A string of marquee hotel sales across Asia Pacific are raising hopes of a rebound in investor appetite. After macroeconomic challenges and rising debt costs battered deal activity in the first half of 2023, July saw a series of major deals, including Singapore’s largest-ever single-asset hotel sale.
Singapore property developer UOL Group sold the 542-room PARKROYAL Kitchener Road hotel to Midtown Properties, a unit of Worldwide Hotels Group, in a deal worth $388 million. This was quickly followed a week later by the first hotel transaction in the Maldives this year, the sale of Amari Havodda Maldives by Crystal Plaza Resorts to Thai hospitality conglomerate Minor International and Abu Dhabi Fund for Development.
The pick-up in deals comes amid a strong operational performance for hotels globally in the first half of the year. This was largely due to an increase in travel and an expectation around a more stable interest rate environment.
Activity this year has been strongest in Japan and Australia. What’s more, deal activity in Japan continues to be supported by favorable interest rates and deep capital markets. Meanwhile, high interest rates in Australia could pressure owners into selling assets to release capital and reduce their leverage.
The main factors driving investors’ appetite are the strong demand for leisure travel and the recovery of business travel in the region.
Hotel investors will be paying particularly close attention to tourism arrivals from China, which reopened its borders early this year. A forecast by U.K. consultancy Oxford Economics suggests Chinese outbound travel could reach up to 48 percent of 2019 levels by this year.
The impact of China’s reopening was evident in the recovery in revenue per available room across Asia Pacific in the first five months of 2023, which is now only 6.8 percent below 2019 levels. Meanwhile, revenue per available room in other regions has rebounded to pre-pandemic levels, led by the Middle East.
This story was excerpted from a report from JLL. The full report resides on the JLL website and can be read here.