Mega Events and Conscious Travel Will Cement Asia’s Recovery
Above, concerts are rockin’ RevPAR for investors. Photo by Nainoa Shizuru on Unsplash. Right, Nihat Ercan
By Nihat Ercan, 01 July 2024
Rockin’ RevPAR and eco-thriving movement will keep Asia’s hotel investment lively, says Nihat Ercan, CEO Asia-Pacific, Hotels & Hospitality at JLL, in this Expert View column
Unlike global lodging industry which saw RevPAR last year surpassing pre-Covid level in 2019 by 12%, Asia-Pacific hospitality will reach the milestone by mid-2024, JLL expects.
Hand in hand with RevPAR increases, JLL predicts that hotel investment volumes across Asia-Pacific could hit US$10 billion this year. If realized, this will represent a 6% year-on-year growth, cementing the region’s comeback as the pandemic sits in the rear-view mirror.
Optimism is natural in this industry. However, the bigger question we hear consistently is how Asia-Pacific’s hotel space will cement its recovery, despite some external challenges.
Much of the region’s comeback is owed to the opening of borders across North Asia including China, Taiwan, South Korea and Japan. China and India have both registered a significant increase in domestic travel, while international travel will continue to increase as more Chinese tourists return to offshore destinations. Japan has seen record setting numbers with over three million passenger arrivals in April. This significant uptick is due to the Yen depreciation, accelerating Tokyo’s hotel performance significantly since 2023.
As countries and the region recover, investors must look out for trends that will shape their portfolios for growth. Two trends that stand out as having the most impact for inbound traffic growth are mega events and sustainable tourism.
Mega bucks
Hotel performance in Asia-Pacific is underpinned by the influx of mega entertainment events being held in the region.
The ‘Swiftonomics’ effect of adding S$300 million to S$500 million to Singapore’s economy – the equivalent of 0.2% of Singapore’s GDP for the first quarter as economists have predicted – have widened the eyes of other countries in the region to the power of mega events.
Collectively, Taylor Swift and Coldplay concerts in Singapore contributed more than 4.35 million arrivals in the first three months of 2024, a 50% increase from the same period last year.
Elsewhere, the Hong Kong Rugby Sevens in April sold 40% of all tickets to foreign visitors.
Even the likes of filming the first season of HBO hit The White Lotus in Thailand, which complements appearances by Coldplay and Ed Sheeran in Bangkok, can lead to shifts in travel demand. Season two, for instance, resulted a significant increase in searches and bookings to Sicily.
In the next half of the year, Asia will continue to host more mega events such as the F1 race in Singapore, regional tours by global pop phenomenons, and year-end music festivals.
Regenerative tourism
On the other side of the fence, sustainable tourism is increasingly becoming a priority for travelers and will emerge as a balance to the mega events tourism economy. With the climate crises in recent years, awareness on the dangers of over-tourism and the need for conscientious travel is also accelerating.
We can expect regenerative tourism to grow in importance. It strives to leave a place and its inhabitants in a better state than before. Investors can look towards sustainability as a core component of hotel underwriting and investment decisions.
Hotels that clearly articulate a commitment to sustainability, wellness and authenticity will have a competitive advantage to not only meaningfully increase market share, but also drive higher asset values and unlock new sources of capital.