Back in Hong Kong for the first time since 2019, The BHN Group led discussions about opportunities in Asia Pacific, including this plenary session with top leaders from the region.
HONG KONG - The BHN Group brought back hotel investment conferences to Hong
Kong for the first time since 2019, hosting HICAP Update on March 13-14 at The
Regent Hong Kong.
Among the high-profile sessions where panelists shared where
their optimism lies was “Views from the Boardroom, Round One,” moderated by
Matt Gebbie, director, Asia Pacific, for Horwath HTL.
With a promise of no talk about Taylor Swift and no self-promotion,
Gebbie first asked the panelist about their performance outlooks and development
focuses, starting with Jihong He, chief strategy officer, H World Group Limited,
Shanghai.

Family and friends are coming together, interested in investing and starting in limited-service hotels. High-speed rail going to every village helps, creating new potential demand.
Jihong He
Jihong said 2023 was a very strong recovery year in China,
where 9,000 hotels account for 80% of the company’s revenue. With the trend
still pointing up, the average RevPAR for 2023 beat 2019 by 20%, driven by ADR
gains because occupancy was not quite back to previous highs (81% in 2023 v 85%
in 2019).
Jihong add that there is increasingly strong demand from
lower tier cities in China. In fact, she said they were surprised by local
activity and demand in cities that previously never saw a chain hotel. “Locals
want to experience chain hotels,” she explained.
She also pointed to strong interest for development from
franchisees in third- and fourth-tier cities. “Family and friends are coming
together, interested in investing and starting in limited-service hotels” she
said. “High-speed rail going to every village helps, creating new potential
demand.”
Looking ahead, Jihong expects continued strong demand and rate
but warned about being careful with rate growth in limited-service hotels to
avoid curtailing demand. She also believes limited-service is still the biggest
growth opportunity and added that upper-upscale development is a coming trend.
Dillip Rajakarier, CEO, Minor Hotels and Group CEO, Minor
International, said he is waiting for more inbound traffic to Asia Pacific,
adding that China remains mostly a domestic market.
More generally, he said Asia is performing very strong this
year with continued softness in outbound Chinese travel. “Japanese, Saudis,
Indians and Europeans are making up for the shortfall of outbound Chinese
travelers,” he added.

You can get a non-recourse loan for 0.55% [in Japan]. Even if you get a property yielding 4.5%, you still have a spread of 4%, which is really decent.
Peng Sum Choe
Rajakarier is very bullish on Minor’s Europe business and
growth as constrained air travel is still leading to more regional and short haul
trips.
Within Asia Pacific, he said traffic remains more regional due
to the lack of outbound Chinese travel, adding that Saudis are traveling a lot
more in Asia Pacific.
Peng Sum Choe, CEO of the Pan Pacific Hotels Group said he
is excited by the development prospects in Japan and Jakarta – Japan because of
the dip in the value of the yen and remaining low interest rates. “Tourism is
strong and which country can you find interest rate so low?” he said. “You can
get a non-recourse loan for 0.55%. Even if you get a property yielding 4.5%,
you still have a spread of 4%, which is really decent. Conversely, a hotel in
Sydney is yielding 6.5% to 7% but preferential interest is at 5.5%.”
Peng Sum added that Jakarta is growing, and he sees occupancy
stabilizing. “It’s the best kept secret market and we want to get in there,” he
said.
Daniel Aylmer, managing director and senior vice president
of Greater China for IHG Hotels & Resorts, said China is performing very
well and he is not sure if it is a result of revenge spending. “The challenge
is Tier 1 cities are not back anywhere near where we want them to be,” he said.
“Long haul is not there yet as it’s quite costly for U.S. and European
travelers. Inbound travel, corporate and MICE to Tier 1 cities are key for RevPAR
growth.”
Domestically, China is showing tremendous demand, Aylmer
added. “We are confident and bullish in Greater China due to the economic
system that makes sense, population growth, the markets, the opportunities, and
under penetration of brands,” he said. “It is different than it was in 2018
with consumer, owners, markets – but there is so much opportunity there.”