APAC hotel transactions set to hit a record US$11.6b in 2024

Transactions soared 19% to US$5.7b in H1 2024.

Asia Pacific recorded US$5.7 billion in hotel transactions over the first half of 2024, led by significant deals in Japan, China, and Singapore, according to data and analysis by global real estate consulting firm JLL.

With volumes up 19% year-on-year in H1 2024, Asia Pacific is expected to make a rebound with an anticipated record US$11.6 billion in hotel transactions for the full year 2024, fuelled by strong investor appetite for Japan, with the country’s total hotel investment volume expected to reach US$4 billion. Singapore’s forecasted hotel investment volume for 2024 is expected to reach US$1 billion.

Meanwhile, markets such as India, South Korea, and Thailand are expected to record high annual growth. If realised, this will represent a 2% year-on-year growth for the region, cementing Asia Pacific’s return to pre-pandemic transaction levels.

“We’re seeing an uptick in hotel investment volumes in tandem with the tourism boost across Asia Pacific as air travel resumes and seat capacity to Asia Pacific destinations recovers,” said Nihat Ercan, CEO, Asia Pacific, Hotels & Hospitality, JLL. “Japan remains a standout market for investors, supported by strong tourism fundamentals, the low interest rate environment, a weaker Yen and a shift of focus of Japanese REITs from office to hotels, pushing values significantly above pre-COVID levels.”

The next 12 months offer compelling opportunities for hotel investment in Asia Pacific as hotel performance continues to improve in key markets. Factors such as impending debt maturity, significant dry powder on-hand, rising CAPEX needs, and closed-end funds reaching the exit stage of their investment lifespan, will further fuel hotel investment activity.

As of June 2024, hotels in Asia Pacific have recorded a revenue per available room (RevPAR) that is 89%^[1] of the level seen in the same period in 2019, with occupancy levels falling just under 4% compared to 2019. Several countries in Asia Pacific, such as Singapore, Thailand and South Korea have also implemented visa facilitation schemes to boost inbound tourism. The relaxation of visa policies has significantly encouraged Chinese travellers to travel to destinations within the region.

Mega entertainment and sporting events such as the Taylor Swift, Coldplay concerts and the Rugby Sevens in Hong Kong have also boosted tourist arrivals significantly. With Asia Pacific experiencing a strong tourism rebound from playing host to some of the biggest entertainment and sporting events, optimism for hotel investment is high among family offices, corporates, and developers.

As hotel investment levels move towards full recovery, ESG continues to become increasingly important for investors and broader stakeholders in Asia Pacific. New metrics announced for the 12^th Uniform System of Account for the Lodging Industry (USALI) will require hotels to take into account their Energy, Water and Waste (EWW) expenses, which will provide further transparency. Public policy and regulation in Asia Pacific continue to evolve to provide further guidance to ESG to investors.

“It’s increasingly obvious to investors that not transitioning to ESG principles will result in brown discounts and a stranded asset in a complex future. Conversely, hotels that clearly articulate a commitment to sustainability, wellness, and authenticity will have a competitive advantage in terms of increasing market share and driving higher asset values," says Ercan. "That said, investors must look towards sustainability as a core component of hotel underwriting and investment decisions, with ESG now being an industry focus.”

¹ 89% represents RevPAR in US dollar teams. JLL estimates the number is potentially higher than 2019 once local currency is isolated.