APACPart 2 of 3 Global Resort Report Three-Part Series - Hotels & Hospitality | 2019 - JLL Sri Lanka
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APACPart 2 of 3 Hotels & Hospitality | 2019 Global Resort Report Three-Part Series JLL Research
2 Global Resort Report | 2019 Content Resort market overview 4 Region at a glance 5 Maldives 6 Phuket 8 Gold Coast 10
4 Global Resort Report | 2019
at a glance
Resort markets
INVESTMENT DRIVERS
Over the past five years, resorts have been the darling of the hotel investment community, influenced by consumers’ focus on experiential
travel and an affinity towards lodging assets with an authentic local feel. Resorts across the world have also benefitted from solid growth
in international tourist arrivals, which are anticipated to grow by 4.0 percent in 2019 to 2.2 billion travellers and continue rising at this pace
throughout the next decade.
Investor appetite for resorts has spanned coastal resort markets and mid-market destinations, as evidenced by Blackstone’s announcement
in October 2019 that it will acquire a 65.0 percent controlling interest in family-oriented, Great Wolf Resorts. Additionally, Anbang Insurance
Group Co.’s sale of 15 luxury urban and resort assets to Korea’s Mirae Asset Management in September 2019, further highlights how hotel
investors, foreign and domestic, are gravitating to resort assets in today’s market.
The following provides an overview of popular global resort destinations in a three-part regional series. The commentary highlights market
dynamics unique to each resort destination related to infrastructure developments and tourism assets, demand and supply fundamentals
and investment trends.
METHODOLOGY
JLL’s report series analyzes total supply and total transaction volume by market. The number of existing properties by market was determined
through an extensive evaluation of STR’s Global Census and Pipeline Database Report, as well as JLL’s proprietary supply database. This
analysis was replicated for the evaluation of JLL’s proprietary transaction database to drive the investment sales analysis. This methodology
ensures that the findings for each market pertain to existing resort assets, including hotel assets for selected markets, situated in the
destinations within the Asia Pacific region.
2018 International visitor arrivals
Total Number of
INTERNATIONAL Y-O-Y
VISITATION GROWTH
( in millions)
Maldives 1.5 6.8%
Phuket 9.9 2.5%
Gold Coast 10.0 7.8%
APAC: Investment Volume by Buyer Type
2014 - H1 2019
HNWI Private Equity Developer Hotel/SA Operator Others
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
Maldives Phuket Gold Coast
Source: JLL
Proportion of Foreign Investment by
2014 - H1 2019
buyer country
100% Sri Lanka
United States
90% Thailand Others
United Kingdom
Germany
80% Hong Kong
70%
UAE
60% China
50%
Singapore
United States
40%
30%
Singapore
Thailand
20%
10%
Singapore
0
Maldives Phuket Gold Coast
Source: JLL
6 Global Resort Report | 2019
Maldives
Celebrated for its crystal-clear waters, white-sand beaches and a rich underwater world, the Maldives is one of the world’s most aspirational travel
destinations. Stretching for more than 800 kilometres from north to south and covering a total area of 90,000 square kilometres just south of Sri Lanka
in the Indian Ocean, the Maldivian Archipelago is made up of 26 ring-shaped atolls comprising around 1,192 coral islands. The Maldives is a tropical
nation and boasts one of the highest concentrations of resorts achieving the highest average rates in the world, where every resort is developed
and operates within its own private island. Enjoying some of the richest marine biodiversity anywhere in the world, the Maldives’ coral reefs are the
seventh largest globally and the entire Baa Atoll was declared a UNESCO World Biosphere Reserve in 2011.
Since the establishment of the Ministry of Tourism, Arts & Culture in 1972, with only 1,097 visitor arrivals that same year, tourism has grown at an
exponential rate, driven by the Maldives’ natural beauty and increasing ease of accessibility. In 2018, the Maldives surpassed record visitation, with
visitor arrivals growing by 6.8% year-on-year (“y-o-y”) to reach 1.5 million. In the past decade (2008-2018), visitor arrivals registered a compound
annual growth rate (“CAGR”) of 8.1%. The resort haven continues to be a strong draw for travellers, with visitor arrivals increasing by 18.7% y-o-y to
around 862,600 in H1 2019. This positive momentum will be further supported by Velana International Airport’s ongoing expansion, which will boost
visitor capacity to up to 7.5 million passengers annually upon completion.
INVESTMENT TRENDS
Maldives attracting new sources of cross-border capital
Approximately $1.0 billion of resorts changed hands Resort Transaction Volume by Buyer Type 2014 to H1 2019
in the Maldives between 2014 and H1 2019, with all of
these properties sold to foreign investors. The country’s $450
reputation as one of the world’s foremost luxury
$400
destinations has traditionally attracted high-net-worth
Total resort sales volume
individual (“HNWI”) investors who accounted for 41.0% of $350
(in millions $US)
transaction volume during this period. $300
Strong trading performance, 100% foreign ownership $250
rights and high yield returns are attracting new sources $200
of cross-border capital from outside of the Asia Pacific
region. Two transactions were concluded in the first six $150
months of 2019, namely the 151-key Conrad Maldives $100
Rangali Island which sold to global private equity firm
$50
Blackstone, as well as the 125-key Finolhu Baa Atoll,
which sold for approximately $90 million to German- $0
HNWI Private Developer Hotel / SA Corporates
based Seaside Hotels. Increasing sales activity is expected Equity Operator
in H2 2019 in the Maldives, with total volume anticipated Source: JLL
to reach a new annual peak of $500 million at year-end.
