New JLL research suggests China’s economy is still
dragging on hotel performance, while the boom in India could offset some of the
near-term shortfalls.
INTERNATIONAL REPORT – North, South, and Southeast Asian hoteliers are forecasting
strong performance for 2024/2025, which is in contrast with the more cautious
Australasia region, according to the JLL Hotel Operators’ Sentiment Survey
2024/2025.
Here are the results of the annual survey based on 1,075
responses from hoteliers operating in the Asia Pacific region, including 225
from Australia, New Zealand, and the Pacific. The survey covered all sectors of
the hotel market, from luxury to budget, and city to resort.
Occupancy. Australasia and Greater China
anticipate a brighter year in 2025 than in 2024, yet they remain more cautious
than the other subregions. Fully, 35% of Australian respondents warned of
challenging conditions for the remainder of 2024, but sentiment regarding 2025
occupancies improved, with 68% predicting a better performance and only 12%
predicting lower occupancies in 2025.
ADR. In line with sentiment for occupancy, more
respondents from Australasia and Greater China expect a decrease year-over-year
in ADR in 2024 and 2025 than in other parts of the region.
Sentiment for more positive occupancy and ADR growth is
highest at the two extremes of the market, with 79% of hoteliers in the luxe
sector, and 82% of budget hoteliers, expressing positive sentiment about
occupancy in 2024/25. Upper Upscale, Upscale and Midscale hoteliers are less
optimistic about revenue, but Upscale hoteliers were the most bullish in terms
of ADR growth.
The motivation for implementing sustainability is more to meet brand standards than to respond to guest demands, and hoteliers highlighted lack of funding as the number one challenge in setting or achieving environmental goals is the lack of funding for sustainability initiatives.
JLL
Revenue, profit. Hotels in Japan, Thailand and
India are most optimistic about the prospect of growth in revenue and profit
results in 2024 and 2025, with slower growth anticipated in Australia and
Southeast Asia. Hoteliers in China are predicting a general declining trend in
2024/25.
F&B. Increased input costs and pressures on
company and household budgets have led hoteliers across the region to be more
circumspect about prospects for hotel F&B operations in 2024/25. 28% of
respondents were pessimistic about growth prospects for F&B revenue, while
48% believed F&B profit would increase.
Fully, 28% of Australian hoteliers forecast a potential
decline in F&B revenues, and 32% believed F&B profit could fall.
Chinese hoteliers were even more concerned about F&B revenues with 69% less
activity, whereas South Asia, the Maldives, and Southeast Asia were generally
more optimistic.
Human resources costs and retention remain major
issues for hoteliers across Asia Pacific as 87% anticipate higher wage costs
and identify that staff loss is primarily related to personnel being poached
from within and outside the industry because of salaries being offered.
The largest CapEx items for 2024/25 are for
technology and mechanical, electrical, and plant items, while sustainability is
identified as third on the CapEx list.
According to the survey, the motivation for implementing
sustainability is more to meet brand standards than to respond to guest
demands, and hoteliers highlighted lack of funding as the number one challenge
in setting or achieving environmental goals is the lack of funding for
sustainability initiatives.
“In Australia, the pace of new hotel openings has begun to
slow – except Brisbane, which is set to welcome some 1,000 new premium hotel
rooms at the Queen’s Wharf precinct – but the expected resurgence in hotel
demand is proving elusive, and that is reflected in the sentiment of Australian
hoteliers surveyed,” said. JLL Hotels & Hospitality Group Executive Vice
President Ross Beardsell.
He said the predictions are for a growing net deficit in
international travel to Australia, with outbound holiday travelers surging, but
inbound visitors still far from returning to 2019 levels.
The prospects for revenue and profitability growth in 2025 are high. India’s outbound market will be one to watch in the coming years.
Joseph Sim
“Inflationary pressure has begun to ease globally but
remains too high for Australia’s Reserve Bank,” Beardsell said. “However,
previous concerns that this would lead to a hike in rates appear unlikely,
especially given that the Reserve Bank of New Zealand lowered rates recently,
almost a year ahead of its own projections. Input prices remain high for
Australian and New Zealand hotels, and business and conference travel remain
subdued.”
Singapore-based JLL Hotels & Hospitality Senior
Associate Joseph Sim said that the negative sentiment reflected in replies from
Chinese hoteliers would have an impact on the entire region’s tourism and
hospitality industry. “The economic situation in China is causing a significant
reduction in travel, both within the country and externally, which is reflected
in the continued shortfall in Chinese outbound travel to countries such as
Australia,” he said.
Sim added that while some countries have witnessed growth in
international arrivals compared to 2019 levels, international demand is still
recovering in most destinations. “Yet, the prospects for revenue and
profitability growth in 2025 are high. India’s outbound market will be one to
watch in the coming years,” he said.
Sim also said the global situation remains very uncertain,
which has led Marriott, Wyndham, and Hilton to suggest consumers may be pulling
back on travel demand in the second half of 2024, and they have modestly
lowered their full-year outlooks. “IHG, on the other hand, remained cautiously
optimistic, with the exception of China travel," he added.