If you want to know about how hotels in the Asia-Pacific region performed in May, STR's Jesper Palmqvist has the answer.
“I think if you just believe the data, May was better than April — the short answer,” he said on the Hotel News Now podcast.
The longer answer is that for the Asia-Pacific region, April sprung out from a top-line and bottom-line macro level in the largest region in the world, so it had its ups and downs for sure, Palmqvist said. May bounced back. For the overwhelming majority of the region, hoteliers can talk about it in terms of year-over-year comparisons instead of just historical benchmarks.
Hotel occupancy is a slow burn, gaining where it can, he said. The last 3%, 4% or 5% increases in a lot of those countries have already happened in the West. In Asia, occupancy is gaining slowly with more flights, groups and — like in Australia’s case — international business.
Vietnam is a bit of an exception in that its hotel performance is much stronger year to date than it was last year, he said. Rates are still what make the difference because markets such as India, Japan and Hong Kong are where the hotel rate growth hasn’t really slowed. Sydney and Singapore are following just behind them.
For the past few months, China is one of the few markets where hotel rates have declined, Palmqvist said. The growth will come at the back of the year for most countries that bring the whole value up with rate growth.
“We kind of feel that that's a first half of the year thing for most of those countries,” he said. “We expect [the third quarter] to start slow down in some of those markets, too.”
One market STR forecasts further rate growth to some degree is Tokyo, he said. There aren’t any exchange-rate shifts just yet, and airlift is still relatively affordable into Japan.
The countries with stable hotel performance, such as Australia and Singapore, through the rest of 2024 and into 2025 will see slowing growth and will find their base, Palmqvist said. There will be the risk of rising costs — for labor in particular — that will affect hotel earnings before interest, taxes, depreciation and amortization.
“But in those markets, it’s less likely to happen drastically,” he said.
There are markets that were slower to recover, including regions in India and China, that need to see stabilization in tier one cities but are under rate pressure currently, he said. There are markets, such as Japan, where there are domestic travelers who are to some degree being priced out by local currency, so they need to set back.
Palmqvist said the Japanese government has talked about 60 million arrivals as a long-term goal, but that milestone was a goal before the pandemic, so that shouldn’t cause anyone to “freak out” as arrivals climb from 30 million to 60 million. However, there’s still cause for concern.
“Japan has great infrastructure, but having 60 million arrivals and what that does to a country — that’s kind of a new ballgame,” he said.
Palmqvist said his team has been looking at what business is on the books in the key destinations around the Asia-Pacific region and comparing to last year’s pace. More and more markets are finding themselves in the middle.
“It’s similar to last year’s pace, and as long as it is that, we know that lead times are shorter, booking windows shorter overall in the region,” he said. “So, if you’re a little bit behind, you’ll catch some of it up.”
For the markets that are way ahead, such as certain Chinese markets and some of Jakarta, there will be some stabilization coming compared to what was on the books last year.