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Slight improvement in Asia Pacific hotel performance in Q3 2020

  • Lower cost of financing continues to mitigate risk premiums being demanded for the sector
  • Australia and China’s management of COVID-19 and size of domestic tourism market to result in opportunities for medium- to long-term investors
  • Investment demand in Maldives to remain healthy moving forward
  • Investment demand generally remains subdued as little evidence of distress and bid-ask gaps remain wide


HONG KONG, 26 NOVEMBER 2020 – Leading diversified professional services and investment management company Colliers International today released the Hotel Insights Q4 2020 report, a quarterly digest of key trends in the Asia Pacific hospitality sector.

Govinda Singh, Executive Director, Head of Hotels & Leisure, Asia, commented: “The global economic outlook is expected to remain subdued in the near term given the ongoing uncertainty and risks of new waves of COVID-19; however, the announcement of a vaccine that is expected to become widely available by the end of Q1 2021, combined with Track & Trace, could allow for some optimism and the return to at least a 70% travel economy starting mid-2021. We remain confident that the hospitality industry will rebound sharply when international travel (without quarantine) returns, given the industry’s legacy of resilience and agility.”

Travel slowly resuming in Australia

Buoyed by the reopening of state borders, Hobart was the clear stand out in October with bookings surging by 40 percentage points (pp) through the month. By the end of October, bookings for Hobart were at 65% of the 2019 level and is expected to continue to grow through November ahead of the peak tourism season in Tasmania. Melbourne, Sydney and Brisbane also showed pickups in bookings throughout October, as lockdowns were eased and travel between states looked more promising.

While challenges are expected moving into 2021, Australia’s management of COVID-19 and size of the domestic tourism market will result in opportunities for medium- to long-term investors with an availability of stock past a development phase. Ongoing government support for what was once the nation’s second-biggest export industry behind mining, bringing in more than $100 billion a year in spending, is also expected to set a strong foundation for recovery.

Maldives to remain attractive tourist destination and investment climate

With the gradual lifting of travel restrictions and the resumption of flights globally, Maldives reopened its borders in July with enhanced precautionary measures. At the end of October, 94% of its hotels and resorts reopened their doors. While COVID-19 may have clouded the short-term outlook for the tourism sector, the longer-term outlook for tourism in Maldives remains positive given its reputation as a sought-after tourist destination and in light of various key significant initiatives including diversification of source markets and profile of tourism arrivals; diversification of tourism offerings; and expansion of infrastructure. Investment demand is expected to remain healthy going forward as investors look further afield in search of higher yielding opportunities amidst the tightening of yields in core markets across the globe in the longer term.

Markets with large domestic investment bases leading investment activity

Investors are still on the lookout for high-value quality assets, with significant pricing adjustments making listed entities prime targets for M&A opportunities. The most liquid markets in Q3 were South Korea, China, and Taiwan, while markets such as Japan, Hong Kong SAR, Singapore and India saw little investment sales during the quarter. With international travel restrictions in place, markets with large domestic investment bases continue to have an advantage during times of challenged cross-border investment. In the coming months, investment activity is expected to gain pace as investors move to take advantage of any opportunities that will emerge.

Recovery of cruise industry dependent on lifting of quarantine restrictions

In Asia, nearly all major cruises have been suspended since March 2020 and have altered future bookings until COVID-19 has eased; however, Genting Cruises has proposed the implementation of special “cruise bubbles” within certain selected regions and the Singapore Tourism Board has launched “cruise to nowhere” sailings. Fears will nevertheless remain in the industry for quite some time and any recovery will likely be directly linked to the removal of quarantine restrictions in both source and destination markets, with a deep decline in 2020, followed by a U-shaped recovery by late 2021.

Click here to download the Hotel Insights Q4 2020 report.