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Hotels & Leisure | Asia – Q1 2023

Two years (or more in some cases), of lockdown combined with a personal savings bonanza and pent-up wanderlust led to a sharp rebound in travel throughout the World. Leisure demand, usually the last to recover from downturns led the recovery across markets that were open to both international and domestic travel. This was tempered only by a conscious effort by operations to manage airlift and occupancy levels given a tight labour market. Even high inflation could not put a dampener on performance with average daily rate (ADR) outstripping inflationary increases in payroll, cost of sales and utilities. Combined with lessons learned in operational efficiency during the pandemic, hoteliers have a lot to enjoy as the recovery takes hold.

According to STR, hotels across Asia Pacific witnessed a RevPAR increase of 23.1% (in USD) compared to 2021, but this remained 31.1% behind 2019 levels. A lag in room occupancy levels, combined with China remaining mostly closed in 2022 contributed to this drag. ADR, despite the stellar increases remained 10.6% short of 2019 levels suggesting there is still room for improvement as we enter 2023.

According to the International Air Transport Association (IATA), 2019 levels are forecast to recover in 2024, with Asia Pacific the only region expected to lag in its recovery, with this expected not before 2025. However, risks are skewed to the downside as continued high prices and economic uncertainty takes hold.

Our view is that 2023 will continue to witness a recovery in travel, with hotel demand across the region continuing abound. Any slowdown in demand from the West at the start of the year, will be mitigated by a return of China travel in the second half of the year. In markets which are already opened with balanced supply demand, we expect RevPAR to grow by circa 6.0% y-o-y, underpinned by an improvement in room occupancy. For markets where there is a supply demand imbalance, we expect this to be lower at around 4% y-o-y, mostly driven by an improvement in room occupancy.

We expect Singapore, Bangkok, Bali and Ho Chi Minh City to lead the recovery across Asia. Mainland China and its SARs are expected to turn around a relatively dismal 2022, leading the recovery across North Asia towards the second half of the year.

– Govinda Singh, Executive Director, Asia, Hotels & Leisure

Read more here.

Categories: Insights / Report

by Faith.Lim

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Hotels & Leisure | Asia – Q1 2023

Two years (or more in some cases), of lockdown combined with a personal savings bonanza and pent-up wanderlust led to a sharp rebound in travel throughout the World. Leisure demand, usually the last to recover from downturns led the recovery across markets that were open to both international and domestic travel. This was tempered only by a conscious effort by operations to manage airlift and occupancy levels given a tight labour market. Even high inflation could not put a dampener on performance with average daily rate (ADR) outstripping inflationary increases in payroll, cost of sales and utilities. Combined with lessons learned in operational efficiency during the pandemic, hoteliers have a lot to enjoy as the recovery takes hold.

According to STR, hotels across Asia Pacific witnessed a RevPAR increase of 23.1% (in USD) compared to 2021, but this remained 31.1% behind 2019 levels. A lag in room occupancy levels, combined with China remaining mostly closed in 2022 contributed to this drag. ADR, despite the stellar increases remained 10.6% short of 2019 levels suggesting there is still room for improvement as we enter 2023.

According to the International Air Transport Association (IATA), 2019 levels are forecast to recover in 2024, with Asia Pacific the only region expected to lag in its recovery, with this expected not before 2025. However, risks are skewed to the downside as continued high prices and economic uncertainty takes hold.

Our view is that 2023 will continue to witness a recovery in travel, with hotel demand across the region continuing abound. Any slowdown in demand from the West at the start of the year, will be mitigated by a return of China travel in the second half of the year. In markets which are already opened with balanced supply demand, we expect RevPAR to grow by circa 6.0% y-o-y, underpinned by an improvement in room occupancy. For markets where there is a supply demand imbalance, we expect this to be lower at around 4% y-o-y, mostly driven by an improvement in room occupancy.

We expect Singapore, Bangkok, Bali and Ho Chi Minh City to lead the recovery across Asia. Mainland China and its SARs are expected to turn around a relatively dismal 2022, leading the recovery across North Asia towards the second half of the year.

– Govinda Singh, Executive Director, Asia, Hotels & Leisure

Read more here.