A string of marquee hotel sales across Asia Pacific are raising hopes of a rebound in investor appetite.

After macroeconomic challenges and rising debt costs battered deal activity in the first half of 2023, July saw a series of major deals, including Singapore’s largest-ever single-asset hotel sale.

Singapore property developer UOL Group sold the 542-room PARKROYAL Kitchener Road hotel to Midtown Properties, a unit of Worldwide Hotels Group, in a deal worth S$525 million ($388 million).

This was quickly followed a week later by the first hotel transaction in the Maldives this year — the sale of Amari Havodda Maldives by Crystal Plaza Resorts to Thai hospitality conglomerate Minor International and Abu Dhabi Fund for Development.

The pick-up in deals comes amid a strong operational performance for hotels globally in the first half of the year, according to JLL research. This was largely down to an increase in travel and an expectation around a more stable interest rate environment.

“Many investors are increasingly confident that the pent-up travel demand seen in the growth of trading can be sustained for the long term,” says Calvin Li, Head of Transaction Advisory, JLL Hotels & Hospitality Group. “With rate cycles close to stabilizing and inflation abating in most developed markets, investors who have been waiting on the sidelines are now becoming more risk-on and willing to take the plunge.”

“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.