The View | For Asia’s hotel investors, a light at the end of the tunnel?

Name: Travel may resume slowly ‘in 3-6 months’ with pandemic limits, says Hong Kong tourism chief
Uploaded: 2021-03-16T01:15:14.000Z
Duration: 9 min 33 s
Description: Travel may resume slowly ‘in 3-6 months’ with pandemic limits, says Hong Kong tourism chief

The prospect of a faster reopening of the global economy, underpinned by the mass roll-out of vaccines, is a boon to the hotel industry

Buyers who acquire assets to rebrand and repurpose them while the recovery is still under way should be able to sell them at a premium later

Reading Time:3 minutes

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An empty swimming pool at a hotel in Patong, Phuket. Average occupancy rates in late January were below 30 per cent in popular resort markets such as Thailand. Photo: AFP

Nicholas Spiro

Published: 9:15am, 16 Mar 2021Updated: 9:15am, 16 Mar 2021

For a sign of how investor sentiment towards the pandemic-battered hotel industry has improved since the vaccine breakthrough in early November last year, look no further than the share price of an S&P 500 index of hotel-focused real estate investment trusts (Reits).

The gauge has surged 63 per cent since November 6, compared with a decline of 3 per cent for an index of industrial and logistics-focused Reits, which benefited hugely from lockdowns as the coronavirus pushed more consumers online, prompting a rush for warehouse space.

The prospect of a faster-than-anticipated reopening of the global economy, underpinned by the mass roll-out of vaccines, is a boon to the hotel industry which, having been among the sectors hardest hit by the pandemic, is expected to enjoy a brisk recovery.

Investors are eager to deploy capital in the sector. Private equity groups are expected to be the main source of liquidity following a dramatic fall in transaction volumes in 2020. According to data from JLL, investment activity plunged 63 per cent year on year as pandemic-induced restrictions decimated demand for leisure and business travel.

In Asia, 70 per cent of investors polled by JLL at the end of January were keen to increase their exposure to hotels this year, with Japan and Southeast Asia seen as the most attractive markets to acquire assets.

09:33

Travel may resume slowly ‘in 3-6 months’ with pandemic limits, says Hong Kong tourism chief

Indeed, there are already signs that investment activity is starting to pick up, particularly in the more transparent and liquid markets.

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.css-1m2rp1p{color:#34b8b5;}The View | For Asia’s hotel investors, a light at the end of the tunnel?

The View | For Asia’s hotel investors, a light at the end of the tunnel?