Source: CBRE, Forbes, thehotelconversation
Apr.28.2022, Shanghai ------ More than two years since the onset of the COVID-19 pandemic, there is light at the end of the tunnel for the Asia Pacific hotel sector, according to CBRE Asia Pacific Hotel Market Outlook - Trends to Watch in 2022, as more markets across the region ease border restrictions in an attempt to reboot business and leisure travel. In 2022, a further improvement in hotel investment volume will be seen as newcomers and experienced investors seek greater exposure, with the weight of capital chasing Asia Pacific hotels now at an all-time high.
Apr.28.2022, Shanghai ------ More than two years since the onset of the COVID-19 pandemic, there is light at the end of the tunnel for the Asia Pacific hotel sector, according to CBRE Asia Pacific Hotel Market Outlook - Trends to Watch in 2022, as more markets across the region ease border restrictions in an attempt to reboot business and leisure travel. In 2022, a further improvement in hotel investment volume will be seen as newcomers and experienced investors seek greater exposure, with the weight of capital chasing Asia Pacific hotels now at an all-time high.
CBRE expects improvements in visitor arrivals and room occupancy to begin to emerge in Q2 2022, with Southeast Asian leisure markets set to outperform as tourists seek out open-air environments. Other key trends anticipated to emerge this year include consumers gravitating to trusted hotel brands, taking longer trips, and placing a stronger emphasis on hotel ESG performance.
Asia Pacific hotel investment staged a recovery in 2021, growing 46% to reach US$12.1 billion compared with 2020. The steady rebound was underpinned by a growing volume of capital seeking to increase in this sector.
Asia Pacific hotel investment staged a recovery in 2021, growing 46% to reach US$12.1 billion compared with 2020. The steady rebound was underpinned by a growing volume of capital seeking to increase in this sector.
Steve Carroll, Head of Hotels and Hospitality, Capital Markets, CBRE Asia Pacific
“Hotels are among the sectors poised to benefit as the region’s borders reopen. The sector offers attractive risk-adjusted yields and asset repositioning opportunities to investors seeking enhanced returns. Hotels have gained appeal as a potential inflation hedge due to the sector’s unique short lease period, measured in days rather than months or years as with other property types,” said Steve Carroll, Head of Hotels and Hospitality, Capital Markets, CBRE Asia Pacific, who has more than 20 years of global hospitality / investment experience, most recently as IHG’s Senior Vice President, Global Corporate Finance and Strategy.
The hospitality sector is fast emerging as one of the most sought-after for investors eyeing value-added opportunities this year. In Hong Kong, a number of investors are converting hotel assets into co-living spaces.
In the past six months, foreign funds have acquired Butterfly on Prat, Hotel sáv Hong Kong and Travelodge Central Hollywood Road, with plans to incorporate co-living or student accommodation elements in the redevelopment. In mid-February, the Town Planning Board received the application to convert the ibis Central and Sheung Wan into a residential building. In early April of 2022, CBRE has successfully advised on the transaction of the Rosedale Hotel in Kowloon, which will be renovated into a co-living space according to the investor’s plan, and ready to open in mid-2023.
Despite the ongoing pandemic in Hong Kong, the hotel industry has not seen any significant distressed assets. CBRE found in its 2022 Asia Pacific Investor Intentions Survey that the number of investors expecting a discount on hotel assets dropped from 99% in 2021 to 78% this year, suggesting an improvement in asset price.
In the past six months, foreign funds have acquired Butterfly on Prat, Hotel sáv Hong Kong and Travelodge Central Hollywood Road, with plans to incorporate co-living or student accommodation elements in the redevelopment. In mid-February, the Town Planning Board received the application to convert the ibis Central and Sheung Wan into a residential building. In early April of 2022, CBRE has successfully advised on the transaction of the Rosedale Hotel in Kowloon, which will be renovated into a co-living space according to the investor’s plan, and ready to open in mid-2023.
Despite the ongoing pandemic in Hong Kong, the hotel industry has not seen any significant distressed assets. CBRE found in its 2022 Asia Pacific Investor Intentions Survey that the number of investors expecting a discount on hotel assets dropped from 99% in 2021 to 78% this year, suggesting an improvement in asset price.
Stephen Lin, Director, Valuation and Advisory Services, CBRE Hong Kong
Stephen Lin, Director, Valuation and Advisory Services, CBRE Hong Kong, said: "While the industry is longing for the recovery of the tourism market, hotels have been looking at ways to maintain operations and boost occupancy by pursuing the staycation or quarantine hotel approach. It is now a good time for hotel operators and investors to look into what value-added opportunities the assets have to offer.”
Global investors are increasing their exposure to hotel properties across the region in anticipation of a recovery. Asia Pacific hotel investments climbed 46% to $12.1 billion in 2021, according to a report published by property consultant CBRE in March. Within the sector, CBRE expects resorts to attract substantial investments in the second half of this year amid growing expectations of a full recovery in occupancy and visitor arrivals.
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