Although the price per key commanded for Maldives’ investment opportunities are higher in comparison to other resort markets, it is directly
correlated to RevPAR, which outperforms all other resort markets in Asia by a considerable margin. Returns for stabilised assets meanwhile represent
some of the most attractive across the globe at around 8.0%-10.0%.
DEMAND
Maldives
Visitation driven by double-digit growth in five of the top-10 visitor source markets
The country enjoys a tropical climate with two distinct seasons, namely the dry and wet season. The dry season, typically from December to April, is
the peak season of travel. Whilst the wet season is usually from May to November; however, visitor arrivals tend to pick up in June and August due to
the summer holidays, as well as in October due to the autumn break in some countries such as the UK, Germany and France.
Visitor arrivals from Australia recorded a significant increase of 36.2% y-o-y in 2018, replacing Korea as one of the top-10 visitor source markets for the
first time. Following years of decline, visitors from France registered a strong rebound increasing by 19.1% y-o-y in 2018, whilst visitors from Italy also
recorded strong growth of 18.5% during the same period.
Maldives Top 10 Source Markets in 2018 vs 2017
2017 2018 % Growth
350 40%
35%
300
Visitor arrivals (in 000s)
30%
Annual growth (%)
250 25%
20%
200
15%
150 10%
100 5%
0%
50
-5%
0 -10%
a
y
m
ly
a
ia
ce
.
n
lia
.A
an
in
di
pa
Ita
ss
do
an
tra
S
Ch
In
rm
U.
Ru
Ja
ng
Fr
s
Au
Ge
Ki
d
ite
SUPPLY
Un
Source: Ministry of Tourism Maldives
2,000 resort rooms to open in the Maldives by 2020
Approximately 2,000 rooms are expected to open from H2
Maldives New and Cumulative Resort Supply
2019 to 2020, which represents almost 13.0% on the existing
Existing rooms New supply
supply as at June 2019. Of these, around 44.0% are in the
3,000 20,000
midscale segment, whilst about 30.0% and 26.0% are in
the upscale and luxury segments, respectively. However, 18,000
Cumulative supply (rooms)
2,500
it is worth noting that there has been considerable delay 16,000
New supply (rooms)
and cancellation of resort developments in the Maldives 2,000
14,000
historically, with development finance and general logistical 12,000
complications in construction acting as a hedge against 1,500 10,000
supply growth. 8,000
1,000
Notable resort openings in 2019 include the 198-key SAii 6,000
Lagoon Maldives, Curio Collection by Hilton and 178-key 4,000
500
Hard Rock Maldives by Singha Estate; 130-key Waldorf 2,000
Astoria Maldives and; the 61-key JW Marriott Maldives 0 0
Resort & Spa. Beyond 2019, notable resort openings include 2018 2019F 2020F 2021F
Source: JLL
the 200-key AVANI Fares Maldives Resort; 80-key Address
Madivaru Maldives Resort & Spa; and the 65-key Capella Maldives.
OUTLOOK
With visitors to the Maldives in 2019 set to surpass record highs, upcoming resort supply is expected to be well-absorbed by the market in
the short- to medium-term. Visitor growth is supported by increasing flight connectivity via initiatives such as the recently signed Open Skies
Agreement between Singapore and Maldives, which will allow for flight frequency increase between the two countries. Looking to the medium-
to long-term, the expansion of Velana International Airport will ensure robust and sustainable demand from this market.
Strong resort trading fundamentals and generally higher yields as compared to other resort markets in Asia, the Maldives continues to attract
new interest and sources of cross-border capital from global and European private equity groups as well as owner operators. With several deals
in the pipeline, transaction activity in the Maldives is expected to reach record levels at year-end 2019.
8 Global Resort Report | 2019
Phuket
Phuket is Thailand’s largest island and is a well-established tourist resort destination. It is located in the Andaman Sea of southern Thailand and the
Phuket International Airport is approximately an hour’s flight from Bangkok. Its accessibility and affordability have been two of the key success points
of the island’s tourism growth. Phuket not only offers beautiful beaches and iconic islets, but also a variety of outdoor activities and multiple shopping
scenes ranging from flea markets to duty free shopping, which play an integral part of being one of the top tourist destinations.
In 2016, the Phuket International Airport expanded its annual airport handling capacity from 7.5 to 12.5 million passengers, further supporting tourism
growth in the resort island. Moreover, plans for a second airport in the nearby Phang Nga have been approved by the board of the Airports of Thailand
and are pending the Cabinet’s approval.
Total overnight visitors to Phuket have grown steadily over the past decade (2008 to 2018), with international and domestic visitation registering a
CAGR of 10.9% and 9.9%, respectively. During the same period, international and domestic overnight visitors accounted for 72.7% and 27.3% of total
arrivals, respectively.
INVESTMENT TRENDS
Active investment market with continued interest from international investors
Phuket continues to be one of the most active hotel Resort Transaction Volume by Buyer Type 2014 to H1 2019
investment destinations in Thailand. Since 2014,
developers have been the most acquisitive group and
$120
have accounted for over 65.0% of total transaction
volume, followed by hotel operators at 20.0%. Of
Total resort sales volume
$100
the resorts that were sold during the period, half of
(in millions $US)
the transacted properties sold for more than US$29
$80
million.
