Because of the spike in travel, many cities are generating record-high revenue per available room (RevPAR), and investors expect the growth to continue, according to JLL's November Global Hotel Investment Sentiment Survey. Urban markets are expected to capture the bulk of capital from 84% of global hotel investors, who will gravitate toward irreplicable luxury assets with in-place cash flow, according to the JLL report. With $2.5 billion in hotel transaction volume through the first nine months of the year, New York City is the most liquid global hotel market so far this year, attracting a mix of domestic and foreign investors. Among the highlights is QUI's $623 million purchase of the Park Lane Hotel in September — the fifth-largest single-asset deal in New York's history.
New York hotels' performance also is increasing with RevPAR up 8.3% through August this year compared to 2019. Of investors surveyed, 86% expect performance to improve even more. London has seen historically high average daily rates, which has resulted in RevPAR growth of 20% through August. Although occupancy is still off, 100% of investors surveyed expect RevPAR to continue growing over the next 12 months. London's hotel investment volume declined to $440 million through the first nine months of the year but is expected to pick up during the coming year.
Although Chinese travel to Tokyo is at just half of what it was before the pandemic, the city's hotel performance has improved significantly since the beginning of the year. Through August, RevPAR was down just 14.5% compared to 2019. The yen's weakening has spurred more European travelers to visit Tokyo, and travel from China and the U.S. is expected to increase. Through the third quarter, Tokyo's hotel transaction volume reached $969 million, the third-highest total in the market's history.
While overall investment activity in the hotel sector has been limited over the past year because of the high cost of capital and debt market volatility, luxury assets and select-service and extended-stay hotels have benefited from strong traveler demand. Although debt has become expensive, pricing for luxury hotels hit a near-all-time high of $624,000 per key through the first nine months of 2023, and investors expect it to increase to $725,000 per key over the next 12 months. Although select-service hotel pricing declined 7.6% so far this year to $163,000 per key, investors expected it to return to prepandemic levels over the next year.
