Insights: Capital targets Asia Pacific hospitality as sector evolves
SINGAPORE -- Capital continues to target hospitality assets in high liquidity markets in the Asia Pacific region as the sector moves from recovery to stabilisation in 2025, according to a new report from Colliers.
Colliers' Asia Pacific Hospitality Insights May 2025 report has found the steady momentum of 2024 has carried through to 2025, signaling a shift toward more deliberate, performance-led growth in the Asia Pacific hospitality sector.
"The rapid rebound of recent years has matured into a more measured pace, with a focus on building long-term value. As high-performing markets begin to stabilise, the narrative is evolving from recovery to a new norm," Govinda Singh, Colliers' Executive Director​, APAC Capital Markets, Hotels & Hospitality and Advisory, said. "Hotel performance across Asia Pacific remained resilient in the first quarter of 2025, supporting ongoing deal activities. Whilst Asia Pacific deal volumes fell 19% in Q1 2025, with yields rising to 5.4% in the first quarter of this year, capital continues to target high-liquidity markets.
"The first quarter has traditionally been a slow period for transactions, and given geo-political uncertainty, it is not unexpected that many adopted a cautious, 'wait-and-see' approach. However, as market conditions stabilise and the imperative to deploy capital intensifies, a pickup in activity is anticipated as the year progresses.
"The most transacted hotel markets during this period were Japan, South Korea and Australia, with Singapore standing out as a key destination for generational wealth investment and India and South East Asia emerging as key demand engines​. With pricing holding firm, investors are shifting away from cap rate compression and toward value-add strategies focused on cash flow and income growth to drive returns."
Hotel performance remains resilient, with increasing Revenue per Available Room (RevPAR), primarily driven by Average Daily Room Rates (ADR) growth.
RevPAR across APAC is up 2.1% year-on-year (year-on-year), a significant improvement compared to the modest 0.4% growth between 2023 and 2024. This uptick is primarily driven by higher occupancy rates, reflecting stronger demand and improving market conditions.
Mr Singh said this indicated strong fundamentals in key markets like Singapore, Japan, Australia, and South Korea, which were benefiting from strong demand fundamentals but also from proactive investment and operational strategies.
"The next phase of growth will hinge on driving occupancy, operational precision and guest experience, especially as supply remains measured given high construction costs," he said. "Phuket, Tokyo, New Delhi, Mumbai, and Osaka led the region in ADR rate growth in Q1 driven by strong domestic demand, a surge in international travel, and effective market positioning. These markets exemplify rate-driven performance strategy but also set the benchmark for value-oriented expansion in the region's hospitality sector."
The report highlights that countries such as Thailand, Vietnam and South Korea, which were previously reliant on Chinese travelers, are now capitalising on the growing wealth and outbound travel from India.
"With India's middle and upper classes expanding rapidly, Indian travelers are not only spending more per stay but are increasingly seeking experience-driven travel. As a result, they are becoming a reliable and consistent source market year-round," Mr Singh said. "This shift is enabling many destinations to sustain high room rates despite a decline in overall volumes. While China remains a critical market, diversifying source markets helps extend seasonality, boost spending, and mitigate over-dependence on a single market."
To read the full report, CLICK HERE
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