Experience Driven Holidays Drive Resort Investment
Ever since the trend of 'experience-driven' holidays started to really become a 'thing', resort assets have remained a star investment among investors. JLL Hotels & Hospitality's Global Resort Report shows that international tourist arrivals at resorts are expected to reach 2.2 billion in 2019, also illustrating a continued growth trajectory through the next ten years.
"Over the past five years, resorts have been star performers ..." said Lauro Ferroni, global head of JLL Hotels & Hospitality Research. "Given many consumers' propensity for experiences over material goods, we anticipate continued investment activity in this sector globally."
According to the same report, resort sales contributed up to 20% of all hospitality sales in the Americas, while resort assets accounted for 7% of all hotel sales in Europe, the Middle East, Africa, and Asia Pacific. Across all the mentioned regions, private equity funds appeared to be resorts dominant buyer, totaling 20% to 50% of annual resort transaction volume in each market.
Key Markets in the Americas
Three key resort markets in the Americas are Florida, Hawaii, and Colorado. Although the three markets are significantly different, they shared these dynamics:
- Resort sales contributing to the majority of total hotel trades;
- Increasing traveler volume.
In Florida, 73% of resort sales from 2014 till now were resort assets, moreover, the market experienced a 6% increase in overnight visitation and a 6.2% rise in international visitation. Meanwhile, Hawaii saw 90% of its hotel sales volume fall under the resorts segment. In 2018, the resort market in Hawaii peaked at 10 million visitors.
Lastly, Colorado's 62% of hotel sales were resorts and in 2018, the market also set a record-high visitation at 85.2 million overnight and day-trip customers, as well as a 4.9% increase in international visitation.
JLL's Americas Hotels & Hospitality CEO Gilda Perez-Alvarado believes that "with the travel and tourism industry performing as strong as ever, resorts are an attractive investment option. Resorts offer a smart way for investors to place a relatively significant amount of capital and secure attractive yield."
Florida's significant infrastructure investments, and its growing reputation as an art hub are the highlights of the market. However, resort supply in Florida remains limited, with 1.1% and 1.4% growth anticipated this year and next. As of 2014, 17 resorts have sold for more than $100 million.
Airline Investment
Airline investment and the continuous domestic and international appeal are the drivers of Hawaii's resort market. In addition, the market receives notable attention from foreign investors. Across all resort transactions, the average price per key was approximately $400,000.
Colorado resort market's highlights are its appeal as a summer and winter destination for out-door activities. The majority of the visitors are local, as are the investors, with domestic REITs accounting for the lion's share of acquisitions, followed by private equity and developers.