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Latest news

International hotel chains betting on Asia’s post-pandemic recovery

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June 15, 2022, 07:11 PM GMT + 7
  • The strong resurgence of luxury travel segment, higher room rates, and changes of guest’s profile are key points of Asia’s post-pandemic hospitality market.

Hotel chains from Hilton - the world’s second largest hospitality group - to billionaire Robert Kuok’s Shangri-La are accelerating expansion plans across the Asia-Pacific region, betting on a post-pandemic recovery as countries gradually reopen to international travelers.
Operators spreading footprints across Asia
Among global players, Hilton is aggressively expanding across the region, with plans to more than double its footprint in Asia in the next few years. The company opened a record number of 100 new hotels across the region in 2021, expanding its presence by almost 20,000 rooms to over 120,000 rooms across 523 properties, including 400 hotels in Greater China, a key growth market. 
“We’re seeing all segments rapidly recovering in the Asia Pacific,” Christopher Nassetta, President and CEO of Hilton, said during a visit to Singapore, where the company launched Hilton Singapore Orchard, its largest hotel in the region with more than 1,000 rooms.

Hilton Singapore Orchard

Singapore-based Pan Pacific Hotels Group - controlled by billionaire banker and real estate tycoon Wee Cho Yaw’s UOL Group is adding more than 4,000 rooms from 18 new and refurbished properties in the next few years to its existing portfolio of almost 12,500 rooms across 39 owned and managed properties in Asia, Oceania, Europe and North America.
While the hotel industry is among the hardest hit by the Covid-19 pandemic in the past two years as governments worldwide imposed travel restrictions to curb the spread of the virus, Pan Pacific CEO Choe Peng Sum has said he is confident pent-up demand will drive the recovery going forward.
Accor said it plans to open over 170 new hotels with more than 41,000 rooms across Southeast Asia, South Korea, Japan and Maldives between now and 2026. Last year, it opened 14 new hotels with almost 3,000 rooms across Indonesia, Japan, Malaysia, South Korea and Thailand.
Garth Simmons, Accor CEO for Southeast Asia, Japan and South Korea, said in an emailed statement to Forbes Asia: “Since the beginning of 2022, we are seeing a strong rebound in booking across the Southeast Asia region. Markets with greater ease of entry such as Cambodia, Singapore, and the Maldives are generating confidence amongst both long-haul and short-haul markets, with loosened restrictions resulting in decreased costs of travel.”
In this context, Hong Kong-based Shangri-La has a substantial pipeline of upcoming hotel and mixed-use development projects in Australia, China, Cambodia and Japan in the coming years.
Reflecting its confidence that the travel industry will stage a recovery after travel slumped in the past two years due to pandemic restrictions, Bangkok-based Dusit Thani is adding over 8,800 rooms across 52 new hotels in the region.
A growing global hub of hotel investments
In response to the strong resurgence, global investors are increasing their exposure to hotel properties across the region in anticipation of a recovery. Asia Pacific hotel investments climbed 46% to $12.1 billion in 2021, according to a report published by property consultant CBRE in March. Within the sector, CBRE expects resorts to attract substantial investments in the second half of this year amid growing expectations of a full recovery in occupancy and visitor arrivals.
In Southeast Asia, known for its white sand beaches, historical architecture and warm climate, international airline bookings reached 38% of pre-pandemic levels by late March, according to travel firm ForwardKeys. They were at less than 10% of 2019 levels at the start of the year. Singapore and the Philippines led a sharp uptick in bookings. In Vietnam, Trip.com Group data shows that domestic hotel bookings in the country in April 2022 are up 247% year-on-year compared to 2021. 
A recent report from the Pacific Asia Travel Association (PATA) projected that international visitor arrivals into Asia will grow by 100% between 2022 and 2023, as demand peaks before returning to more normal growth rates over time. 
“Hotels are among the sectors poised to benefit as the region’s borders reopen,” Steve Carroll, head of hotels and hospitality in Asia Pacific capital markets at CBRE, said. “The sector offers attractive risk-adjusted yields and asset repositioning opportunities to investors seeking enhanced returns.”
A promising outlook
Besides upcoming potentials, hotel operators should prepare for changes of the profile of international travellers to Asia in the post-pandemic world. 
Once making up Asia’s largest group of travellers, Chinese tourists are stuck at home due to strict lockdowns. Japan, which remains shut to tourists itself, has seen only small numbers of travellers to Southeast Asia, while Russia-Ukraine’s war has kept away the typically large number of Russian tourists in the region.

Shangri-La Quiantan Shanghai

Shangri-La Group CEO Lim Beng Chee said in March 2022: “We are seeing travel rebound across much of the world and are cautiously optimistic. While remaining vigilant, we are readying ourselves for a post-pandemic future and preparing to seize opportunities for business development as they arise.”
Notably, a third of the travellers to Southeast Asia so far in mid-April 2022 were from Europe, up from 22% in 2019, while those from North America have more than doubled to 21% from 9% in 2019, according to ForwardKeys. Travellers from Asia made up just 24%, versus 57% in 2019.
In this context, the luxury travel segment is leading the way of recovery across the world and Asia is no exception.
“Everyone is shocked at the pace luxury travel returns when everyone was expecting it to be impaired. Pricing growth in top-end luxury resorts is stronger than any other segments globally,” said IHG group CEO Keith Barr.
Rajah Travel president, Aileen Clemente, said “bleisure and luxury are the travel segments growing more” although “the pace of recovery is not the same everywhere in the world”.
STR forecasts that the regional luxury segment will continue driving the pricing momentum. And while cost inflation may present a challenge, it could be offset with Average Daily Rate (ADR) growth and implementing efficiencies in hotel management. In terms of leisure travel, a sustainable way of reducing restrictions will drive its growth, while when it comes to business travel, based on current economic recovery, the demand is expected to be stronger.
Hilton CEO Chris Nassetta predicted that two things were keeping demand high: the leisure consumer’s incremental savings, and strong corporate balance sheets paired with “very good” profitability.
“They’ve gone two years both from a leisure point of view and a business point of view with meetings and events without being able to do the things that they need to do,” he said. “They have the availability of discretionary income in both segments to do it and they have the need, and that is being matched with demand.”
Many hotel executives also agree that the hotel prices will go up despite high inflation, a softening economy, and fears of a recession.
Keith Barr said that he expects demand to continue to grow for the rest of the year as travel is more normalized post-pandemic. That will likely come with further price increases as inflation and other costs are further factored in.

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