Over the past five years, total transaction volume for $60
the resort market was dominated by Singaporean
$40
investors, whilst the remaining comprised investors
mainly from the UK and Thailand. Of the resort
properties that were sold during the period, all of the $20
sellers were Thais who disposed their assets primarily
to recognise their investment returns. $0
Developer Hotel / SA Corporates
Operator
Source: JLL
DEMAND
Phuket
Indian visitors to Thailand surged by 24.3% y-o-y in H1 2019 due to increased flight connectivity and visa fee waivers
In H1 2019, total international visitors to Thailand rose by 1.8% y-o-y. Whilst visitation from Mainland China to Thailand declined y-o-y as at YTD June
2019 (-4.7%), the notable 24.3% y-o-y growth in visitors from India over the same time period helped ease the void left by the Chinese visitors. The trend in
visitation from India is expected to continue given Indian airlines GoAir and IndiGo’s plans to expand flight service to Phuket, as well as visa on arrival fee
waivers for Indian travellers.
According to the latest available annual government statistics, Phuket welcomed approximately 9.9 million international overnight visitors in 2018,
representing a y-o-y growth of 2.5% and a CAGR of 10.9% over the 10-year period from 2008 to 2018. Likewise, the number of domestic overnight visitors
have grown steadily by 3.9% y-o-y to 3.7 million, registering a 9.9% CAGR over the same 10-year period.
The increase in international overnight visitors in 2018 was mainly driven by growth in Phuket’s top three source markets, namely Mainland China
(+10.3%), Russia (+3.0%) and Germany (+6.5%) which together, comprise more than 45.0% of the total accommodation nights during the period.
Phuket Top 10 Source Markets in 2018 vs 2017
2017 2018 % Growth
350 15%
300 10%
Visitor arrivals (in 000s)
Annual growth (%)
250
5%
200
0%
150
-5%
100
-10%
50
0 -15%
ce
sia
en
Ch land
ia
y
lia
UK
a
n
an
re
pa
ss
an
tra
ed
ay
a
Ko
rm
Ru
Ja
in
n
Fr
Sw
al
s
ai
Au
Ge
M
M
Source: Department of Tourism Thailand
SUPPLY
Incoming supply will elevate the market’s resort offerings
As of June 2019, Phuket had more than 14,300 Phuket New and Cumulative Resort Supply
resort rooms available. Most of the existing
supply is in the upscale segment (60.5%), Existing rooms New supply
followed by the luxury (20.3%) and midscale 300 15,000
(19.2%) segments.
Cumulative supply (Rooms)
250 14,800
An estimated 540 resort rooms are expected to
New supply (rooms)
open from H2 2019 to 2021, which translates
200 14,600
to an increase of nearly 4.0% on the existing
resort supply as of June 2019. The upcoming 150 14,400
new supply will mainly be in the upscale (65.0%)
and the luxury (35.0%) segments, namely the 100 14,200
189-room JW Marriott Phuket Resort & Spa
Chalong Bay; 150-room Melia Phuket Karon; 101- 50 14,000
room Melia Phuket Mai Khao and the 100-room
0 13,800
Anayara Luxx Panwa. 2018 2019F 2020F 2021F
Source: JLL
OUTLOOK
Phuket’s strong appeal as an ideal resort destination for international and domestic travellers, as well as increased air
connectivity, limited future resort supply and lower barriers of entry through visa fee waivers, are expected to bode well for the
resort segment. Moreover, demand to the resort market in the medium- to long-term will benefit if the pending construction of
the second airport in Phang Nga is finalized.
10 Global Resort Report | 2019
Gold Coast
The Gold Coast located in Queensland, Australia’s ‘Sunshine State’, is a long established and coveted resort leisure destination. The Gold Coast is
positioned a short distance from the State’s border with New South Wales located within South East Queensland. Situated on Australia’s east coast,
the Gold Coast is the beneficiary of expansive sandy beaches as well as lush hinterland with outstanding national parks. With established popular
ocean fronting resort sub-markets such as the iconic Surfers Paradise, Main Beach and Broadbeach, the Gold Coast has cemented its appeal as a
holiday and leisure market.
An established ‘playground’ in terms of domestic tourism and an aspirational holiday destination for international visitors, the Gold Coast is a
world-class entertainment orientated market. In addition to extensive tourism infrastructure, in the form of short-term accommodation and a vibrant
retail, restaurant and nightlife offering, the Gold Coast also offers a broad range of venues and attractions of scale. These include exhibition and
conferencing facilities, an established and growing casino precinct, golfing experiences as well as the country’s leading theme parks.
Major ongoing infrastructure developments include the expansion of the Gold Coast Airport. A retail area with aerobridges linking to a new three-
storey terminal is to be developed. This is anticipated to substantially increase the airport’s handling capacity when completed in 2021. Looking
ahead, the Gold Coast Airport is forecast to double its annual passenger handling capacity from its existing 6.6 million by 2037.
INVESTMENT TRENDS
Sustained interest amongst domestic and international investors
Total hotel and resort transaction volume totalled Total Transaction Volume by Buyer Type 2014 to H1 2019
$746.4 million during the period from 2014 to H1 2019.
There was a relatively even split between the local $180
and foreign buyers, with 48.9% of the total transaction
$160
volume comprising the overseas investors and 51.1%
Total resort sales volume
the local buyers. The HNWIs and developers were the $140
(in millions $US)
largest group of investors, each accounting for more $120
than 20% of the total transaction volume during the
$100
period.
