Investors in the hotel sector will turn their initial focus to buying assets with cash while waiting for pain to be felt across the market, according to JLL.
The group said that it expected “realistically-priced deals to come to the market during the second half of 2020”.
The company said: “While experienced and patient investors will make exceptional returns out of the recovery, they are likely to have to wait for the pain to kick into a point that realism builds up on pricing. Fortune will favour the brave as ever in the hotel market, however the hasty may miss out as it could take 12 months before we can demonstrate the start of a genuine sustained recovery in demand and trading. For existing owners, with demand levels currently low, new developments will likely grind to a halt, reducing competition and therefore speeding up their recovery period.
“There is little differentiation between what the top 20 hotel operators are currently offering, so M&A activity will be inevitable, with cost synergies driving activity. Although this will be tough for existing owners, as the rise of the mega operator is a strong likelihood, individual owners and independent hotels may start to worry.
There is also an opportunity for consolidation in ownership. There are currently few scaled owners across countries or regions and therefore we expect several mega hotel owners to emerge from the crisis, taking advantage of scale and cheap assets to build exceptional long-term portfolios.”
The group said that it was starting to see the industry “reshape before our eyes,” bringing new and exciting challenges.