Activity this year has been strongest in Japan and Australia, which look set to “take back its rightful seats” as the most active markets before the pandemic, according to Li, albeit for different reasons.

“Deal activity in Japan continues to be supported by favorable interest rates and deep capital markets,” says Li. “Meanwhile, the high interest rates in Australia could pressure owners into selling their assets to release capital to reduce their leverage.”

In the first half of 2023, both markets outperformed the rest of Asia Pacific, with Japan and Australia/New Zealand recording $1.54 billion and $820 million in deals respectively, JLL data shows.

“Trading performance of the sector remains strong,” says Nihat Ercan, Chief Executive Officer, Asia Pacific, JLL Hotels & Hospitality Group. “Fundamentals including tourism arrivals and high occupancy rates give us full confidence that the current investment environment is externally based, rather than industry-specific.”

The main factors driving investors’ appetite are the strong demand for leisure travel and the recovery of business travel in the region, Li adds.

Hotel investors will be paying particularly close attention to tourism arrivals from China, which reopened its borders early this year. A forecast by UK consultancy Oxford Economics suggests Chinese outbound travel could reach up to 48% of 2019 levels by this year.

The impact of its reopening was evident in the recovery in revenue per available room (RevPAR) across Asia Pacific in the first five months of 2023, which now stands at only 6.8% below 2019 levels, according to JLL. Meanwhile, RevPAR in other regions has rebounded to pre-pandemic levels, led by the Middle East.