The slow and steady recovery of the Asia Pacific region’s hotel sector

Pent-up demand and increased operator confidence are key drivers of the increase in hotel room rates

According to a recent study, the hotel market in the Asia Pacific is recovering slower than its US and UK counterparts because of stricter border restrictions.

The Business Times reported that it is expected that it may take six months to a year before cross-border travel picks up in the region.

Despite this, confidence in the region is unwavering as borders reopen and operations recover to pre-pandemic levels. 

According to CBRE, tourism arrivals and hotel performance within the region are expected to return to pre-pandemic levels in 2024.

Pent-up demand and increased operator confidence are key drivers of the increase in hotel room rates. In fact, as of July 2022, the average daily rate (ADR) is only six percent below July 2019 numbers.

More: Hotel investment in the Asia Pacific region go up 33% in H1 2022

Moreover, demand-driven pricing has great potential in fighting rising inflation, as owners are given the opportunity to quickly respond to the increase in underlying operating costs and continued labour shortage.

JLL’s Hotels & Hospitality Group’s latest Global Hotel Investor Sentiment Survey revealed that hotel investment in the region will continue to recover in Q4 2022 and into 2023 on the back of investors looking to deploy the highest levels of capital since the pandemic started.

Furthermore, approximately 20 percent of investors stated that they will provide between USD501 million to more than USD1 billion in capital into the hospitality sector. This is up from seven percent of investors last year and 16 percent in 2020.

“The recovery of Asia Pacific’s hotel sector has accelerated in the past few months as travel restrictions ease, which is translating into an uptick of renewed investor interest in the space despite some of the broader economic headwinds. Our projection of USD10.7 billion in total hotel investment in Asia Pacific for 2022 remains unchanged, backed by improving sentiment on the long-term fundamentals of the industry in this region in the coming years,” said Nihat Ercan, Senior Managing Director, Head of Investment Sales, Asia Pacific, JLL’s Hotels & Hospitality Group.

Albeit slower than its US and UK counterparts, things are looking up for the Asia Pacific region’s hotel sector.

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