Occupancy for hotels in Asia Pacific is still down on pre-pandemic levels in most market, and this is expected to continue into the first half of 2024, according to a report by Coldwell Banker Richard Ellis (CBRE).
In the 2023 Asia Pacific Hotels & Hospitality Outlook Report by the commercial real estate services and investments firm, it said that occupancy rate range from 5% to 15% below 2019 (pre-pandemic) levels.
“This scenario will continue into the first half of 2024. With affordability for travel becoming more of a factor, tourists will become increasingly cost conscious given that flight and accommodation pricing is unlikely to fall until the second half of 2024.
However, it said that with Average Daily Rates (ADRs) in many markets nearing historical highs at the start of 2023, it expected that operators would begin to stabilise rates amid concerns that affordability would become a challenge.
“Instead, operators in Asia Pacific have put greater emphasis on operational efficiency, occupancy and Revenue Per Available Room (RevPAR) levels throughout the course of this year, experiencing differing levels of success.”
On the positive front, hotels and hospitality markets in Asia Pacific are poised for growth.
In a statement, CBRE said that institutional investors are attracted to prime hotel assets in tier 1 markets across Asia Pacific despite tourist arrivals in key destinations are only reaching 70-80% of pre-pandemic levels.
CBRE Investor Thought Leadership and Research global head (Asia Pacific) Dr Henry Chin said that with limited supply of high-quality assets, it anticipate intense competition among investors for the best hotel properties across Asia Pacific.
“Despite the region’s uneven tourism recovery, core assets in tier 1 markets (Japan, Singapore, Australia and Korea), as well as resort markets continue to generate strong interest,” he said today (October 19) in a statement.
Henry said as of Q3 2023, Asia Pacific hotel investment volume was down 29% year-over-year to US$8.44bn, with Japan accounting for approximately one-third of investment activity.
“While overall investment activity remains cautious, well-located, high-quality hotel assets in key markets remain attractive.
“The slower return of travelers, particularly from mainland China, has not deterred real estate investors who recognize the long-term potential of top-tier hotel properties in Asia Pacific.
CBRE Hotels & Hospitality, Capital Markets (Asia Pacific) head Steve Carroll said it expects a full recovery of Chinese travel may not transpire until the end of 2024.
“Some destinations like Japan, Korea and Hong Kong SAR have already seen a rebound in travelers from mainland China. Asia Pacific hotel assets have perform well over the past year, making them highly coveted investments,” he said.
“We anticipate a repricing of Asia Pacific hotel assets to be more moderate than in many other parts of the world, as the rebound in international arrivals and higher hotel revenue helps to offset headwinds from the capital markets environment,” he said.
