Hospitality Technology and Property Technology Transactions

Since 2020, the hospitality industry has witnessed notable investments in technology solutions to adapt to the changing landscape and meet the evolving needs of guests. In 2021, the global hospitality technology market reached approximately $19 billion worldwide and is forecast to grow to $133.7 billion by 2031.

Similarly, over the same period the real estate industry has experienced significant investments in technology solutions to drive innovation, improve operational efficiency, and adapt to changing market dynamics. The global property technology market size reached $30.16 billion in 2022 and is projected to reach $133.05 billion by 2032, with a CAGR of 16%. 

In this report, Jahani and Associates will analyze the international capital market transaction activities conducted within the hospitality technology and property technology markets between 2020 and Q2 2023. 

• The total amount invested was $6.47 billion, over 481 deals in the hospitality market between 2020 and Q2 2023.
• The highest quarterly deal count was recorded in Q2 2020 with 88 deals. This could signify an early response to Covid-19, as investors looked towards new industries and new technologies to adapt to the potential future changing landscape.
• The second highest deal number was recorded during Q1 2022 with 49 deals, which conversely could be the result of investors seeing significant growth opportunities post Covid-19 as the hospitality market recovered after quarantine restrictions.

• Within the period, $2.07 billion total capital was invested in the US over 229 deals, with an average deal size of $9 million, demonstrating the importance and focus on the United States. 
• The second largest recipient was India with a total of $888 million over 23 deals, with an average deal size of $38.6 million. 
• Spain is the third largest recipient county with $856 million invested over 13 deals, showing  a strong industry interest in Europe. 

• Between 2020 and Q2 2023, $2.7 billion in M&A investments were made over 97 deals in the hospitality technology industry. The average deal size of the M&A investments was $28.3 million. Some of the key revenue drivers in the hospitality industry are pricing, direct bookings, loyalty programs, and systems and tools. These drivers increased the investment movement in human-powered, tech-enabled experiences, boosting profitability for hospitality. As shown above the M&A activity within the hospitality tech sector could indicate an appetite for market consolidation. 
• Venture capital deployed $510 million in the hospitality sector within the period across 187 deals. 
• Private equity deployed $1.5 billion within the period, with an average deal size of $16.8 million. 

• Between 2020 and Q2 2023 the total amount of capital invested in the property technology market was $12.5 billion, with a total deal count of 808.
• The busiest quarters were Q4 2021 and Q1 2022, with 86 and 83 deals respectively. 
• Investment in the sector has slowed since the first half of 2022 in line with a general decrease in the deal count in the global capital markets. 

• Between 2020 and Q2 2023, $4.7 billion in M&A investments were made over 229 deals with an average deal size of $20.8 million. The M&A activity within the property technology sector could indicate market consolidation. Private equity groups were the biggest investors with $5.7 billion over 114 deals. 
• Within the period, $1.6 billion was deployed by venture capital in the hospitality sector across 489 deals.

• With $9.2 billion over 33 deals, the United States was by far the favored destination for investment, with more than 50% of the total invested. The average deal size was $4 million. 
• Italy was the second largest recipient of investment with a total of $2.1 billion over 15 deals, and an average deal of $38.6 million. 
• India has the third largest investment received with $2.1 billion over 30 deals, with a $70 million average deal size.

North America, particularly the United States, has been a significant hub for hospitality technology and property technology transactions over the period. In the hospitality technology sector, North American companies have developed and implemented innovative solutions, leading to numerous transactions such as software acquisitions and integrations and subscription partnerships.

Europe has witnessed significant growth in hospitality technology and property technology transactions. Countries like Italy and Spain have been prominent in these transactions, with a focus on property management systems, guest experience technologies, and smart building solutions.

Overall, globally there was a surge in investments in specific industries until Q1 2020. After that, investments and partnerships to develop and deploy technology solutions in the hospitality, real estate, and property sectors have slowed.

Jahani and Associates predicts a continued increase in capital market activity within the hospitality technology and real estate technology transactions in Southeast Asia and North America as economies become more interconnected and companies expand into new international markets.

Source: PitchBook Data.