors and while there is some ghoulishness to be had - hopes clearly run high that there is going to be distress to profit from - the generally hopeful view of the sector has held. Travel will return, is the feeling, with pent up demand from both travellers and investors fuelling hope and keeping the focus on the sector.
Some might think this an inauspicious time to release an investor sentiment assessment, yet we believe it fortuitous to have conducted our inaugural assessment amidst the Coronavirus outbreak in March as it provides an exclusive reference point for quarters and years to come. Stay tuned to see how the mood shifts.