$80
Whilst the Gold Coast hospitality sector generally
remains tightly held and there is often a paucity of $60
quality investment opportunities, the market has $40
experienced a wave of transactional activities of late.
$20
These include the sale of the 169-room Hilton Surfers
Paradise for $49.5 million in 2019, a mixed-use hotel $0
I
r
or
ity
rs
r
IT
and apartment development within a prime location
W
pe
to
he
RE
at
HN
qu
es
lo
er
Ot
nv
E
within Surfers Paradise, as well as the 103-room
ve
Op
te
lI
De
iva
na
A
Woodroffe Hotel located in Southport sold for $13.4
/S
Pr
io
ut
l
te
million.
tit
Source: JLL
Ho
s
InDEMAND
Gold Coast
An established destination with significant youth and family appeal
As a leisure orientated market, the market’s peak travel season is typically during the summer season in January, when occupancy averaged
approximately 83.6% in 2018. This compares to the average occupancy of 63.6% during the low winter season in June in the same year. The spring
season during the September-November period is also a strong travel season, with occupancy averaging 75.4% in 2018.
Notably, the Gold Coast Commonwealth Games in 2018 was a catalyst for accommodation demand and the hotel sector was a beneficiary of
significant growth both in terms of business volumes and the average daily rate during the event. In 2018, total visitor nights to the Gold Coast Tourism
Region increased by 8.5% y-o-y to a record 24.7 million, representing the market’s highest ever annual growth. Nine out of the top 10 visitor source
markets registered y-o-y increases ranging from around 2% to 45% during the period.
While moderating in line with expectations post the Commonwealth Games, the market is anticipated to maintain a growth trajectory overall relative
to 2017 and prior years.
Gold Coast Top 10 Source Markets in 2018 vs 2017
2017 2018 % Growth
2,500,000 50%
40%
Annual growth (%)
2,000,000
Visitor nights
30%
1,500,000 20%
1,000,000 10%
0%
500,000
-10%
0 -20%
a
an
g
e
da
a
d
n
m
A
or
re
n
in
US
pa
an
do
w
Ko
na
Ch
Ko
ap
Ja
al
i
ng
Ta
Ca
ng
Ze
ng
Ki
Ho
Si
w
d
Ne
ite
Source: Tourism Research Australia
Un
SUPPLY
Fresh supply with hybrid characteristics scheduled for near term
According to STR, there was an average of 9,397 short-term
accommodation rooms in the Gold Coast region at end-2018. Gold Coast New and Cumulative Hotel and Resort Supply
Prior to the 2018 Commonwealth Games, there were two
notable hotel openings in the Gold Coast, namely the 57- Existing rooms New supply
room Darling Hotel at the Start Gold Coast and the 120-room 700 10,800
Mantra at Sharks Southport. In November 2018, The Ruby 10,600
600
Cumulative supply (rooms)
Collection Serviced Apartment Hotel also opened with 243 10,400
New supply (rooms)
rooms. 500 10,200
Whilst there were no new hotel openings in H1 2019, around 400
10,000
1,120 rooms are under construction and are scheduled to 9,800
open from H2 2019 to 2021. This translates to a 12.0% y-o-y 300 9,600
increase on existing supply. 9,400
200
The upcoming developments include the 169-room luxury 9,200
100
hotel Jewel Gold Coast, as well as upscale hotels such as 9,000
the 192-room Rydges Gold Coast Airport, 446-room Meriton 0 8,800
Suites Surfers Paradise and the 316-room Dorsett Hotel at 2018 2019F 2020F 2021F
Source: STR
the Star Gold Coast.
OUTLOOK
The outlook for the Gold Coast accommodation market is overall positive. While some performance moderation subsequent to the Gold Coast
Commonwealth Games in 2018 and the delivery on new supply is anticipated, the market’s underlying appeal remains strong. Moreover,
continued investment into major infrastructure projects will support further growth in visitation, as well as reinforce the Gold Coast’s
underlying position as one of Australia’s most popular leisure destinations.Contributors
Asia Pacific Gold Coast
Mike Batchelor Julian Whiston
Chief Executive Officer, Asia Executive Vice President, Australasia
mike.batchelor@ap.jll.com julian.whiston@ap.jll.com
Craig Collins Tom Gibson
Chief Executive Officer, Australasia Senior Vice President
craig.collins@ap.jll.com Investment Sales, Australasia
tom.gibson@ap.jll.com
Maldives
Nihat Ercan Research
Managing Director
Head of Investment Sales, Asia Lauro Ferroni
nihat.ercan@ap.jll.com Global Head of Hotels Research
lauro.ferroni@am.jll.com
Giuliano Esposito
Senior Vice President Geraldine Guichardo
Strategic Advisory & Asset Management, Asia Head of Americas Hotels Research
giuliano.esposito@ap.jll.com geraldine.guichardo@am.jll.com
SzeMin Tay
Phuket Associate, APAC Hotels Research
szemin.tay@ap.jll.com
Paul Chakkrit
Executive Vice President
Investment Sales, Thailand
chakkrit.chakra@ap.jll.com
Pitinut Pupatwibul
Senior Vice President
Strategic Advisory & Asset Management, Thailand
pitinut.pupatwibul@ap.jll.com
About JLL’s Hotels & Hospitality Group
JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five
years, totalling more than $71 billion worldwide. Between negotiating the world’s most extraordinary, enticing, and profitable property deals,
the group’s 350-strong global team in over 20 countries also closed more than 5,300 advisory, valuation and asset management assignments.
