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November 21, 2019

(Photo by Wang HE/Getty Images)

The Asia-Pacific region is forecast to account for 30 percent of international visitor arrivals globally by 2030, up from just 8 percent in 2011, and it is set to change the landscape of hospitality across the world.

While the estimate is based on the United Nations World Travel Organisation (UNWTO) 2011 forecast, in the first six months of 2019, international tourism exceeded these expectations by 4 percent. And, with Asia Pacific outpacing even this global growth – up 6 percent year-on-year – the region is expected to gain a slice of an even bigger pie.

China leads the way. Its residents made 150 million outbound tourism trips in 2018, with that number expected to rise to 166 million in 2019. South Koreans accounted for the second highest number of outbound trips by APAC residents, with 29 million. India (26 million), Japan (19 million) and Taiwan (16 million) followed.

The focus is not simply on tourism hotspots though. The emphasis instead is on places that can deliver more personalised and experience-based travel, says Giuliano Esposito, Senior Vice President, Strategic Advisory & Asset Management for JLL Hotels & Hospitality Group. “Tourists increasingly rely on online sources as well as bespoke travel agencies that can offer travel curated to their individual interests. So tourists no longer concentrate solely on visiting a particular country, but on the experience they want to receive.”

A robust scenic, shopping, and food and beverage offering are important considerations in the vacation decision-making process, as is the “instagramability” of a location. While immersing and experiencing the local culture continues to be a priority for a growing number of travellers.

“Consumers are savvier and more discerning,” says Esposito. “In response, lodging establishments are becoming much more than accommodation offerings. Infusing aspects such as wellness, together with creative food and beverage and entertainment options, are key to attracting and retaining demand.”

Recent M&A activity in the sector is a clear indication of the changes taking place. LVMH acquired boutique luxury operator Belmond while Accor acquired a 50 percent stake in sbe Entertainment Group and IHG’s acquired Six Senses Hotels Resorts Spas. Hyatt has undertaken a slew of acquisitions, including but not limited to that of Two Roads Hospitality, wellness resorts/operations (Miraval/Exhale) and also continues to expand its existing loyalty alliance with Small Luxury Hotels of the World.

Destination hotspots
Much of the tourism flow remains intraregional, with APAC residents making 455 million visits within the region in 2018. The Pacific Asia Travel Association (PATA) expects 615 million such visits by 2023.

The countries of North Asia are particularly popular destinations among APAC travellers, along with Vietnam and Thailand.

Chinese tourists – who account for a significant proportion of overall visitor flows – favour Thailand (in particular Bangkok and the beach resorts of Phuket and Pattaya), followed by Japan, Vietnam and South Korea. South Koreans prefer Japan, China and Vietnam, albeit the current spat between Japan and South Korea may impact South Korean visitor arrivals to Japan temporarily.

“Most APAC travellers originate from North Asia, so proximity, accessibility and allure are big drivers in destination choices,” says Esposito. “Countries such as Thailand and Vietnam have also become increasingly popular due to more flight options, an increase in developments, and the unique experience and cultures they offer.”

There is a notable flight to safety taking place in the current geopolitical landscape, with more mature and safer markets such as Singapore and Australia standing to benefit, says Esposito.

Japan is another, he adds. “Japan has robust tourism and hotel trading fundamentals, with demand boosted by global events such as the 2019 Rugby World Cup, 2020 Tokyo Olympics and 2025 Expo. Japan has yet to really open up to the world and it offers a wealth of diverse attractions, including rich historical, cultural and gastronomic offerings.”

Japan’s wellness sector is relatively untapped too, with the country home to over 60 percent of the world’s thermal/mineral springs establishments, according to the Global Wellness Institute.

“For investors seeking yield, the Maldives is very rewarding if the appropriate combination of island, lagoon and operating partner are in place,” notes Esposito. “Thailand is another attractive investment market for hotels, given its market depth and strong tourism fundamentals.”

Demand to South Korea is also on the rise, primarily driven by recovering Chinese visitation, which fell significantly in 2017, as a result of political tensions between the two countries.

“South Korea is also benefitting from substantial marketing efforts in other markets, which are now yielding results,” says Esposito.

And, for a longer term and opportunistic play, “emerging destinations such as Sri Lanka may provide opportunities.”

Click to read why investors are making a splash for Aussie islands.

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Giuliano Esposito

Senior Vice President, Strategic Advisory & Asset Management for JLL Hotels & Hospitality Group.

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