Unshaken in Apac: Hilton sees strong demand, fundamentals, investment in region amid global flux

[SINGAPORE] Even as geopolitical tensions disrupt the hospitality industry worldwide, Hilton’s Asia-Pacific outlook remains positive, given the region’s strong economic fundamentals, rising affluence and sustained investment in infrastructure.

Despite the uncertainty introduced when the Middle East crisis broke out in end-February, the region still recorded a strong start to the year. For the company’s first quarter ended Mar 31, 2026, revenue per available room grew in all parts of the region, and was up 4.7 per cent year on year to US$65.58.

The growth was led by robust demand in Australasia, Japan and South Korea, said Alan Watts, president, Asia-Pacific for Hilton, adding that China saw a modest improvement thanks to renewed corporate demand.

Other metrics reflect a similar picture: occupancy for Asia-Pacific (Apac) was up 2.2 percentage points from the corresponding year-ago quarter to 64.8 per cent; average daily rate rose 1.1 per cent to US$101.22.

In an earnings call following the results release, Hilton president, CEO and director Christopher Nassetta said that approvals, openings and new development construction starts for Apac (excluding China) were all up by double-digit margins in the first quarter.

Limited supply, strong demand

Watts said in an interview with The Business Times: “Asia-Pacific remains one of the most compelling growth regions, with significant undersupply and rapidly rising demand across all segments.”

“The long-term fundamentals are in place, and investment momentum remains strong, underpinned by a supply-demand imbalance across much of the region,” he added.

“Here’s some fun with math,” Watts quipped. “There is one hotel room for every 50 people in America. In China, there is only one hotel room for every 300 people.” So for China to get to America’s level of accommodation supply, it would have to grow six times what it is today, he noted.

In India, there is only one hotel room for every 9,000 people, he said. And while it is important to look at the relative poverty lines in such countries, their economic growth is worth watching.

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“Rising affluence, a growing appetite for experiences, and resilient intra-regional travel in Apac support a positive outlook,” Watts said.

“While the external environment remains fluid, demand for travel and high-quality hospitality in the region has proven remarkably resilient, giving us confidence in the continued strength of the market.”

He noted that the region is expected to account for 3.2 billion of the world’s middle-class consumers by 2035, fuelling demand for experience-led travel.

“Development momentum continues at pace,” he said. Hilton now has more than 1,300 hotels trading in the region, with a further 1,000 hotels planned. 

The global hospitality company is targeting a compound annual growth rate of “a percentage north of 15 per cent” for new rooms in the region.

In tangible terms, this would be around 30,000 keys every year, he said, adding that, industrywide, rooms added in Asia grow “three times faster than the rest of the world”.

Rush to brand

Watts described Hilton’s asset-light model as a “clear strength”.

“In Asia-Pacific, it allows us to scale quickly, expand into new locations and capture more travel occasions, ultimately attracting new customers and strengthening our network effect,” he said.

Franchised and licensed properties, representing 896 of the 1,303 hotels recorded in Apac as at Q1 2026, make up close to 70 per cent of the portfolio. Hilton owns five properties and manages 402 in the region.

Watts also pointed out a “rush to brand” amid global uncertainty.

“Conversions continue to gain traction as owners look for a faster, more cost-efficient path to market amid elevated construction costs,” he said.

“The reality is, there’s a lot of unbranded stock in Asia that looks to the safety and security and recognition of a brand,” he added, noting that Hilton considers the real estate, the quality of the physical asset and what renovations would be needed for conversion.

The group also ensures that the conversion would give the property’s owner a better return and that it does not cannibalise an existing hotel it has on the market.

Across the scale

Watts highlighted strong owner demand across the chain scale, adding that a “pyramid of hotels” is building in the region.

Historically, hospitality players have led with their core brands in key cities, said Watts. Hilton has “been in this market forever as large-format hotels”.

With “more millionaires in the world than ever before”, but also eyeing those in emerging markets who have never been able to afford an international hotel until now, Hilton recognises the importance of providing choices across price points.

Younger or more price sensitive travellers may begin with its more accessible brands such as Hilton Garden Inn, DoubleTree by Hilton and Hampton by Hilton, and move up the tiers as their earnings grow to a Waldorf Astoria, Watts said.

He likened this to choosing between a Mercedes-Benz A-Class and S-Class vehicle, or a BMW 2 Series and 7 Series.

“What you are trying to do is make sure that you’ve got a closed ecosystem and your customers want your level of quality, your level of assurance and your level of service. So you’ve got different products for different customers at different price points, all within the ecosystem,” he said.

Luxury and lifestyle is still a key driver, with eight brand debuts across Apac and more than 15 openings planned this year, he said. “This builds on a portfolio of more than 170 trading hotels and keeps us on track to exceed 250 in the coming years.”

These brand entries reflect owners’ demand for “differentiated, high-performing brands”, Watts said.

Meanwhile, mid-market brands are driving volume and expanding into new markets. He pointed to a strategic agreement to sign and open 125 Hampton by Hilton hotels in India.

“For owners, our portfolio offers the flexibility to deploy the right brand for the right market, supporting resilient, long-term growth and best-in-class investment returns,” he said.

Watts said Apac is well positioned to remain a key growth engine for Hilton globally.

“Ultimately, in a dynamic external environment, our focus remains the same: working with the right partners to deploy the right brands in the right places, at the right time, and creating long-term value for both owners and guests,” he said.