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ASIA PACIFIC’S TOP HOTEL DESTINATIONS

Investors looking to explore Asia Pacific would do well to consider emerging hotel markets that offer growing investment opportunities.

May 2015

Asia Pacific might contain the world’s most populous countries, but it is also home to remote, luxurious destinations making it a firm contender for investors looking for opportunities to expand their portfolios.

According to property consultant JLL, the Asia Pacific hotel market is expected to bring a steady increase of 15% in transactions, lifting deal volume to USD 8.5 billion in 2015. According to its biannual 2015 edition of ‘Hotel Destinations Asia Pacific,’ growing investment opportunities can be found in emerging hotel destinations of: Indonesia, China, Thailand and Korea.

INDONESIA

Bali

Known as the “island of the Gods”, Bali lies near the heart of the Indonesian archipelago and attracts a steady number of tourists. According to JLL the island is peppered with luxury hotels and continues to grow.

“Although Indonesia can still be considered an emerging economy, many investors now consider Bali hotel real estate to be an established investment,” comments Adam Bury, Vice President, Investment Sales at JLL Hotels & Hospitality Group. “An apt comparison would be Phuket in Thailand, which also has a well-established brand, developed infrastructure and an impressive portfolio of properties from ultra-luxurious to more affordable options.”

According to the JLL report in 2014, international visitors arriving via the island’s Ngurah Rai airport rose to 3.73 million, an increase of 15% from the previous year. In addition, Indonesia’s tourism authorities have ambitious plans to grow the country’s international visitor numbers to 20 million by 2020.

“Bali is rightly seen as a very solid bet,” continues Bury. “Rules for investment are relatively transparent compared to other countries in the region and the Indonesian government is highly supportive of further growth.”

According to Dan Miller, Head of JLL’s Bali office, the Indonesian government has a good record of developing infrastructure.

“Bali is maturing as a destination and the hotel market is maturing also,” adds Miller. “Previously there was not a whole lot of trading, but now property owners are considering selling at reasonable market values. Ally this with the variety on offer and Bali’s dynamism as a destination and it is clear there is plenty of scope for further growth.”

Jakarta

Indonesia’s capital Jakarta is the main gateway to the country’s many tourism destinations. According to JLL last year the city experienced its highest ever number of visitor arrivals. “Although the capital of the world’s fourth most populous nation is seldom viewed as a centre for tourism and culture itself, efforts to improve the city’s reputation as a service and tourism city have been stepped-up,” says the report.

In recent years, says the JLL report, Jakarta has expanded its facilities for visitors by developing new multi-star luxury hotels, entertainment centres, fine restaurants as well as tourist attractions. Approximately 2,454 rooms were added to the city in 2014, most of which were in the economy and midscale sectors.

According to Scott Heatherington, Chief Executive Officer Hotels & Hospitality Group Asia Pacific, Indonesia’s emerging cities, growing middle class and development boom have resulted in the country’s increased need for mid-scale hotels. “Over the last 15 years, several Indonesian owned and operated hotel brands have emerged and witnessed tremendous growth and country-wide expansion in the mid-tier segment.”

The future is optimistic, says JLL, with the economic situation stabilising and investors relooking at one of Southeast Asia’s largest economies.

HONG KONG

For Heatherington China represents growing investment opportunities, especially Hong Kong. Despite the political unrest, total visitor arrival in 2014 increased 12% year-on-year to reach 60.8 million.

“The popularity with inbound visitors from the Mainland continues to drive Hong Kong’s hotel pipeline with recent government forecasts suggesting a necessary doubling of hotel room numbers in the coming decade,” says the report.

Approximately 2,553 rooms are expected to enter the market this year. At the end of 2014 Hong Kong had 230 hotels comprising 71,767 rooms with an average daily rate of USD 476. “1,750 new hotel rooms were opened throughout the year and consisted of a mix of international and independent operators,” says the report.

Hong Kong is an attractive leisure destination due to its numerous shopping and entertainment options. “As a leading financial centre, corporate travel is another major demand generator for Hong Kong due to the favourable business environment and close proximity to Mainland China,” according to the report.

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