Based on the new annual publication of JLL Hotel Investment Outlook ReportThe Asia-Pacific hotel market saw a strong rebound in investment in 2021, but levels still remain below pre-pandemic levels as the industry recovery continues.
JJL further reports that transaction volume in Asia-Pacific totaled $8.5 billion, accounting for 13% of total global hotel volume. This level of activity represented a 39% increase over 2020 volumes, but sales remained 40% below pre-COVID levels achieved in 2019.
Capital deployment in 2021 has been impacted by ongoing pandemic restrictions and border controls in several key economies, coupled with a wide bid-ask spread on properties. Encouragingly, new market entrants were eager to capitalize on booming opportunities, with activity in the region supported by factors such as five high-end hotels located in urban markets with strong domestic or leisure, trading at over $1.0 million per key and stable trade on a single asset. activity, which accounted for 85% of the region’s total volume.
“Deal activity in 2021 has been robust and demonstrates that investors are looking longer term when considering their exposure to Asia-Pacific hotel assets. We believe that as international travel becomes more accessible and as leisure and business travel markets further recover, investors will tap into significant dry powder resources and strategically deploy in the hospitality industry across a wide range of markets,” said Nihat Ercan. , Senior Managing Director, Head of Investment Sales, Asia Pacific, JLL Hotels & Hospitality Group.
Geographically, the Maldives saw an upsurge in visitation in 2021, with international arrivals increasing by 152% year-on-year. Specifically, the Maldives’ upscale and luxury hotel performance per available room (RevPAR) ended 2021 24% above 2019 levels. The rebound in visitation was supported by the market’s ability to successfully attract strong demand from Western Europe, Russia and several Middle Eastern countries, as it shifted focus away from the former main source markets of mainland China, resulting in an average price per room of 860 $000. All three resort deals during the year were sold to cross-border investors with capital coming in from Italy, Singapore and the Middle East, underscoring the strong foreign investment interest in the market.
Global trading volume totaled $66.8 billion in 2021, a 131% increase from 2020. With an uneven recovery in demand across all asset classes, investors focused on the acquisition of luxury or resort assets. Assets located in urban areas remained the most liquid, but the level of activity in 2021 was down 22% from 2019 levels. However, asset sales activity in resort locations accounted for a 17% increase from 2019 levels. Buyer pools diversified in 2021, with private equity groups increasing their investments in hospitality by $25.4 billion from 2020 levels, representing 50% of all transaction activity globally.
JLL believes that several major themes will influence deal activity in the Asia-Pacific hospitality industry in 2022.
Investors will focus their money on markets that have raised their profile since the pandemic. According to the report, tourist destinations that have strengthened their competitive edge and amplified their profile in the market are expected to attract significant interest from investors, especially from markets like the Maldives.
Institutionalized markets with strong domestic demand fundamentals will remain a key focus for cross-border investors, with Japan and Australia in particular being high priority target markets.
Hoteliers will continue to face post-Covid headwinds that threaten operating margins and potentially impede RevPAR growth. In 2022, the main challenges hoteliers will need to watch closely are labor shortages, supply chain issues and inflationary pressures, all of which threaten to achieve substantial earnings growth over the course of the year. coming year.
Industry’s commitment to sustainability can lead to increased asset values, lower operating costs and increased consumer demand. Consumers, operators and investors will all play a vital role in helping the industry reduce its carbon footprint and all three groups have expressed support for an industry focus on sustainability and boosting investment in impact.
The blurring of real estate sectors is accelerating the growth of alternative housing in all regions. The co-living industry is experiencing notable growth and emerging as a popular alternative accommodation type across Asia-Pacific. JLL expects more new disruptors of alternative accommodation in the region, who manage and rent flexible spaces, while meeting hotel-level standards.
“We are extremely encouraged that the Asia-Pacific hospitality market is recovering faster than expected, but more interestingly, we are seeing a transformation of the industry to meet the demands of changing behaviors and consumer expectations. Hoteliers will increasingly need to readjust their strategies to adapt and create a work environment that promotes the health and well-being of its workforce in addition to prioritizing efforts that reduce the carbon footprint of the hotel. industry and reduce climate risk,” says Xander Nijnens, Managing Director, Head of Consulting and Asset Management, Asia Pacific, JLL Hospitality Group.