The hospitality and lodging sector across Asia Pacific recorded strong growth momentum in the past year. Not only have higher-standard hotels in the major cities been attractive investment targets but also investors have widened their focus to second-tier markets and to mid-range accommodation providers in search of higher-yielding opportunities. Initial yields in the hotel sector had compressed to pre-GFC levels by 2016 in most APAC markets and since then have compressed even further. Strong domestic and international visitation fundamentals, both for tourism and for business-related travel, have provided good demand drivers in turn supported by solid economic fundamentals and a benign geopolitical environment within the region. Aside from these strong structural drivers, the region is hosting an increasing number of conferences and congresses as well as several “mega-events” including three successive Olympic Games (Pyeongchang Winter Games 2018, Tokyo Summer Games 2020 and Beijing Winter Games 2022) and a World Rugby Cup (hosted in 12 cities across Japan in 2019) among others. Hotel pricing is high reflecting strong investor demand, still-low interest rate policy and the high likelihood of growing international arrivals. In emerging markets, middle class expansion is encouraging a domestic travel culture expansion, and this benefits certain hotel segments. Liberalizing gaming/gambling regulations in some markets and more restrictive policies on AirBnB and similar businesses in certain markets are also seen as tailwinds to the sector.
Source : CBRE Global Investors