Despite another challenging year in many respects, the global hotel industry remained resilient in 2024. Through November, global hotel demand reached a staggering 4.8 billion room nights, 102 million more than 2023, resulting in RevPAR growth of 4 percent. Though RevPAR grew in all regions, performance remains uneven, with Asia Pacific (APAC) still lagging 10 percent behind 2019 levels while the Americas, Europe, and the Middle East have all fully recovered, with RevPAR growth ranging from 17 percent to 26 percent.
Global resort and leisure-heavy markets have started to see some normalization in demand underpinned by slowing consumer spending amid some contraction in savings. JLL expects global hotel investment volume to accelerate in 2025, likely exceeding 2024 by 15 percent to 25 percent.
Read: Saudi Tourism Ministry: Licensed hospitality facilities surge by 80 percent in Makkah
Three themes that will shape the future of the industry
Theme 1: The great merging is here – the ways in which we live/work/play are forever blurred
At their core, hotels provide consumers with experiences. These experiences vary tremendously based on the individual but can include exposures such as immersion in a new culture, exploration of a new city, sampling of a new food, or just interacting with new and old friends. As such, the global lodging industry finds itself at the center of the Experience Economy, which emphasizes the impact of experience-driven spending as opposed to product-centric consumption.
Rise of the lifestyle hotel as the new ‘Third Place’
Designed to be destinations in and of themselves, lifestyle hotels were the lodging industry’s first foray into trying to engage the local community as opposed to just overnight visitors. With a heavy focus on food and beverage and public spaces that encourage socialization, lifestyle hotels were early pioneers in capturing consumers seeking uniquely authentic experiences. Lifestyle hotels will account for 18 percent of all hotel rooms that open globally in 2025, an increase of 10 percentage points compared to their share in 2000.
Branded residences
While not new, branded residences have been a high-growth sector over the past decade underpinned by rising global wealth. As consumers have increased mobility driven by the rapid rise in remote work, expect the sector to more than double in size by 2030, with nearly 800 new branded residential projects to open globally.
Hotel brands continue to dominate the sector, accounting for 80 percent of all branded residential projects globally. As consumers increasingly adopt location-independent lifestyles rooted in a desire for authentic experiences, branded residences run by hotel groups will become even more prevalent. JLL anticipate growth to be strongest in APAC followed closely by the Middle East led by luxury brands such as Fairmont, Four Seasons, Ritz-Carlton, and St. Regis.
Theme 2: Evolution of global travel and emerging market influence
The global travel landscape is undergoing a significant transformation driven by shifts in demographics, economic power, and consumer preferences. As international travel nears a full recovery, down just 2 percent from 2019 levels, its composition looks noticeably different. China, once the world’s largest outbound travel market, has reached just 80 percent of its 2019 peak, with much of that travel concentrated intra-regionally as opposed to overseas. In its place, the U.S. has emerged as the largest outbound global travel market, with many Americans traveling to Europe and parts of Asia driven by the strong dollar.
The Middle East continues to see the strongest growth over 2019 driven by favorable visa policies and the implementation of concerted tourism strategies via the development of multiple megaprojects.
Vision 2030: Saudi Arabia’s grand tourism plan
Saudi Arabia is undergoing a monumental transformation. Known as Vision 2030, KSA aims to position the country as a global investment powerhouse and tourism hub. Through the development of ambitious megaprojects such as Diriyah Gate and NEOM, KSA seeks to attract 150 million tourists, a staggering 780 percent more than it welcomed in 2019. While it is hard to envision such significant growth, the country has already made tremendous strides welcoming nearly 100 million international tourists in 2024.
None of this would be possible without The Public Investment Fund of Saudi Arabia (PIF), which has invested hundreds of billions of dollars into the various projects. KSA’s impressive transformation has created numerous opportunities for hotel brands and prospective investors. Currently the kingdom has 161,000 hotel rooms, 60 percent more than it had in 2019.
With another 102,000 expected to open over the next decade, the country will host one of the largest hotel room counts in the Middle East. Perhaps more remarkable though is the number of major hotel brands the country has been able to attract in such a short period of time as nearly 60 percent of all existing hotels are affiliated with globally recognized chains. Over the last decade, hotel investment volume has reached $781.2 million cumulatively, with all of it originating from domestic investors.
“Saudi Arabia is undoubtedly one of the most exciting destinations in the world, undergoing a remarkable transformation into a world-class tourism hub. The key to sustaining this momentum lies in balancing the influx of new hotel developments with a competitive market edge,” said Philip Wooller, senior director, Middle East at Africa at hospitality data specialists STR.
The kingdom is poised to develop 362,000 new hotel rooms by 2030 as part of its $110 billion hospitality sector transformation, according to a recent data.
Theme 3: Rise in adoption of AI
It is no secret that artificial intelligence (AI) is massively transforming our society, with PwC estimating that it could add $15.7 trillion to the global economy by 2030. All industries stand to benefit, with those that fail to adapt likely to be left behind. The hotel sector is no exception. While human connection remains essential, there are a multitude of AI-driven initiatives that hotel owners and operators can, and should, implement to significantly enhance their business.
Hotels have been using various forms of AI for years, particularly in revenue management to help optimize their pricing. Systems such as IDeaS and Duetto that use predictive modeling to analyze historical data and forecast future demand to maximize RevPAR have proven to be gamechangers for the industry.
However, there is so much more the sector could do. Hotels, particularly the major brands, possess an astonishing amount of data about their customers and their behaviors yet personalization remains broadly elusive and inefficient staffing models continue to be commonplace.
Given that consumers increasingly seek truly authentic experiences, and the industry continues to struggle with attracting and retaining labor, the thoughtful implementation of AI could have a profound impact. In an increasingly data-driven world, AI can help enable and amplify experiences such that they occur more frequently and are more individualized to the consumer.
By harnessing the trove of data that already exists and leveraging AI, hotels can allow their employees to focus more on creating truly personalized experiences for their guests.
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