International visitors on the rise but Chinese tourists still not fully returned

Although travel restrictions have been eased in Mainland China, Chinese tourists have not fully returned due to ongoing airlift challenges. As a consequence, destinations that heavily rely on Mainland China tourism, such as South Korea and Japan, have yet to fully recover. However, as global and regional airlift improves, international visitation in the Asia Pacific region is increasing. The corporate and MICE segments are also contributing to this growth, particularly with the number of major events scheduled to take place. There is strong momentum from short-haul markets driving the recovery in Asia. In Australia, demand remains largely driven by the domestic leisure segment. Additionally, leisure tourism within Mainland China has been supported by the May Day Golden Week.

Hotel supply increases

Following limited new supply in the first quarter, the region saw an increase in new hotel completions during the second quarter. Bangkok had the highest number of new hotels with four additional properties, and is expected to experience the highest year-on-year growth in new supply over the past decade, despite pandemic-related delays. Tokyo followed with an additional 732 rooms in the 4- and 5-star segments. Although markets such as Beijing, Jakarta, and Sydney did not see any new hotel completions in the quarter, more are expected throughout the rest of the year.

Rising trading performance with hotels holding rates

Since the easing of travel restrictions in the Asia Pacific region in 2022, hotels have been able to achieve significant levels of ADR due to strong tourism demand. As more tourists return, trading performance has continued to improve with increased occupancy, particularly in the higher-end segment. Destinations such as Bangkok, Jakarta, Singapore, Sydney, and Tokyo have even surpassed pre-pandemic levels as of YTD June 2023. However, markets in Greater China, including Hong Kong, are still behind given the recent loosening of restrictions in Mainland China. Additionally, the hospitality industry in Asia Pacific is experiencing strong investment momentum, as operational performance has improved and expectations for future demand remain high.

Outlook: Markets in Asia Pacific poised for further growth

The lifting of travel restrictions in the region is expected to have a positive impact on the tourism and hotel industry in the second half of 2023. Chinese tourists, who are a significant source of tourism revenue for many countries in the region, are expected to return by the end of the year. As a result, mass-tourism from Mainland China is expected to increase towards Q4. MICE activities are expected to increase in the second half of the year in destinations such as Seoul, Tokyo, Singapore, and Sydney, and this is likely to provide a further boost to the hospitality industry in the region. In Mainland China, as we approach the summer peak season, the trend of tourists expanding their travel radius is expected to become more prominent, and outbound tours are anticipated to dominate summer tourism consumption and continue beyond the summer season.