Launched in 2023, JLL’s Hotel Operators’ Sentiment Survey (HOSS) analyses sentiment from hotel General Managers on the year ahead to get a view ‘on the ground’ from an operations perspective. With uncertainties still lying ahead in the immediate/near term, collecting feedback from hotel operators themselves strengthens JLL’s understanding of the market, complementing our understanding of the dynamics from an investor perspective.

The 2024/2025 edition of HOSS is based on a total of 1,075 responses from hotels in Asia Pacific, across 20 countries. The survey was conducted in Q3 2024 and respondents were characterised as follows:

Air capacity in the region continues to improve gradually, with international seat capacity increasing in tandem with demand yet still below 2019. However, domestic routes have met demand since the onset of the pandemic, bolstered by robust staycation business during lockdown periods.

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

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.

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.

• Evaluate success on performance with outlet and meal period analysis in each outlet. For instance, is the outlet’s revenue growth driven by higher breakfast contribution (due to stronger occupancy yet typically of lower profitability) or does it encompass all meal periods?

• Is the outlet optimising the space and seat utilisation?

• Seats turnover by specific time period for lunch/dinner to consider staffing.

• Consider different micro-concepts for different meal periods to explore improving space utilisation

• Alternative usage – e.g. events, private dining space

• Review current operations and evaluate the tactical promotions that are ROI-driven and profitable. Explore alternative operating models – collaboration/partnership/F&B operator & brand.

• With inflationary pressure on the cost of goods and cost of living, menu optimisation while ensuring a value proposition, is essential to drive guest spending. Hotels should adopt a more commercial approach to formulating F&B strategies.

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.

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.