Asia-Pacific travel boom drives hotel rates up

Hotel chains are investing in expanding hotels domestically and internationally 

Hotel rates are at an all-time high due to the travel boom in Asia Pacific that has been driven by Chinese travellers. According to business and financial news network CNBC Travel, hotels like Hilton, Marriott, and IHG have hiked prices by 8 percent, 13 percent, and 14 percent, respectively, and rates across Southeast Asia have gone up by more than 10 percent since 2022, while rates in some destinations have climbed more than 45 percent. 

However, hotel daily rates could be short-lived or follow an undulating path of sporadic rises and falls as the travel industry in Asia Pacific attempts to return to normal. Meanwhile, rising hotel costs are hitting travellers’ wallets.

Asian newsletter Nikkei Asia reported Thai hotel chains, such as Centara Hotels and Resorts, Dusit Thani, and Erawan Group, are expanding investments at home and abroad to meet rising demand as fresh tourism revenue fuels the industry’s growth. Centara has allocated $662m to build six hotels in Thailand and Japan, while Dusit Thani is targeting Japan with a hotel opening in Kyoto. 

Related: Hotel transactions in the Asia Pacific region reach $8.4 billion

Budget hotel operator Erawan Group is focusing on increasing the number of its Hop Inn hotels in the domestic market. Analysts attribute this to improved financial performance in 2022 due to Thailand’s reopening and steady recovery, prompting hotel chains to restart investing.

JLL noted that Thailand saw 14 investment-grade hotel transactions worth THB11 billion in 2022, a drop from THB12.3 billion in 2021 due to delayed transactions. Despite this, JLL expects hotel investment activity to grow to THB12 billion in 2023, with a strong pipeline of deals and continued investor interest. 

Most hotels sold in 2022 belonged to Thai corporations or families, and 80 percent of the investment capital was from domestic investors, marking a shift from 2021 when foreign capital accounted for 60 percent of the total hotel investment volume in Thailand. Bangkok, Phuket and Koh Samui were the top three hotel investment destinations, accounting for nearly 70 percent of total transaction volume.

The Property Report editors wrote this article. For more information, email: [email protected].