Prospects of the hotel services market: review of investor interest
The pandemic and quarantine restrictions severely hit the hotel real estate segment around the world. Unlike some other markets, the recovery is not happening as fast as we would like it to. However, recent trends in the Asia-Pacific region show positive developments. Investors note the excellent prospects for the hotel market and increase the volume of investments.
Despite the fact that the tourism sector is still affected by the pandemic, about 70% of investors surveyed are optimistic about the development of the hotel market. They are increasing the volume of investments, hoping to increase income in the coming years. According to the forecasts, this year the hotels will enter into deals worth $7 billion, which is 20% more than last year, when the total was signed contracts for $ 5.8 billion.
If we consider the general situation on the regional market, we can see an optimistic mood. The gap between buyers’ and sellers’ value expectations has narrowed, and pricing has become more flexible, which contributes to increased business activity. According to surveys, about 80% of investors expect a discount of 20-30%, but sellers are willing to reduce prices by no more than 10%.
The most promising markets in Asia-Pacific are Japan and Southeast Asia. There is a fast recovery of economies here, which contributes to an increase in demand for the hotel sector. Investors are focused on long-term planning and are gradually increasing volumes.
The increase in sentiment in the region is due to an increase in the volume of tourists. Vaccination has made travel more affordable and safer. However, about 25% note that they are still cautious about new projects and carefully monitor any changes in the market. They are in no hurry to increase their investments, preferring more stability in the market. There are also those who are trying to leave this segment in order to channel funds to other, more profitable areas.
For a long time, demand in the segment was concentrated in the largest cities in Japan and Australia, but recently there has been growing interest in other regions. In addition, investors are increasingly turning their attention to facilities for repurposing.
Experts say that in the next 12-18 months priority will be given to investments in existing hotels, as they require less money. The objects with added value are also of interest. However, over time, trends may change in the direction of new projects. This will depend on an increase in capital and investors’ willingness to trust the market again.