According to a recent study by CBRE, the Asia Pacific hotel and hospitality market continues to strengthen due to the opening of borders and increased investment appetite. At the same time, operational performance is approaching pre-pandemic levels.
The revival is mainly driven by domestic tourism demand, particularly evident in the North Asian and Pacific markets. Meanwhile, tourist arrivals to the Asia Pacific region are expected to reach pre-pandemic levels by 2024. However, although tourist arrivals from other countries to the area continue to increase, they remain well below pre-pandemic levels. As for markets that have more rapidly relaxed restrictions on vaccinated travellers (Australia, Singapore, India, Thailand), they have seen a much more pronounced increase in tourist return rates than those where strict entry or testing regulations are maintained (Korea, Indonesia) or where a quarantine period on entry is mandated (Japan, mainland China, Hong Kong, SAR, Taiwan).
Henry Chin, Global Head of Investor Thought Leadership & Head of Research, Asia Pacific, suggested, "In line with the gradual reopening of borders, confidence relating to the Asia Pacific hospitality sector is returning. In this regard, we find confirmation that if people have the opportunity to travel, they will do so. The opening of borders in the region is happening partly, the continued uncertainty about the opening of borders in mainland China, Hong Kong, SAR and Japan is somewhat adversely affecting tourism sentiment in the region."
All Asia Pacific markets are trending upwards in Average Daily Rate(ADR), Occupancy and Revenue per Available Room (RevPAR), with a regional rebound to pre-pandemic levels expected by 2024. As supply remains limited in most markets in the Asia Pacific, the risk of new hotels flooding the market is low, and as a result, room rates and revenues are under less pressure. However, operating costs have significantly increased across all revenue streams, especially labour and utilities.
As of 2022, investment in the Asia Pacific hospitality sector increased to US$10.1 billion (up 17% year-on-year). Since 2021, cross-border capital flows to this sector of the Asia Pacific economy have reached US$932 million, mainly driven by cash from institutional investors. Investments were made in several Asia-Pacific countries, with Korea accounting for the largest share of investment in the first half of the year at US$2.8 billion, followed by mainland China, Australia, Japan and Singapore.
Steve Carroll, Head of Hotels & Hospitality, Capital Markets, Asia Pacific for CBRE, believed that daily pricing structures and rate flexibility mean hotels can hedge against inflation in a changing economic environment. In addition, the loosening of border controls, increased tourist interest, and significant investor capital reserves drive appetite for operating properties, with well-located, high-quality hotel assets in crucial markets enjoying increased demand.
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