Private equity and institutional investors have started to return to the hotel market, a trend  that began in the second half of 2020. According to research from JLL, private equity and institutional investors were responsible for 54% of total hotel transactions last year and  they are likely to remain active in the market this year, driving investment activity.

Last year, private equity alone raised $24.5 billion in closed-end funds for hotel investment. This matched 2016 investment levels, and it will likely provide the majority of hospitality investment this year. While investment globally has focused on resort markets, private equity groups deployed capital across asset classes with a specific focus on distressed investment. This has created opportunities for non-traditional investors to participate in the space.

Half of all hotel transactions occurred in the first three months of 2020, before the onset of the pandemic. However, more liquidity will help to drive transactions in 2021, and resort properties will likely get most of the attention with JLL predicting this category will account for 35% of total hotel investment volume this year.