Rising interest rates dampen Asia-Pacific hotel investments by 50 per cent in first half: JLL

Hotel investments in Asia-Pacific fell by half to US$3.13 billion in the first six months of the year despite a pickup in the travel industry, according to a JLL report

Investments in Singapore’s hotel industry slumped by 95 per cent to US$30 million, while in China it declined by 76 per cent to US$300 million

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The Marina Bay Sands hotel and casino in Singapore. Rising rates in the city state hit deal-making in the hotel industry. Photo: Bloomberg

Published: 6:47pm, 17 Jul 2023Updated: 6:48pm, 17 Jul 2023

Hotel investments in Asia-Pacific fell by half to US$3.13 billion in the first six months of the year from a year earlier despite a pickup in the travel industry, as rising interest rates put investors on the back foot, according to a JLL report on Monday.

The hotel industry is in a much better position compared with last year. In the January to May period, hotel occupancy in Asia-Pacific rose to 63.4 per cent, up from 46.5 per cent in the same period of 2022, according to STR, a hotel industry data provider.

Revenue per available room, a key performance industry metric, improved to US$64.66 in the first five months of the year, from US$38.06 a year earlier.

“We have observed the impact of a continued disconnect between the robust tourism demand and macroeconomic and geopolitical challenges in the first half of 2023, resulting in a gap between sellers’ pricing expectations and buyers’ access to capital,” said Nihat Ercan, CEO for Asia-Pacific at JLL hotels and hospitality group.

Tourists visit the Trevi Fountain in central Rome, Italy. Photo: EPA-EFE

“However, [the] performance of the sector remains strong and other fundamentals including tourism arrivals and high occupancy rates provide us with full confidence that the current investment environment is external,” he said.