7 in 10 plan to invest more into Asia-Pacific hotels: poll

MORE than 70 per cent of investors plan to put more money in the Asia-Pacific hotel sector in 2021, a new poll by JLL showed this week.

The property consultancy firm expects about US$7 billion in transactions this year, 20 per cent more than last year's US$5.8 billion in hotel investments.

The long-term confidence comes despite the impact from Covid-19, with the pandemic hurting the tourism industry as limits of international travel largely remain in place.

Nihat Ercan, head of investment sales, Asia Pacific, at JLL Hotels & Hospitality Group, said investors see the industry on "the cusp of a period of recovery". "Optimism around the deployment of vaccines and an eventual recovery in tourism has started to drive activity and investors don't want to miss the opportunity," he said.

That being said, a quarter of the polled investors are still waiting on clarity on the industry's recovery before committing further funds. Meanwhile, 5 per cent are looking to exit the sector and focus on other asset classes.

Investments will also be allocated to asset management initiatives on existing properties, including renovations, repurposing, and repositioning in response to changing consumer preferences.

"There are deals to be done in the current environment, yet value-add players will have the upper hand as they are willing to roll up their sleeves to invest and reposition hotels with a view of selling them in three to five years," said Xander Nijnens, head of advisory and asset management, Asia Pacific, JLL Hotels & Hospitality Group.

JLL also predicts that the price-expectation gap between buyers and sellers will narrow. Investors are anticipating 20 to 30 per cent discounts, while sellers are expected to lower asking prices by 10 per cent. This is because distress becomes less likely, while sellers "come to terms" with the impact of operating cash flow on pricing, JLL said.

Based on JLL's survey of 100 clients in January this year, most showed interest in Japan (52 per cent) and Southeast Asia (46 per cent), with Australia (31 per cent) and China (22 per cent) following behind.