• Geopolitical tensions lead to divergent tourism demand across Asia Pacific

• Limited new supply in Q1, supporting pricing power across most markets

• Growth in trading performance led by continued rise in average daily rates

Tourism demand across Asia-Pacific diverged sharply due to geopolitical tensions and source market dynamics. Seoul recorded its strongest start to the year since 2005, and Beijing welcomed 61.3% more inbound visitors from last year. China-Japan diplomatic strains triggered a drop in Chinese visitors to Tokyo while simultaneously diverting travellers to Seoul, where Chinese arrivals surged 30.9% Y-o-Y. Markets with diversified source bases, such as Sydney and Singapore, demonstrated greater resilience. With Middle East tensions disrupting flight connectivity from long-haul travellers, regional and domestic demand provided a growth buffer.

New hotel supply remained constrained across Asia Pacific, with most markets reporting minimal openings. No new hotel supply was recorded in Sydney, Seoul, and Hong Kong during the quarter. Where openings occurred, they were modest, such as in Jakarta, Ho Chi Minh City, and Manila. This muted activity reflects persistent structural challenges including elevated construction costs, limited site availability, and project delays.

In terms of hotel performance, RevPAR growth was recorded across markets on average, driven predominantly by average daily rate (ADR) expansion rather than occupancy gains. In particular, Tokyo’s luxury hotels exhibited exceptional pricing power with strong ADR growth. Investment activity showed signs of revival, with Seoul completing several notable transactions including L7 Hongdae and Shilla Stay Seodaemun. Jakarta’s hotel investment market reawakened with the signing of the Waldorf Astoria sale in this quarter, signalling rising foreign investor interest in premium assets. Singapore’s market had an unusually active Q1 with two transactions, departing from historically slow first quarters.

Outlook
The outlook across markets balances cautious optimism against persistent geopolitical and economic uncertainties. Government-led tourism initiatives are expected to sustain momentum: especially by scaling up flagship events and mega-event positioning, whilst market segmentation is intensifying. Diversification strategies are gaining traction, including Kuala Lumpur’s focus on high-value medical tourism and Hong Kong’s hotel-to-student housing conversion trend. Overall, fundamentals remain supportive despite near-term volatility from geopolitical developments.