Confidence in the Asia-Pacific hospitality market continues to grow as borders reopen, investment sentiment picks up and operational performance approaches pre-pandemic levels, according to the latest research from CBRE.
The recovery will be largely driven by domestic travel demand, particularly in North Asia and the Pacific, with total tourist arrivals in Asia-Pacific expected to return to pre-pandemic levels by 2024. While international arrivals in the region continue to rise, they remain well below pre-pandemic levels.
Markets that eased restrictions on vaccinated travelers more quickly (Australia, Singapore, India, Thailand) see much stronger return of tourists than those that maintain strict entry or testing policies (Korea, Indonesia) or impose quarantine periods on entry (Japan , Mainland China, Hong Kong SAR, Taiwan) “As borders reopen, confidence in the Asia-Pacific hospitality industry is returning, confirming that people will travel when they can travel. Reopening across the region has been fragmented, with uncertainty over the opening of borders with mainland China, Hong Kong SAR and Japan weighing somewhat on tourism sentiment in the region.” said Henry Chin, Global Head of Investor Thought Leadership & Head of Research, Asia Pacific.
Average daily rate (ADR), occupancy and revenue per available room (RevPAR) are trending up in all Asia-Pacific markets, with a regional recovery to pre-pandemic levels expected by 2024. As the delivery pipeline remains limited in most Asia-Pacific markets, the risk of new hotels saturating the market is low, putting less pressure on room rates and revenue. Operating costs have increased significantly across all revenue streams, particularly for labor and utilities.
Investments in hotels in Asia-Pacific grew to $10.1 billion since August 2022 — a 17 percent increase from a year earlier. Cross-border capital flows into hotel properties in Asia-Pacific have reached US$932 million since the beginning of 2021, mainly driven by institutional investors. Investments were spread across a range of markets in Asia-Pacific, with Korea accounting for the largest share at US$2.8 billion in the first half, followed by mainland China, Australia, Japan and Singapore.
“In an evolving economic climate, the daily pricing structure and flexibility of pricing changes means hotels can provide inflation protection. Easing of border controls, rising tourist sentiment and investors’ strong capital reserves underpin increased appetite for corporate real estate, with well-located, high quality hotel properties in key markets in high demand.” said Steve Carroll, Head of Hotels & Hospitality, Capital Markets, Asia Pacific at CBRE.
To download a PDF of the CBRE 2022 Asia Pacific Hotels & Hospitality A Roadmap to Recovery, click on the links in the contact forms below.