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Colliers International expects that there will be “changes and more emphasis on factors such as hygiene”, but the general public’s “inherent wanderlust, relatively cheap cost of travel and pent-up demand” will be the driving factor for the V-shaped recovery.
Colliers International expects Asia Pacific’s hotel sector to witness a V-shaped recovery, with much dependent upon the success of mass vaccinations in the US, Europe and to some extent China, which are the key source markets for most destinations within the region.
With COVID-19 measures in place, Asia Pacific saw occupancy and average daily rate (ADR) decline to 44.5% and US$65.88 (S$86.91), respectively, year to date December 2020. Revenue per available room (RevPAR) also dropped by around 51% year-on-year.
But with the global economy expected to improve by the second half of 2021, Govinda Singh, Executive Director, Head of Hotels and Leisure, Asia at Colliers International, sees travel rebounding in the next three years to at least pre-pandemic levels.
“We anticipate some caution in the near term as borders reopen and the mechanism to facilitate mass travel is formalised between governments; nevertheless, we are of the opinion that travel will return,” he said.
“There will be changes and more emphasis on factors such as hygiene, but our inherent wanderlust, relatively cheap cost of travel and pent-up demand will drive our prediction of a V-shaped recovery for the sector over the next three to four years.”
Melbourne, for instance, which is traditionally one of Australia’s stronger performing markets, is expected to benefit from domestic demand in the near term albeit new supply may dampen the hotel sector’s performance.
“However, the city has a history of absorbing supply quickly and interest from investors remain strong,” said Colliers.
Singapore is also forecasted to register a recovery amid government efforts to drive visitation for this year.
Colliers noted that the Singapore government has actively promoted various tourism initiatives aimed at driving visitation this year. These include business travel lane that allows diplomatic and corporate travellers to skip quarantine on arrival, as well as the “Air Travel Pass Program” which enables leisure tourists to apply for travel to the city-state without undergoing the 14-day quarantine period.
Moreover, the World Economic Forum recently revealed plans to host its annual meeting in August 2021 in Singapore, which would boost the city-state’s hospitality and Meeting, Incentives, Conferences and Exhibitions (MICE) sector.
Investment interest in Singapore hotels is also expected to remain on sound hotel fundamentals.
“Planned new attractions and infrastructure projects scheduled between 2021 and 2030 – including the expansion of the two integrated resorts and Great Southern Waterfront– bode well for future visitation and, combined with the relatively low level of new room supply anticipated over the near term, this should continue to underpin hotel fundamentals over the medium term,” said Colliers.
Hotel projects in Singapore that are expected to proceed include Banyan Tree Mandai, Pullman Singapore, Artyzen Cuscaden, Club Street and Mondrian Duxton Hill.
But while green lanes for business travel are slowly emerging, investors continue to be on the “lookout for high-value quality assets, with significant pricing adjustments making listed entities prime targets for M&A opportunities”.
South Korea, China, and Japan emerged as the most liquid markets in Q4 2020, while Singapore and Malaysia registered little investment.
“With international travel restrictions in place, markets with large domestic investment bases continue to have an advantage during times of challenged cross-border investment, as Tokyo and Seoul maintain their top positions.”
In the coming months, investment activity is expected to gain pace as investors move to take advantage of any opportunities, although stricter underwriting and cautious sentiment remain key considering the evolving COVID-19 situation as well as the economic volatility and uncertainty.
Meanwhile, recovery for the land-based casino industry, which emerged as one of the most hard-hit sector, is expected to be led by markets with high local visitation.
Macau and Cambodia is expected to lead the way, with Singapore, Vietnam and the Philippines lagging behind.
“Premium mass will drive the recovery in Macau, whilst the VIP segment will lead Cambodia’s,” said Colliers.
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