Market Snapshot: Asia Pacific 2024

Transactions in the Asia Pacific

In 2023, hotel transaction volume in the Asia Pacific recorded approximately USD11.7 billion, a 12% decrease from USD13.3 billion from the previous year. The decline in transaction activity can be attributed to the high interest environment, buyer and seller price expectation gap, and a lack of suitable or available hospitality assets in the market. Australasia (Australia and New Zealand), as well as Southeast Asia, observed decreases of 20% and 56% in transaction volume, respectively. However, the trailing 12 months have shown positive signs, with total transaction volume recording a 17% increase, reaching approximately USD12.1 billion. This is fueled by the resurgence in travel demand and strong investor appetite for hotel assets. As the US Federal Reserve begins its easing cycle, the market may continue to see increased transaction activity in the coming year.

Transaction History in the Asia Pacific (2019 - 2Q 2024)

Source: HVS Research

*Please note mentions of "transaction values" pertain to the transaction volume based on relevant stake/interest as of the mentioned date

Top Three Most Active Markets (3Q 2023 to 2Q 2024)

Both transaction activity, measured by the number of completed transactions, and transaction volume for hospitality assets have increased over the last four quarters (3Q2023 – 2Q2024) in China, Japan and Singapore. In particular, China recorded a 180% increase in transaction volume compared to the same period last year, reflecting a recovery in the hospitality real estate market, with the majority of support coming from domestic investors. Japan has attracted strong international investor appetite due to robust tourism demand, a weak currency, and low interest rates. Singapore's hotel market has also proven its resilience during the pandemic, supported by a stable and well-established macroeconomic and political environment.

Transaction Volume in Top Three Most Active Markets (3Q 2022- 2Q 2024)

Source: HVS Research

*Please note mentions of "transaction values" pertain to the transaction volume based on relevant stake/interest as of the mentioned date

Major Investors in the Asia Pacific

In 2023, transaction activity from the top ten investors in the Asia Pacific accounted for approximately USD4.7 billion or 40% of total transaction volume.

In 2023, we have observed a mix of local and foreign investments, partially contributed by the depreciation of local currency against USD. In terms of the transaction activity by the number of transactions, the consortium formed by UAE-based ADIA, US-based Goldman Sachs, and Singapore-based SC Capital Partners tops the list with the 27-property Daiwa House portfolio deals in Japan, while Japan-based Polaris Holdings recorded 14 with the Red Planet Hotel portfolio deals. Australia-based Salter Brothers took over the third place with the acquisition of 13 properties in Australia.

Top Ten Investors

Source: HVS Research

*Please note mentions of "transaction values" pertain to the transaction volume based on relevant stake/interest as of the mentioned date

Hotel Performance in the Asia Pacific (2024)

Overall hotel performance across the tracked markets in 2024 is anticipated to continue its recovery. While most markets have not yet reached pre-Covid levels of tourist arrivals, the surge in travel demand has greatly improved market-wide occupancy compared to 2023. ADR has also continued to improve, benefiting from the strong USD and the revenge travel trend. Looking ahead, market occupancy is expected to continue improving, as outbound travel from China has not yet recovered to pre-Covid levels, and air traffic capacity remains restricted by a lack of manpower and aircraft. Markets that saw a significant surge in ADR over the past two years, such as Singapore, the Maldives, and Australia, have observed a more stabilized ADR trend while still gradually recovering in occupancy.

The top five market growth in hotel performances are Tokyo, Bali, Ho Chi Minh City, Kuala Lumpur and Jakarta. In general, hotel performance in Asia Pacific is forecasted to continue its growth trajectory in 2024. Auckland market is expected to register a notable decline in hotel performance metrics due to lower domestic demand, lack of major events and increased hotel supply.

Hotel Performance in the Asia Pacific (2024)

Source: HVS Research

Australia

Key Points

Tourism contributed 9.8% of GDP in 2023 (AUD252.2 Bn), an increase of 17% from AUD216.1 Bn in 2022, achieving 84% of 2019’s tourism contribution
1.7% Real GDP growth is expected in 2024
7.2 million international tourist arrivals were recorded in 2023

Highlights

Infrastructure Projects

AUD5.3 billion for new Western Sydney Airport, to be operational by 2026 for international, domestic and freight
AUD13.0 billion Melbourne Airport Rail Link to connect to entire Victoria state by 2029
AUD3.0 billion Melbourne Airport expansion project, featuring a third runway that is expected to be completed by 2031
AUD65.0 billion expansion of Sydney’s city train network by 2032
AUD125.0 billion Suburban Rail Loop which will link Melbourne’s Frankston Line to the Werribee Line, providing a key connection through Melbourne Airport by 2053

Notable Transactions

300-key Esplanade Hotel Fremantle acquired for AUD116.5 million (AUD388.3k/key) in Jul 2024
140-key InterContinental Sydney Double Bay acquired for AUD215.0 million (AUD1.5m/key) in Feb 2024
416-key Sofitel Brisbane Central acquired for AUD177.7 million (AUD427.2k/key) in Dec 2023

Notable Upcoming Hotel Openings in Sydney and Melbourne (2024)

lyf Bondi Junction Sydney, 197-key
Veriu Macquarie Park, 184-key

Demand

In 2023, total visitor arrivals reached 18.2 million, marking an 87.6% increase from 9.7 million recorded in 2022. International arrivals saw a remarkable 94.6% growth, jumping from 3.7 million in 2022 to 7.2 million in 2023. YTD Jul 2024 data shows a 21% rise in international arrivals from YTD Jul 2023, underscoring a strong recovery in global travel Australia continues to attract international visitors, with the top five source markets in 2023 being New Zealand (17.3%), USA (9.3%), United Kingdom (8.4%), China (7.6%) and India (5.6%).

Supply

*Include non-branded hotels
Source: HVS Research

HVS has noted that there will be 108 additional hotels with approximately 17,508 keys by 2028; 19 properties with a total of approximately 2,788 rooms will open by the end of 2024.

Hotel Pipeline (2024 - 2028)

*Exclude non-branded hotels
Source: HVS Research

Hotel Performance

Source: HVS Research

As of YTD Aug 2024, Sydney demonstrated strong hotel performance with an increase in occupancy rates (+1.5 percentage points (p.p)), ADR (+2.4%) and RevPAR (+4.4%) as compared to the same time last year. While ADR has decreased by 1.6% in Melbourne, an increase in occupancy rates (+2.5% p.p) translates to an overall growth in RevPAR (2.1%). The ongoing recovery of international travel likely contributed to the increase in metrics while Melbourne might be facing increased competition among hotels leading to downward pressure on rates.

Transactions

From 2019 to YTD Aug 2024, New South Wales (NSW) recorded the highest transaction value followed by Victoria and Queensland. NSW and Victoria, home to Sydney and Melbourne, attract significant investment while Queensland benefits from popular destinations such as Cairns and Gold Coast. High transaction volumes in these states are fueled by thriving tourism and major urban centers.

Transaction Value Recorded By Region (2019 - YTD Aug 2024)

Source: HVS Research