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SG Asia's hotel sector remains resilient

Property Here - Thursday, October 17, 2013

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Despite a growing pipeline supply and global economic uncertainties, hotel operations in Asia showed resilience during the first eight months of 2013, with increased activity on the part of buyers, CBRE Hotels said.

This is fuelled by the need for assets with genuine growth potential and the weight of capital in the region.

Bangkok, Taipei and Jakarta emerged as the top three cities with highest RevPAR or revenue per available room growth in USD terms. “However, the analysis of hotel performance in USD terms has to be treated with caution, given recent fluctuations of exchange rates,” the consultancy said.

On the other hand, Hong Kong and Singapore posted slight declines in RevPAR, after occupancy levels fell during the first eight months of this year. Notably, Singapore's RevPAR dipped 1.0 percent year-on-year to S$247.99 as at end-August, while Hong Kong's RevPar slipped two percent to HKD1,530 (S$245). But there is no reason for concern as both markets operate at above 80 percent occupancy. Both markets have also witnessed robust investor interest, with yields tightening from their already low levels.

Although Singapore's average daily rate (ADR) inched up by just 0.2 percent and Hong Kong's ADR dropped by 1.1 percent, hotels in these markets are performing way above the regional average. 

Meanwhile, the Asia-Pacific region is expecting a large pipeline of hotel rooms (approximately 401,000) to come on-stream in the next two to three years. Specifically, Hong Kong and Bangkok are expecting supply to rise by three percent between 2013 and 2015, while Singapore and Bali are predicting six percent growth per annum.

Given the strong fundamentals of the hospitality sector, investor sentiment remained upbeat while investment activity is likely to gather momentum in Q4 2014.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg