“Institutional investors' buyer share is expected to stay strong in '17; private equity buyers stand to see some increases,” according to JLL's report. “Particularly in the US, a partial re-emergence of private equity investors is on deck, with funds having raised capital to deploy.

“The role of private equity is shifting. In some cases, where they did sell big portfolios in '16, investors are staying in the deals in a partial capacity. They continue to serve as portfolio managers when selling to long-term-hold institutional capital, which has less hotel real estate expertise.”

JLL projects global transaction volumes will amount to approximately $60 billion, mirroring the amount recorded in '16. Transactions this year will be driven by funds reaching the end of their hold period and portfolio restructuring, rather than by assets' future high income-growth expectations.

Additionally, the $60-billion transaction ballpark JLL identifies will mean different things in different regions of the globe. The EMEA is expected to see growth in volume from approximately $20.5 billion in 2016 to $22.5 billion this year, while activity in the Americas, after a relatively strong year underpinned by off-shore buyers, is slated to remain flat at up to $31.0 billion. Asia Pacific volumes are expected to hold steady at $8.5 billion during the year.

“Investors will also grow their focus on assets outside of the top gateway markets in pursuit of higher yields,” says Lauro Ferroni, global head of research for JLL's Hotels & Hospitality Group. “In the US, market fundamentals are expected to fare best in Boston, Hawaii, Washington, DC, Atlanta and Seattle in '17.”

JLL also notes that some 30% of branded full service hotel rooms across the globe have been involved in M&A activity since 2014, and there's little slowdown in sight. “We expect to see more consolidation among operators and real estate owners alike due to key players' need to remain competitive through efforts that align growth strategies,” the report states.

CHICAGO—Investment in the US hotel sector will originate from closer to home this year, JLL says. Although the sector drew a record proportion of offshore capital last year, “2017 stands to be the year of the domestic investor in the US,” according to the firm's 2017 Hotel Investment Outlook.

The emphasis on homegrown deals in the lodging space this year will be underpinned by “an increase in buys from private equity funds and REITs,” the report states. Meanwhile, investment flows from major recent buyer groups, such as mainland Chinese investors, is expected to slow.

Buttressing its prediction of stepped-up activity from lodging REITs, JLL cites the Dow Jones US Hotel & Lodging REIT Index's 44% rally during 2016. The firm points out that public REITs acquired an average of $4 billion annually in US markets between 2011 and 2015, “indicating the amount of buying power they could hold this year.” Meanwhile, PE funds' buyer share fell by nearly 50% in '16, making way for institutional players to get into the game.

Specifically, JLL says, transaction volumes by institutional investors accounted for 20% of market share, four times the proportion seen in 2015. Conversely, PE investors' and funds' share of acquisitions decreased from over 40% to 25% in '16. PE funds were also not dramatically active on the sell-side last year.

“Institutional investors' buyer share is expected to stay strong in '17; private equity buyers stand to see some increases,” according to JLL's report. “Particularly in the US, a partial re-emergence of private equity investors is on deck, with funds having raised capital to deploy.

“The role of private equity is shifting. In some cases, where they did sell big portfolios in '16, investors are staying in the deals in a partial capacity. They continue to serve as portfolio managers when selling to long-term-hold institutional capital, which has less hotel real estate expertise.”

JLL projects global transaction volumes will amount to approximately $60 billion, mirroring the amount recorded in '16. Transactions this year will be driven by funds reaching the end of their hold period and portfolio restructuring, rather than by assets' future high income-growth expectations.

Additionally, the $60-billion transaction ballpark JLL identifies will mean different things in different regions of the globe. The EMEA is expected to see growth in volume from approximately $20.5 billion in 2016 to $22.5 billion this year, while activity in the Americas, after a relatively strong year underpinned by off-shore buyers, is slated to remain flat at up to $31.0 billion. Asia Pacific volumes are expected to hold steady at $8.5 billion during the year.

“Investors will also grow their focus on assets outside of the top gateway markets in pursuit of higher yields,” says Lauro Ferroni, global head of research for JLL's Hotels & Hospitality Group. “In the US, market fundamentals are expected to fare best in Boston, Hawaii, Washington, DC, Atlanta and Seattle in '17.”

JLL also notes that some 30% of branded full service hotel rooms across the globe have been involved in M&A activity since 2014, and there's little slowdown in sight. “We expect to see more consolidation among operators and real estate owners alike due to key players' need to remain competitive through efforts that align growth strategies,” the report states.