ASIA-WIDE revenue growth of hotel markets could soften this year, but a positive turn is expected in 2014, according to a report newly released by Cushman & Wakefield.
Akshay Kulkarni, regional director of Cushman & Wakefield’s hospitality sector group across South Asia and South-east Asia, said: “Several hotel markets have had a large supply influx of rooms in the past year or so. This has led to region-wide RevPAR levels falling in the first half of 2013 due largely to declining occupancy levels. However, we expect much of the excess supply to get absorbed soon on the back of strong tourism demand. As occupancy starts increasing, we will see room rates rising upwards in most markets.
“RevPAR growth in Asian hotel markets is expected to turn positive in 2014. The only exception is likely to be Seoul, which is seeing an unprecedented pipeline of least 15,000 rooms over the next two to three years.”
Most hotel markets across Asia saw positive RevPAR growth in 2012, except Mumbai and NCR, India. Bangkok (19.3 per cent), Hong Kong (10.1 per cent) and Jakarta (9.8 per cent) were the top markets benefiting from increases in occupancy and average daily rates. Declining markets included Bali (-4.6 per cent), Ho Chi Minh City (-7.0 per cent), Mumbai (-15.1 per cent) and NCR region (-21.6 per cent).
In 2013, the dramatic influx of new hotel rooms in recent years has led to some price relief in markets such as Singapore and Shanghai. Yet emerging markets like Dhaka, Yangon and Colombo with limited high-end hotel stock amid strong tourism demand are enjoying strong revenue growth. Overall, Asia-wide RevPAR is expected to fall below 2012 levels, although performances will vary across markets.
As for investment volumes, Cushman & Wakefield expects to reach US$10-12 billion this year, making 2013 a record year for hospitality investment post-GFC.
Said Kulkarni: “Expect 2014 to equal or come close to this year’s level in terms of transactional activity. Japan’s investment market will undoubtedly improve further and lead the pack, due to strong corporate demand and greater investor optimism arising from Abe’s economic reforms. Less transactional activity is expected for Singapore after a busy year.
“Similarly, levels in China could come down due to a pricing mismatch and differences in buyer and seller expectations. India, Thailand, Indonesia and to some extent, the Philippines could see more exciting times ahead with some major transactions to be closed. Emerging countries such as Myanmar and Sri Lanka have recently become viable investment destinations due to improved political stability.”
