Article

Hotels Market Insights

February 22, 2024 / By ,

Tourism rebounds with improved air connectivity

As air connectivity in the Asia Pacific region improved in the last three months of 2023, there has been an increase in international tourists, particularly with intra-regional travel. Destinations like Singapore, Tokyo, and Seoul experienced a surge in foreign visitation, while domestic tourism remained strong in Beijing, Shanghai, and Jakarta. Regional corporate and MICE tourism has also started to grow as more events took place in Jakarta and Sydney. However, the number of Chinese tourists, although growing significantly, has not met expectations, except in Hong Kong.

Elevating the hospitality landscape through refurbishments and rebranding

Delayed hotel projects across Asia Pacific resulted in an increase in hotel supply during the last quarter of 2023. Markets such as Bangkok, Kuala Lumpur, and Shanghai saw the addition of over 1,000 new hotel rooms, led by brands such as InterContinental, Indigo and Renaissance. Singapore’s new supply primarily consisted of refurbishments and rebranding with the reopening of iconic hotels like the Conrad Singapore Orchard (formerly Regent Singapore) and Novotel Singapore Kitchener (formerly PARKROYAL on Kitchener Road). In Chinese markets like Beijing, hotel owners are prioritising the revitalisation of existing assets, renovations, and exploring innovative ways to maximize their properties’ utilisation, while in Seoul, the co-living segment is gaining traction.

Soaring RevPAR in Q4 2023

Asia Pacific hotels experienced significant growth in revenue per available room (RevPAR) during the last quarter of the year, driven by high average daily rate (ADR) and improving occupancy rates. The recovery in trading performance was supported by increased inbound tourism due to improved flight connectivity. The luxury segment performed well, and while entry-level segments saw growth in occupancy and ADR, growth was slower and below pre-pandemic levels, as Chinese tourist groups have yet to fully return. Overall, most markets in Asia Pacific surpassed 2019 levels in Q4 2023, except Chinese cities.

Outlook: Cautious optimism for the year ahead

With persisting macroeconomic challenges and geopolitical tensions, as well as upcoming elections in several countries in 2024, the growth in travel and tourism industry, which was observed in 2023, is expected to slow down in the coming year. The extent of recovery in hotel trading performance in the region during the first half of 2024 will rely on factors such as the sustainability of leisure demand and the return of corporate tourists. Despite governments’ efforts to stimulate tourist arrivals through visa-exemption programs in countries like Thailand, China, and Singapore, the projected increase in hotel trading performance is likely to be modest. The revival of air connectivity in the Asia Pacific region and the complete return of Chinese tourists will play a crucial role in determining the magnitude of this growth.

 

 

 

 

 

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