Hotel Operators’ Sentiment Survey 2024-2025

As airlift continuously improves in the region throughout 2024, international tourist arrivals in Asia Pacific remained 15% below pre-pandemic levels as of YTD Sep 2024 based on the latest available data from UN Tourism. Tourism in Asia Pacific has however been evolving at different paces since the lifting of travel restrictions, closely linked to air connectivity and macroeconomic and geopolitical situations. In particular, North Asia lags behind other subregions due to Mainland China's current economic challenges. South Asia on the other hand shows stronger recovery, with arrivals only 6% below 2019 levels, followed by Southeast Asia, with tourist numbers 13% short of pre-pandemic figures.

Hotels in Asia Pacific continued to improve their top-line performance since the second half of 2023. The recovery of air routes supported rising occupancy rates, contributing to robust RevPAR increases and record-breaking Average Daily Rates (ADR). However, regional disparities are emerging, with some markets experiencing strong performance while others are seeing a taping of growth, and some are plateauing.

Trading performance trends in APAC as of YTD October 2024

HOSS 2024/2025 results reveal a divergence in recovery and growth prospects in Asia for 2024 and 2025. The region is divided into two primary categories: the ‘Outperforming markets’ (South Asia + Maldives, Southeast Asia, and North Asia), and the ‘Slow-growing markets’ (Australasia and Greater China). Notably, Greater China lags behind, forecasting a general decline in 2024 from its 2023 performance and a softer growth in 2025 than any other subregion.

Sentiment in general is more positive for 2025 as a majority of respondents expect results to be increasing slightly Y-o-Y. Outperforming markets should remain leaders in 2025 with an anticipated continuation of momentum, while others are anticipating limited - yet certain growth - in both revenue and GOP.

Amid post-pandemic recovery and current economic conditions, the hotel industry continues to tackle ongoing challenges:

1. Labour & Talent: Scarcity of talent persisting in Asia Pacific, with some nuances by subregion

2. Food & Beverage (excluding MICE): Light at the end of the tunnel with stable margin?

3. MICE & Weddings on standby

4. Implementing technology: A top priority in all aspect of hotel operations

5. Sustainability on the forefront
    

Labour dislocation in the hospitality industry through the pandemic has persisted in the first half 2024 in major markets in Asia Pacific. Relative to pre-pandemic time, respondents expect less headcount in 2025 and staff cost to be significantly higher, however in line with cumulative inflation since 2019. For most of the hoteliers, staff loss is mainly due to higher salary, whether it is within or outside the hospitality industry, a similar challenge found in Asia Pacific regardless of the industry and level of seniority. As labour has become even more salary and benefits sensitive given the ongoing macroeconomic uncertainties, hotels in Asia Pacific are finding it difficult to recruit for guest-facing roles (front office), and F&B related (F&B service and kitchen). Housekeeping is also another department where hotels, particularly in Australasia, Greater China and Southeast Asia, are struggling to recruit for.

• Identify operational efficiencies in every department to continue the efforts made during the pandemic to maintain earlier efficiencies and find new ones, amidst labour pool shortage and rising costs. Benchmark against new industry averages to prioritise hiring efforts and look into the correlation to guest satisfaction to focus on increasing guest engagement where it matters most.

• Reinvest in existing staff for training and upskilling to develop a multi-skilled workforce, especially with the young workforce more transient with less experience.

• Review compensations, benefits and career planning for all to retain talent in the industry with creative incentive deployments.

• Embrace and leverage technology as a way to supplement the existing manning level. Ensure that the customer journey is further enhanced through technology/AI especially for areas that can be automated.

In Asia Pacific, Food & Beverage (F&B) results are anticipated to be lower than pre-pandemic times for most of the hotel respondents, despite the region now considered on par with Europe when it comes to dining offering and experience, according to the Future of Food report from the Luxury Group. Hotel sentiment on F&B results differs by subregion, with Greater China expecting significantly lesser activity than in 2019. South Asia + Maldives and Southeast Asia are generally more optimistic. 2025 is anticipated to record higher F&B Revenue and Profit Y-o-Y across all subregions, with Greater China remaining cautious. More hotels generally expect a Y-o-Y stabilisation from 2024, with margin anticipated to remain the same between 2024 and 2025.

The MICE (Meetings, Incentives, Conferences, and Exhibitions) sector is set for a robust comeback, driven by a growing demand for creative and engaging experiences. As companies increasingly value in-person interactions, the industry is projected to experience substantial recovery and growth globally. The latest Skift report, "The State of Travel 2024", predicts strong global expansion for the MICE sector, with an estimated Compound Annual Growth Rate (CAGR) of 9% in market size (USD) from 2024 to 2032. Skift identifies key trends influencing Meetings and Incentive Travel in 2024, including remote work arrangements, AI adoption, environmental consciousness, political factors affecting events, and budget constraints. Looking closely at the survey’s results, challenges should persist on average in the region for the remainder of 2024, and well into 2025, although Asia Pacific hotels are generally more optimistic in the year ahead.

Majority of hotels in outperforming markets expect more activity in weddings, conferences and meetings than pre-pandemic times, whilst exhibitions are anticipated to remain the same as in 2019 for almost half of the hotels. Sentiment in slow growing markets is however more cautious, with one out of three hotels anticipating less activity in wedding, conference, exhibition, and meeting. However, conferences and meetings are expected to pick up throughout 2025.

Hotels in Asia Pacific are displaying strong interest in technology investments for the year ahead as technology supports enhancements in hotel operations: improve efficiency in manpower, reduce energy and water consumption, as well as lessen waste. Ultimately, adopting technology seems to benefit the bottom line while operating hotels in a more efficient manner.

It is unsurprising that technology upgrades and Mechanical, Electrical and Plant (MEP) improvements remain the key priorities in CAPEX since the 2023/2024 HOSS analysis, but expenditure related to brand standards now surpasses sustainability enhancement to take the third position.

• Asset preservation has become increasingly vital for older properties nearing or at the end of their asset’s physical lifecycle. Planning the optimal Capital Expenditure (CAPEX) spend for the next three to five years will assist in achieving the long-term objectives of the asset.

• The perspective of the end-user is crucial, such as the ease of using the technology, its suitability for guest comfort, and its compatibility with mobile devices. Understanding the different requirements of the new generation travellers compared to traditional travellers.

• Maximise the usage of data from the F&B booking/POS system along with newer, targeted F&B Revenue management platforms for a more targeted marketing campaign and data-driven decision making on cost/pricing. Consideration for AI-powered technology in both front-facing and back-end operations to improve processes and guest satisfaction.

• Meeting sustainability and energy efficiency standards has become a non-negotiable aspect for participating in RFP programmes. Investing in mechanical, electrical, and plumbing systems not only ensures compliance with regulations and the USALI 12^th edition, but also enables cost savings.

Additionally, about a quarter of respondents are externally rated and intend to do so in 2025, emphasising the significance of brand requirements, institutional pressure and financial backing similar to in Australasia and Southeast Asia. In Asia Pacific, sustainability reporting and data collection at the hotel level are the two priorities for 2025 regarding sustainability initiatives.

• Focus on transition to new USALI standards to capture Energy Waste and Water data and use data for baselining.

• More corporate businesses considering sustainability/ESG accreditation for RFP and as such hotels need to work towards meeting these new criteria.

• ESG Legislations and stock exchange regulation in more advanced countries are expected to drive ESG data and climate risk transparency

• Growing role of international operators in driving ESG requirements as brand standards.

• Increasing scrutiny by buyers, lenders and investors in hotels of ESG standards should encourage owners to be on the front foot in their ESG credentials