Investors worldwide turn to JLL to shape their strategies, tailor their portfolios and maximize the value of their assets. We are recognized as
the global leader in real estate services across hospitality properties of all shapes and sizes. Our expert advice is backed by industry-leading
research. We apply our broad spectrum of hotel valuation, brokerage, asset management and consultancy services through every phase of
the hotel lifecycle. We have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate
advisor in the world. Whether you are looking for a hotel or you’re ready to sell, we’ll use our capital markets expertise, hospitality industry
knowledge and global relationships to put the right parties together and execute a bespoke deal that exceeds your objectives.
To find out more, talk to JLL.
www.us.jll.com
© 2019 Jones Lang LaSalle IP, Inc.
All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.Americas
Part 1 of 3
Hotels & Hospitality | 2019
Global Resort Report Three-Part Series
JLL Research2 Global Resort Report | 2019 Content Resort market overview 4 Region at a glance 5 South Florida 6 Hawaii 8 Colorado 10
4 Global Resort Report | 2019
overview
Resort markets
INVESTMENT DRIVERS
Over the past five years, resorts have been the darling of the hotel investment community, influenced by consumer focus on experiential
travel and an affinity towards lodging assets with an authentic local feel. Resorts across the world have also benefitted from solid growth
in international tourist arrivals, which are anticipated to grow 4.0 percent in 2019 to 2.2 billion travelers and continue rising at this pace
throughout the next decade.
RevPAR performance of resort markets has continued to outpace other locations, such as urban, suburban and airports. The U.S. observed
anemic average supply growth of 0.7 percent from 2014 to H1 2019, which has allowed resorts to achieve an average RevPAR growth
nearly two times the national pace of growth. Limited additional supply growth is expected this year and next, which bodes well for resort
performance going forward and supports continual investor interest in the asset class.
From 2014 to H1 2019, sales activity in resort locations across the Americas accounted for 20.0 percent of total hotel sales volume, with some
of the most notable recent trades including the Waldorf Astoria Boca Raton Resort, the JW Marriott Phoenix Desert Ridge Resort & Spa
and the Hyatt Regency Waikiki Resort & Spa. Investor appetite for resorts has spanned coastal resort markets and mid-market destinations,
as evidenced by Blackstone Group Inc.’s recent announcement that it will acquire a 65.0 percent controlling interest in family-oriented, Great
Wolf Resorts. Additionally, Anbang Insurance Group Co.’s sale of 15 luxury urban and resort assets to Korea’s Mirae Asset Management, further
highlights how hotel investors, foreign and domestic, are gravitating to resort assets in today’s market.
The following provides an overview of popular global resort destinations in a three-part regional series. The commentary highlights market
dynamics unique to each resort destination related to infrastructure developments and tourism assets, demand and supply fundamentals
and investment trends.
METHODOLOGY
JLL’s report series analyzes total resort supply and total transaction volume by market. The number of true existing “resort” properties by
market was determined through an extensive evaluation process of each property reported in STR’s Global Census and Pipeline Database
Report, to capture true “resorts” featuring typical resort amenities including a spa, pool, and other leisure facilities. This analysis was
replicated for the evaluation of JLL’s proprietary transactions database to drive the investment sales analysis. This methodology ensures that
the findings for each market pertain to actual resort assets situated in the destination.
2018 visitation Total Number of Y-O-Y
OVERNIGHT VISITORS GROWTH
( in millions)
South Florida 32.0 6.0%
Hawaii 10.0 5.9%
Colorado 37.8 -1.1%Region at a glance
Americas: Resort supply breakdown by class
Luxury Upper Upscale Upper Midscale Upscale Midscale Economy
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
70%
of South
16,000
Florida’s
14,000
resort supply
12,000
is luxury
10,000
grade
8,000
6,000
4,000
2,000
-
South Florida Hawaii Colorado Source: JLL, STR
Proportion of Foreign Investment
Proportion of Foreign Investment
2014in -Resorts
H1 20192014 - H1 2019
in resorts
20.0%
Proportion of foreign investment of resort acquisitions
18.0% Canada
South Korea
16.0%
14.0%
12.0%
10.0%
8.0% $503 $990
6.0%
4.0%
2.0%
$0
0.0%
South Florida Hawaii Colorado
Source: JLL Note: The flag above the bar chart represents the country with the greatest investment in resort assets
in the market. Value in bar chart pertains to the total investment made in the market.6 Global Resort Report | 2019
South Florida
South Florida, spanning from Palm Beach to Miami represents a prominent tourism hub in the U.S. for domestic and international travelers and is
considered the crossroads of the U.S., the Caribbean and Latin America. In fact, Florida imports approximately $29.6 billion from Latin America and
the Caribbean annually. The market’s year-round tropical climate, miles of beaches, world-class dining and bourgeoning cultural and art scene, make
it a multi-faceted destination that attracts an increasing number of visitors year after year. In 2018, overnight visitation increased 6.0%, surpassing
31 million, representing 25.0% of all visitors in Florida. In 2018, international visitation rose to 7.7 million visitors, a 6.2% increase over 2017 levels.
Following the Zika virus surfaced in South Florida in 2016, the market rebounded strongly, in part, due to the efforts of the Greater Miami Convention
& Visitors Bureau’s multi-million “Found in Miami” global marketing campaign, which launched June 2017 and Discover the Palm Beaches’ expanding
marketing presence in countries, such as Argentina, Colombia and Mexico.
