December 3, 2020

Key Insights:

  • The significant impacts of COVID-19 are expected to result in a cyclical low in national hotel sales year in 2020, as investment activity contracted over the sector’s most challenging period in history. 
  • Around $670 million in volume is expected over 17 transactions over the full year, which is 63% lower than the 10-year average annual sales volume of $1.8 billion.
  • Sales activity in 2020 has been characterised by asset purchases within tightly held CBD and some suburban markets. Observed price discounts across these assets range between 5% to 15% on estimated pre-COVID values.
  • With most lending institutions still cautious in issuing new debt to the sector, liquidity conditions are expected to gradually improve for hotel investors in 2021 as global investment continues to be underpinned by record-low interest rates and central bank quantitative easing policies. 
  • As such, we expect an active hotel transaction market over the course of 2021/22, which will be driven by interest in a number of high-quality assets brought onto the market, as well as building momentum from an emerging weight of international and domestic capital seeking value in new deals with medium term yield prospects in a world starved of yield opportunities. 

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Chinmay Chitale
Research Manager - CBRE Hotels
Head of Hotels Research 
[email protected]

Troy Craig
Regional Director - CBRE Hotels
Valuations & Advisory
[email protected]