Hotels Market Insights

August 26, 2022 / By ,

Strong tourism demand rising amid current macroeconomic and geopolitical headwinds

Markets in Asia Pacific (AP) have continued easing border restrictions as global demand for tourism strengthens. Most have recorded significant increases in visitors as border restrictions and quarantine requirements were scrapped. For instance, Thailand lifted the ‘Test & Go’ requirement and the Sandbox programmes. In Japan, domestic demand continued to lead recovery, taking advantage of public holidays without travel restrictions. However emerging macroeconomic and geopolitical challenges are slowing the pace of tourism recovery in AP.

Limited new supply enters markets in 2Q22

In AP, limited new supply has entered the markets, with countries delaying future openings to 2H22 and 2023. Continuous tight border controls in Hong Kong have led to reduced hotel supply as past hotel transactions were driven by conversions into alternative accommodation like co-living products. The conversion of existing hotels was also noteworthy in Seoul, resulting in a favourable supply-demand situation.

Significant rise in trading performance since the beginning of the pandemic

Further easing of restrictions has unleashed pent-up tourism demand in AP, translating into significant growth in hotel trading performance. In Bangkok (BK), Kuala Lumpur (KL) and Singapore (SG), hotels have registered triple -digit growth in 1H22, with KL reaching a pandemic high since January 2020. The return of international corporate travellers and the MICE industry in BK and SG have led to a y-o-y RevPAR increase, boosted by an ADR rise in SG. Sydney also registered rising trading performance due to the improving market conditions. Control policies due to outbreaks heavily impacted trading performance in Beijing and Shanghai in early-2Q22.

Lifting of remaining border control measures expected to support significant rise in APAC hotel performance

With border control measures removed in most AP markets, the hotel industry is expected to improve significantly in 2H22. More in-person MICE activity is expected, likely boosting tourism, especially in destinations like Australia, Korea, Singapore and Thailand. Malaysia tourism will likely be driven largely by domestic demand and visitation from neighbouring countries. For China, short-distance suburban and urban staycations are growing in demand.

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