Current improvement and expansion efforts across the Miami International Airport (MIA) and Fort Lauderdale-Hollywood International Airport (FFL)
will further increase South Florida’s visitation and enhance its global visibility as an easily accessible destination. In 2019, MIA announced a new $5
billion capital improvement plan, while FLL is in the later stages of a $3.2 billion expansion and modernization program. Further, the intercity rail line
that currently connects Miami, Fort Lauderdale and West Palm Beach is being expanded to Orlando, which will expose South Florida to millions of
new travelers that typically focus on visiting Central Florida.
INVESTMENT TRENDS
Domestic and foreign buyers make resorts a highly liquid asset class in South Florida
Resort Transaction Volume by Buyer Type 2014 - H1 2019 South Florida’s highly liquid hotel market
coupled with higher quality resort supply
has attracted significant private equity
$2,500
and REIT investment to the market. In
fact, over the analyzed period, the buyer
Total resort sales volume
$2,000 groups collectively represented 60.0%
(in millions $USD)
of total resort sales activity. Foreign
investors have also been active buyers,
$1,500
acquiring over $1.0 billion worth of some
of the most prestigious assets in the
$1,000 market. Resort assets accounted for the
lion’s share of total hotel sale activity in
$500 South Florida, representing an average
of 73.0% of sales since 2014. This high
proportion has been influenced by the
$0 fact that 17 resort assets sold for over
Private Equity REIT Foreign Developer Hotel HNWI
Operator $100 million.
Source: JLL
From 2014 to 2018, resort hotels commanded an average price per room premium of 170.0%
above the average price per room of all other hotels that sold in the market.DEMAND
South Florida
New York, Brazil and Colombia lead visitation into South Florida
Strong leisure demand and offsite business meetings and conventions have contributed to increasing visitation into South Florida. Further, South Florida
overnight demand is largely driven by domestic visitors, representing 75.0% of total visitation in each of the last two years. That being said, the number of
overnight visitors from the northeast region of the U.S. and South America were nearly identical in 2018, with each representing a critical feeder market for
South Florida. In 2020, the market is expected to see demand grow between 3.0% and 4.0%, attributable to Super Bowl LIV.
Top Visitor Source Markets in 2018 vs 2017
2017 2018 % Growth
2,500 40%
36%
Visitor arrivals (in 000s)
2,000 32%
Annual growth (%)
28%
1,500 24%
20%
1,000 16%
12%
500 8%
4%
0 0%
s
da
ica
ica
t
L)
e
t
t
an
s
es
es
rie
p
ea
-F
be
ro
na
er
er
w
-W
nt
on
rth
Eu
id
Am
Am
rib
Ca
US
ou
(n
M
No
Ca
rC
-
l
h
h
US
ra
ut
-
ut
US
he
nt
So
So
Ce
Ot
-
US
Source: Discover The Palm Beaches, GFLCVB, GMCVB, JLL
Note: The data pertains to greater Miami, Fort Lauderdale and Palm Beach and are based on JLL estimates
SUPPLY
South Florida has the highest proportion of luxury resort product among the three resort markets outlined
South Florida’s resort stock totals 19,543 rooms, South Florida New and Cumulative Resort Supply
of which 42.0% is affiliated with a luxury hotel
chain. Luxury independent product (38.0%) is Existing rooms New supply
also widely represented in the market by iconic 500 30,000
properties including, The Setai Miami Beach, SLS 450 28,000
Existing supply (rooms)
South Beach, and the Lago Mar Beach Resort 400 26,000
New supply (rooms)
Club. Midscale resort product is less prominent 350 24,000
in South Florida and more ubiquitous in 300 22,000
family-oriented destinations, such as Orlando; 250 20,000
therefore, the market typically commands a 200 18,000
price premium over other markets in the state
150 16,000
of Florida. New additions to resort supply will
100 14,000
be limited, with 1.1% and 1.4% growth expected
50 12,000
this year and next, which is below supply growth
0 10,000
expected in the overall MSA. 2018 2019 2020F 2021F
Source: JLL, STR
OUTLOOK
South Florida has always represented a popular vacation destination but more recently has evolved into a more prestigious global resort
market, as evidenced by the growth in international visitation. The prominence of luxury resort product, brand-affiliated and independent,
coupled with a growing art scene bodes well for demand from less price sensitive travelers.8 Global Resort Report | 2019
Hawaii
Hawaii, one of the pre-eminent global resort destinations with strong international airlift, boasts beautiful landscapes and world-class shopping
and dining experiences. The state, anchored by four main islands including Oahu, Maui, Kauai, and the Big Island of Hawaii, has also expanded its
reputation as a popular destination for business activity and meetings. Hawaii has experienced continuous growth in visitation since 2010, reaching a
record-breaking 10 million arrivals in 2018. Domestic demand, which accounted for approximately 65.0% of total visitation in 2018, is highly supported
by West Coast U.S. residents with direct airlift from major markets such as Los Angeles, San Francisco, Seattle among others, as well as mid-West and
East coast travelers. There is also large military presence in the market, particularly in Oahu that drives government base business. International
visitation also continues to grow and is projected to increase 1.3% in 2020 with The Island of Oahu being the primary beneficiary supported primarily
by Japanese travelers as well as a growing population from Korea and China. In support of this projection, Hawaii passed a bill for a $3.4 billion
Capital Improvement Projects Plan, which includes $617 million in airport & airfield improvements, $170 million for new concourse at Daniel K Inouye
International Airport, and $384 million for harbor projects. Further, a $9.2 billion Honolulu commuter rail line (HART) is currently under construction
and anticipated for completion in 2025, which will increase Honolulu’s accessibility from its western suburbs to the airport, downtown, and the Ala
Moana Center to attract further tourists.
