JLL Hotels & Hospitality Group is projecting for 2016 US$8.5 billion in hotel investments in the Asia-Pacific region, down from US$9.2 billion in 2015.
Scott Hetherington, CEO, JLL Hotels & Hospitality, Asia, said: “In 2015, the headlines featured blockbuster acquisitions of high-profile, gateway market hotels by investors from mainland China, Hong Kong and the Middle East. We also saw a high volume of hotel deals in Japan with increasing interest from foreign investors.
“This year, we expect transaction activity across the region will slow somewhat, with a likely shift to secondary markets in South-east Asia and the Indian Ocean.”
JLL also identified the likelihood of there being continued consolidation among hotel brands in 2016, following headlining deals in 2015 like Marriott’s purchase of Starwood andAccor’s acquisition of FRHI.
“Public markets are rewarding growth, creating a strong case for hotel brand consolidation. Hotel brands are on a never-ending quest to bolster their pipeline and with the natural attrition in properties and limits to new supply growth, the surest way is often by acquiring operators with strategic management or franchise contracts,” explained Mark Wynne Smith, global CEO, JLL Hotels & Hospitality.
Meanwhile, Japan saw the highest deal volumes in the region in 2015, and JLL predicts this will continue into 2016 with transactions comprising a substantial number of domestic REITs in addition to interest from US private equity funds and South-east Asian families. Increased demand from Chinese investors looking to purchase hotels in second tier Japanese markets is also expected.
China too, which continually sees approximately US$1 billion in hotel trades annually, will likely see further growth as quality assets there garner greater interest.
As for Australia, Hong Kong and Singapore, scarcity will probably lead to less opportunities for investors hoping to buy into tightly-held hotel stocks in those markets.
