Apac hotels making slower recovery than in US and Europe, says study
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Ry-Anne Lim
THE Asia-Pacific hotel market is recovering more slowly than its counterparts in the United States and Europe, a new study published by Deutsche Bank’s asset manager DWS said on Wednesday (Oct 5).
While hotel occupancies in the region have bounced back with last year’s easing of domestic travel, DWS noted that revenue per available room remains “subdued”, at around 50 to 60 per cent of 2019 levels.
The Asia-Pacific region is lagging significantly behind the United States and Europe in air passenger traffic, noted the asset management group. This is primarily due to its stricter border restrictions, including high travel expenses, extra visa requirements and additional quarantine risks.
Even with the recent easing of border restrictions, DWS estimates it may take another six to 12 months for cross-border travel to pick up in these countries.
The group added that this sluggish performance has also influenced hotel transactions in the region, which have weakened significantly.
Hotel transaction yields in Japan, for instance, widened by 30 to 50 basis points, expanding the yield spread between office and hotel from 50 to 100 basis points in the last three years. (Hotel transaction yields are made from hotel bookings or reservations, whether or not the traveller uses the hotel reservation.)
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Likewise, the yield spread between office and hotel in Australia widened from 80 basis points to 130 basis points post-pandemic, although that was driven more by office cap rate compression.
Despite this, DWS believes that Asia-Pacific’s hotel market is still poised for a full recovery by 2026. This is especially with the return of outbound travellers from China; they are the largest tourist market and strongest driver of outbound travel to neighbouring destinations such as Japan, South Korea, Singapore and Australia, in the group’s view.
“Owing to their proximity, these markets will likely receive the majority of demand, as travel preferences among Chinese travellers do not show signs of an immediate shift towards new markets outside the Asia-Pacific,” said DWS.
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