Real Estate has always been and always will remain one of the most secure forms to invest. Unlike other ways, there is a real physical asset to see, touch and experience. Even though the industry was massively disrupted in the early 2020s due to the Covid-19 pandemic, it has been on a skyward trajectory, revealing its strength and stability.

A Strong Recovery in the Pandemic Aftermath

Even though the pandemic may feel like it happened ages ago, it was only officially declared as “over” in May 2023. At the time of this writing, 2 years have not yet passed. While the full effects of the pandemic remain to be seen, one thing is certain: the real estate market is recovering, and with the tourism industry on the rise, hotel investments are witnessing a renewed momentum worldwide, as they are rightfully perceived as resilient, adaptable, and most importantly, as lucrative opportunities.

According to the Financial Times, hotel investments are on the rise all over the world, especially in the United Kingdom. Activity is buzzing wherever there is a high prospective return on investment to be had, no matter where in the world. The prestigious publication cites a bidding war for a strategically located hotel in Venice, Italy, as well as exponential growth in the Asia-Pacific region, where transaction volumes grew by a staggering 19% in early 2024 to a total value of $5.7 billion.

As the tourism industry steadily reclaims its numbers before the pandemic, revealing a pent-up demand for travel, it stands to reason that hotels are seen as an attractive option for investors seeking stability and high returns. Plus, hotels are able to respond to inflationary pressures on the fly by adjusting prices on a daily basis. The Financial Times also cites as hotels being one of the main targets by family offices, since real estate tends to appreciate over time, and when acting as hotels, becomes a source of generated income, especially when accounting for the appeal of including cross-sales services, including spas and restaurants.

The interest generated by the hospitality industry does not solely rely on the income generated by the property itself, but also by the value of the brand operating the hotel. A recent report from CoStar highlights that multiple companies have, in the wake of the pandemic, allocated substantial amounts dedicated to property upgrades and strategic renovations, with the prime example being the Pebblebrook Hotel Trust, which has been redirecting efforts toward property enhancements since 2018, investing nearly half a billion in the process.

With these property renovations modernising hotels and enhancing guest experiences, further value is created and associated with a brand, driving further revenue potential and turning otherwise underperforming assets into specific, targeted lifestyle hotels that cater to shifting consumer preferences. The same report by CoStar predicts that returns on these investments could exceed 10% as market conditions stabilise and improve.

Fewer Offices, More Corporate Business

There is more to the hotel industry than simply hosting leisure travel. A significant part of many hotels’ revenue comes from business and corporate travel. While recent numbers indicate that numbers are close to, but have yet to regain their pre-pandemic levels, there is an increasing shift in preference for corporate retreats and group travel. For instance, the Wall Street Journal notes that in 2024, revenue from group travel increased by nearly 7%, surpassing inflation rates and revealing how companies are reconsidering their daily operations.

As the remote work phenomenon grows, and with many businesses shifting to hybrid models, the demand for spaces capable of hosting corporate and team building events, as well as executive retreats is increasing, and shows no signs of slowing down. The Wall Street Journal also cites data from CoStar, claiming that revenue was up 6.4% for the first 8 months in 2024, outpacing inflation, with Fortune 500 companies taking the lead in terms of booking rooms and dedicated spaces.

Another prime example of why real estate is a prime method of investment is its flexibility. As long as a space is deemed suitable, it can serve multiple purposes. Recent reports from Reuters refer to London’s own Canary Wharf as one of the best examples, considering the recent trend of converting underutilised office buildings to a multitude of spaces, including into hospitality.

As demand for office spaces is steadily declining, partially due to the growth of remote and hybrid work models and the high borrowing costs in the aftermath of the pandemic, London and multiple other cities throughout the world are seeking to revitalise and repurpose existing properties. In service of this, Canary Wharf’s current goal for 2025 is to have over 1000 hotel or short-term apartment rooms. For instance, the Canary Wharf Group is looking to redevelop HSBCs vacated 45 floor office towers into a hospitality space.

The post-pandemic hotel investment landscape presents a series of opportunities, no matter where the property is located. Strategic renovations, repurposing real estate and demand in travel needs are not looking to stop any time soon, and carving out your own piece has never been easier. Investors who understand and adapt to the needs of the real estate sector will find that the hotel industry remains a dynamic and lucrative asset ripe for the taking with long-term growth potential.