INVESTMENT TRENDS
Domestic buyers provide liquidity in high-quality resort assets in Hawaii
Resort Transaction Volume by Buyer Type 2014 - H1 2019
Strength in fundamentals has
made Hawaii outperform as a
$3,000 top-25 market in the US and as
such, the market has attracted
$2,500 notable private equity and
Total resort sales volume
foreign institutional investor
(in millions $USD)
interest. Since 2014, together
$2,000
these buyers accounted for
nearly 80.0% of total resort
$1,500
sales activity. Resort assets
drive the liquidity in the market
$1,000 and between 2014 and H1 2019,
represented more than 90.0% of
$500 sales activity. A trend influenced
by the fact that 22 resort assets
sold for more than $100M under
$0
Private Equity REIT Foreign Developer Hotel the analyzed period.
Operator
Source: JLL
From 2014 to 2018, resort hotels commanded an average price per room premium of 44.0%
above the average price per room of all other hotels that sold in the market.DEMAND
Hawaii
Japan, Canada, and Oceania lead international visitation growth into Hawaii
Similar to strong visitation observed in 2018, visitation to Hawaii in 2019 and 2020 is expected to follow a positive trend, supported by an increase in seat
inventory. Southwest Airlines announced in March 2019 that it expanded its routes to reach Hawaii for the first time, with non-stop flights currently offered
from Oakland and San Jose, California. The last time new air routes were launched in Hawaii was in 2011, with the market posting a 10.0% surge of
visitation by year-end 2012 as a result. While Hawaii’s visitation is largely comprised of domestic demand, international arrivals has continued to increase
year-over-year.
Top Visitor Source Markets in 2018 vs 2017
2017 2018 % Growth
4,500 20%
4,000
15%
3,500
Visitor arrivals (in 000s)
10%
Annual growth (%)
3,000
2,500 5%
2,000 0%
1,500
-5%
1,000
-10%
500
0 -15%
t
st
n
da
ia
rs
a
a
e
es
p
re
in
pa
Ea
he
n
ro
na
W
ea
Ch
Ko
Ja
Ot
Eu
US
Ca
US
Oc
Source: Hawaii Department of Business, Economic Development & Tourism, JLL
SUPPLY
High-quality resort assets continue to comprise the bulk of supply, with the addition of an Atlantis resort
planned for island of Oahu in 2021
Hawaii New and Cumulative Resort Supply
Hawaii’s resort stock totals 26,408
rooms with the most recent addition Existing rooms New supply
featuring the 50-room Ocean Tower by 900 30,000
Hilton Grand Vacations. Hawaii’s existing 800 28,000
resorts are largely upper upscale and
Existing supply (rooms)
700 26,000
New supply (rooms)
luxury chain scales, which complement 24,000
600
the state’s reputation as a world-class 22,000
500
vacation destination. The most notable 20,000
resort planned for the state is the 800- 400
18,000
room Atlantis Ko Olina resort, which is 300
16,000
anticipated to break ground in 2021. 200 14,000
Prior to 2021, new additions to resort
100 12,000
supply for this year and the next will
0 10,000
grow at less than 0.5%. 2018 2019 2020F 2021F
Source: JLL, STR
OUTLOOK
Hawaii has taken a pro-active effort to fund infrastructure improvement plans. This is a pivotal change considering the market’s need for
infrastructure improvement in the face of rising sea levels and aging infrastructure. The island is anticipating the groundbreaking of the
landmark-resort of the 800-room Atlantis Ko Olina by 2021, which will be well absorbed by the market’s sustained growth in visitation. Strong
visitation trends are supported by the market’s enhanced airlift capacity resulting from Southwest and ANA’s additional flight service. With
ongoing infrastructure improvements, a year-round tropical climate complemented by world-class amenities, increased air-seat capacity, and
expectations for state-level GDP to grow 1.2%, prospects for Hawaiian resort investment remains strong.10 Global Resort Report | 2019
Colorado
Colorado is a unique travel destination in that it serves both summer and winter visitors by featuring several national parks and monuments coupled
with the fact that it’s home to the highest concentration of mountain peaks above 14,000 feet in the nation with some of the most high-profile ski
resort markets in the world including Aspen, Vail, Telluride and others. Visitation has trended up over the past nine years, reaching a record-breaking
85.2 million overnight and day trip visitors in 2018, with international visitation up 4.9% from the prior year. The city of Denver has reignited the
expansion of its $233 million Colorado Convention Center after facing several delays. The convention center is pegged to open in 2022 and should
boost convention demand in the market. In 2018, Colorado strategically partnered with DestinationThink! to fuel the creation of new tourism assets,
which involves evaluating travel areas to expand adventure tourism activities. In response to traffic congestion resulting from increased demand, the
Colorado Department of Transportation is leading a $70 million project that will add another express lane to the I-70 corridor to be completed in 2021.
