Earlier this week I had the opportunity to attend #SEAHIS2024 to re-connect and network with partners, colleagues, and many industry experts.
Here are some key observations from the conference.
➢APAC RevPAR Forecast for 2024 still has decent growth (6-8%), high double-digit growth only for Japan particularly Tokyo , but in 2025 we expect much lower numbers with the rate growth almost goes away (2-5%).
➢Investors increasingly prefer Hotels over Offices based on the hotel sales volume as percentage of the office sales.
➢In SEA, only Singapore could be able to significantly move the ADR high to an increasingly pricy destination.
➢Upscale, Upper Upscale and Luxury are three main segments (70%) in active pipelines.
➢SEA pipeline is 25% resort. 2/3 pipeline outside China is Urban. 26% of active pipeline is not yet operator selected.
➢2024 Jan-Apr GOP margins were ahead of 2023 with Maldives was the highest followed by Thailand, Singapore, Vietnam, and Japan. China was highest in terms of Y-o-Y margin percentage growth.
➢For Q1 2024 APAC Room profit margins stabilized at 76%, which labour, other expense, Commission costs were at 10.3%, 8.7%, and 5% of room revenues respectively.
➢High Pressure from F&B expenses, especially rising food costs for Australia, Hong Kong, and Japan resulted in F&B profitability below 25% for Jan-Apr 24.
➢The highest S&M spend per occupied room ( Y-o-Y) mainly from Loyalty program and Others ( SEO, Media, Ad, Tradeshows etc.) resulting in Y-o-Y increase between 12-15%, while Indonesia hotels are the highest average at 26%.
➢Office conversion to hotel asset class is rare in APAC but very well utilized approach in north America especially in big cities likes New York or LA, the conversion costs would be quite expensive and only suitable to urban cities with less land availability in prime location.
➢The branded residence sector is set for further expansion, driven by their fit into mixed use developments, their complementary nature to hotels and resorts, and the ability to boost returns of residential and multi-use schemes. Thailand is leading in total existing hotel-branded residential supply in APAC (23%) followed by China and Indonesia while Vietnam comes first for leading future supply (46%).
Special thanks to Simon Allison and HOFTEL Summit Series team for organizing 7th Edition of the South East Asia Hotel Investors' Summit (SEAHIS).
Great seeing the positive energy and the aspirational opportunity for growth from several owners, operators and investors in the room.