International hospitality investing is often discussed as a capital allocation challenge.
In practice, it is an operational discipline problem first, a jurisdictional risk problem second, and only afterward a capital problem.
This distinction is foundational for funds operating across borders that seek durability and performance through market cycles.
Recent projections indicate that global hotel investment volume could grow by 15 to 25 percent in 2025, according to JLL’s Global Hotel Investment Outlook, driven by strategic capital deployment and repositioning activity even amid macroeconomic uncertainty.
That optimism exists alongside uneven performance across regions and asset segments, reinforcing the importance of disciplined operating frameworks rather than broad capital deployment.
Capital Is Mobile. Operations Are Not.
Capital moves faster than operational capability.
While global RevPAR performance has shown resilience entering 2025, outcomes vary significantly by geography and segment. Luxury hospitality has outperformed the broader market in several regions, while other segments face margin pressure driven by occupancy normalization and rising costs. These dynamics underscore a fundamental reality for international funds: operational execution, rather than capital availability, determines performance consistency.
Industry outlooks continue to show operating cost pressure outpacing revenue growth in several markets, increasing the importance of disciplined operations and cost management, as noted in PwC’s Hospitality Directions outlook.
Funds that centralize decision making at the capital level without embedding meaningful local operating control often encounter execution risk. Hospitality assets depend on labor markets, service standards, vendor ecosystems, and regulatory environments that do not scale uniformly across borders. Funds aligned with experienced local operators who retain decision authority on the ground are better positioned to manage volatility and deliver outcomes aligned with investor expectations.
Regional performance continues to diverge across markets, with Europe benefiting from stronger international travel recovery while demand drivers in North America and parts of Asia Pacific remain uneven, according to CBRE’s Global Hotel Outlook.
Jurisdictional Friction Is the Real Risk
Cross-border hospitality investment introduces layers of complexity that directly affect returns. Licensing requirements differ materially across countries. Tax exposure shifts based on ownership structure. Labor regulations evolve with political and economic conditions. Currency volatility influences not only returns, but also repatriation timing and feasibility.
Industry outlooks for 2025 project modest global RevPAR growth, supported by international travel recovery. At the same time, supply dynamics and regulatory constraints continue to vary by market. Funds that incorporate jurisdictional risk directly into underwriting assumptions are better positioned than those that treat regulatory complexity as a secondary consideration.
In international portfolios, small regulatory or tax changes can materially affect cash flow and valuation. Proactive jurisdictional planning strengthens both operational resilience and investor confidence.
Hospitality Is an Operating Business Before It Is a Real Asset
Hospitality assets generate value through daily execution. Service quality, staffing stability, revenue management, and guest experience shape long term performance more than financial leverage.
Forecasts suggest that operating costs will continue to rise faster than revenue growth in several markets, placing pressure on margins. In this environment, operational systems, technology adoption, and disciplined labor management increasingly define competitive advantage.
Funds that approach hospitality primarily as a real estate allocation often underestimate this complexity. Those that succeed treat hospitality as an operating business with real asset characteristics, not the reverse. This perspective influences asset selection, capital structure, and exit strategy.
Discipline, Not Scale, Drives Longevity
Scaling an international hospitality platform is not a function of asset count. It is a function of governance, operating depth, and capital alignment.
Funds that expand without established operational systems amplify risk rather than mitigate it. By contrast, disciplined funds grow deliberately, entering new markets only where operational capability already exists or can be built with confidence. Slower expansion often produces more resilient outcomes, particularly in volatile or emerging markets.
This discipline also shapes LP communication. Capital partners increasingly look for evidence of repeatable operating playbooks, jurisdictional risk mitigation, and alignment between asset strategy and capital structure. These factors, more than growth narratives, distinguish funds built for longevity.
Closing Perspective
International hospitality funds operate in environments where complexity is unavoidable. Capital deployment is accelerating, but performance remains contingent on execution quality, regulatory awareness, and governance discipline.
Funds that align capital strategy with local operations, jurisdictional understanding, and long term operating discipline are positioned not merely to transact, but to navigate cycles with confidence. In an asset class defined by daily performance, that alignment is foundational.