INVESTMENT TRENDS
Domestic buyers drive liquidity of resort assets in Colorado
Growing consumer interest in
Resort Transaction Volume by Buyer Type 2014 - H1 2019 experiential travel and robust
state economic fundamentals
$350 have established Colorado as
an attractive hotel investment
$300 market. Moreover, the state is
home to irreplaceable resort
Total resort sales volume
$250
assets. Consequently, resorts
(in millions $USD)
accounted for approximately
62.0% of sales activity in
$200
Colorado from 2014 to H1 2019,
with over 60.0% of the number of
$150
hotels sold selling for $50 million
or higher. Domestic REITs, private
$100
equity, and developers have been
the most acquisitive buyers of
$50
resorts in Colorado collectively
acquiring nearly $1.0 billion
$0
REIT Private Equity Developer HNWI Hotel/SA worth of assets.
Operator
Source: JLL
From 2014 to 2018, resort hotels commanded an average price per room premium of 38.6%
above the average price per room of all other hotels that sold in the market.DEMAND
Colorado
Colorado ranks first in overnight ski trip demand among the 50 states in the U.S.
Domestic demand dominates overnight visitation to Colorado, accounting for over 98.0% of total demand in 2018. The remaining share represents
international visitation. U.S. based visitors are attracted to the state’s ski activities. To support this demand the state has introduced a second season
pass that provides unlimited access to 40 of Colorado’s premier destinations. Further, in 2018, visitation flows increased for outdoor trips and combined-
business leisure trips as travel marketing shifted its focus to diversifying demand by promoting new tourism assets. With these combined initiatives,
demand expectations for 2019 and 2020 remain strong.
Top Visitor Source Markets in 2018 vs 2017
2017 2018
35%
Proportion of Total Overnight Trips (%)
30% 30%
30%
25%
20%
15%
9% 9%
10% 8% 7%
6% 4%
5% 3% 3% 3% 3% 3% 3%
2% 2% 2% 2% 1% 2%
0
o
a
s
a
s
na
k
as
ico
g
xa
oi
r
in
ni
id
d
Yo
ns
izo
ra
in
ex
m
or
or
Te
Ka
lo
Ill
w
yo
M
lif
Fl
Ar
Co
Ne
Ca
w
W
Ne
Source: Colorado Tourism Office, Longwoods International
Note: Foreign visitors are excluded from the analysis as the figures are immaterial. Exact figures
for each source market are not made available by the Colorado Tourism Office, only proportions.
SUPPLY
Gaylord Rockies Resort & Convention Center debuts in 2018, further expanding the high-quality resort stock in
the market
Colorado New and Cumulative Resort Supply
Colorado’s resort stock totals 15,411 rooms with
the most recent addition featuring the 1,501-room Existing rooms New supply
Gaylord Rockies Resort & Convention Center. The 1,600 30,000
Gaylord Rockies Resort Hotel represents the largest 1,400 28,000
resort hotel to open in Colorado’s history, receiving
Existing supply (rooms)
26,000
New supply (rooms)
1,200
the highest economic development incentive from 24,000
the state and the city of Aurora, which rivals the value 1,000 22,000
of the economic package offered to Amazon during 800 20,000
its search for its second headquarters. The opening 18,000
600
of the Gaylord hotel will further enhance the market’s
16,000
already large concentration of upper upscale and 400
14,000
luxury chain supply. Resorts in the pipeline include 200
12,000
two luxury chains, the 88-room W Hotel Aspen and
0 10,000
the 50-room The Hotel Ajax, which are projected to be 2018 2019 2020F 2021F
complete in late 2019 and 2020, respectively. Source: JLL, STR
OUTLOOK
With strong efforts by Colorado’s marketing brand to create tourism assets promoting voluntourism and other tourism experiences, the
state is poised to enter its tenth consecutive year of visitation growth. Positive expectations for tourism demand are further supported by
enhanced accessibility of the state’s major thoroughfares through construction projects and expanded bus services, as well as strategic
innovations by ski resort operators. The state has two luxury-chain resorts in the development pipeline, which can help elevate the ADR
market ceiling. Prospects for Colorado resort investment remain optimistic driven by above-average economic growth, increased visitation,
and strong travel marketing efforts.Contributors Gilda Perez-Alvarado Lauro Ferroni CEO, Americas Global Head of Hotels Research gilda.perez-alvardo@am.jll.com lauro.ferroni@am.jll.com John Strauss Geraldine Guichardo Senior Managing Director Head of Americas Hotels Research john.strauss@am.jll.com geraldine.guichardo@am.jll.com Gregory Rumpel Ophelia Makis Managing Director Americas Hotels Research Analyst gregory.rumpel@am.jll.com ophelia.makis@am.jll.com Tony Muscio Executive Vice President tony.muscio@am.jll.com Zayli Rodriguez Vice President zayli.rodriguez@am.jll.com About JLL’s Hotels & Hospitality Group JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totalling more than $71 billion worldwide. Between negotiating the world’s most extraordinary, enticing, and profitable property deals, the group’s 350-strong global team in over 20 countries also closed more than 5,300 advisory, valuation and asset management assignments. Investors worldwide turn to JLL to shape their strategies, tailor their portfolios and maximize the value of their assets. We are recognized as the global leader in real estate services across hospitality properties of all shapes and sizes. Our expert advice is backed by industry-leading research. We apply our broad spectrum of hotel valuation, brokerage, asset management and consultancy services through every phase of the hotel lifecycle. We have helped more hotel investors, owners and operators achieve high returns on their assets than any other real estate advisor in the world. Whether you are looking for a hotel or you’re ready to sell, we’ll use our capital markets expertise, hospitality industry knowledge and global relationships to put the right parties together and execute a bespoke deal that exceeds your objectives. To find out more, talk to JLL. www.us.jll.com © 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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