Exclusive: Caution ahead – APAC hoteliers split on future prospects
Op-Ed: Ross Beardsell unpacks JLL’s Hotel Operators’ Sentiment Survey 2024/2025 for hoteliers facing budget challenges
The newly released JLL Hotel Operators’ Sentiment Survey 2024/2025 is forecasting mixed fortunes for the hotel sector across the Asia Pacific in the year ahead. JLL’s Ross Beardsell casts his eyes over the contrasting viewpoints.
Our annual JLL Hotel Operators’ Sentiment Survey 2024/2025 is the most comprehensive of its kind, based on 1075 responses from hoteliers across the Asia Pacific region, including 225 from Australia, New Zealand and the Pacific. The survey covered all sectors of the hotel market, from luxury to budget, and city to resort.
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Overall, North, South, and Southeast Asian hoteliers are forecasting strong performance for 2024 and 2025. In contrast, the Australasia region is more cautious in its optimism.
The Survey’s main conclusions are:
Occupancy – Australasia and Greater China anticipate a brighter year in 2025 than in 2024, yet they remain more cautious than the other subregions. 35 percent of Australian respondents warned of challenging conditions for the remainder of 2024, but sentiment regarding 2025 occupancies improved, with 68 percent predicting a better performance and only 12 percent predicting lower occupancies in 2025.
ADR – In line with sentiment in Occupancy, more respondents from Australasia and Greater China expect a decrease Y-o-Y in ADR in 2024 and 2025 than in other parts of the region.
Sentiment for more positive occupancy and ADR growth is highest at the two extremes of the market, with 79 percent of hoteliers in the luxe sector, and 82 percent of budget hoteliers, expressing positive sentiment about occupancy in 2024/25. Upper Upscale, Upscale and Midscale hoteliers are less optimistic about revenue, but Upscale hoteliers were the most bullish in terms of ADR growth.
Total Revenue & Profit – Hotels in Japan, Thailand, and India are most optimistic about the prospect of growth in revenue and profit results in 2024 and 2025, with slower growth anticipated in Australia and Southeast Asia. Hoteliers in China are predicting a general declining trend in 2024/25.
F&B – Increased input costs and pressures on company and household budgets have led hoteliers across the region to be more circumspect about prospects for hotel F&B operations in 2024/25. 28 percent of respondents were pessimistic about growth prospects for F&B revenue, while 48 percent believed F&B profit would increase.
28 percent of Australian hoteliers forecast a potential decline in F&B revenues, and 32 percent believed F&B profit could fall. Chinese hoteliers were even more concerned about F&B revenues, with 69 percent less activity, whereas South Asia, the Maldives, and Southeast Asia were generally more optimistic.
Human resources costs and retention remain major issues for hoteliers across Asia Pacific. 87 percent of hotels anticipate higher wage costs and identify that staff loss is primarily related to personnel being poached from within and outside the industry because of salaries being offered.
The largest Capex items for 2024/25 are for technology and mechanical, electrical, and plant items, while sustainability is identified as third on the Capex list.
According to the survey, the motivation for implementing sustainability is more to meet brand standards than to respond to guest demands, and hoteliers highlighted lack of funding as the number one challenge in setting or achieving environmental goals is the lack of funding for sustainability initiatives.
I think the survey provides a really comprehensive insight into how hoteliers are viewing the year ahead, which can be useful for hoteliers planning their budgeting in this era of economic and political uncertainty.
In Australia, the pace of new hotel openings has begun to slow – except Brisbane, which is set to welcome some 1000 new premium hotel rooms at the Queen’s Wharf precinct – but the expected resurgence in hotel demand is proving elusive, and that is reflected in the sentiment of Australian hoteliers surveyed.
The latest ABS arrivals and departures figures confirm a growing net deficit in international travel to Australia, with outbound holiday travellers surging, but inbound visitor numbers are still far from returning to 2019 levels. On the other hand, international airfares are moderating and capacity growing which should stimulate inbound tourism over the next year.
Inflationary pressure has begun to ease globally but remains too high for Australia’s Reserve Bank. However, previous concerns that this would lead to a hike in rates appear unlikely, especially given that the Reserve Bank of New Zealand lowered rates recently, almost a year ahead of its own projections. While this is encouraging news against a backdrop of cost-of-living pressures, input prices remain high for Australian and New Zealand hotels, and business and conference travel demand remain subdued.
The views of Asian hoteliers are sharply divided between negative sentiment from China and more positive views from the rest of the continent, according to my JLL Hotels & Hospitality Singapore colleague, Joseph Sim.
“The economic situation in China is causing a significant reduction in travel, both within the country and externally, which is reflected in the continued shortfall in Chinese outbound travel to countries such as Australia,” said Mr Sim.
“Whilst some countries have witnessed growth in international arrivals compared to 2019 levels, international demand is still recovering in most destinations. Yet, the prospects for revenue and profitability growth in 2025 are high. India’s outbound market will be one to watch in the coming years.
“The global situation remains very uncertain, which has led Marriott, Wyndham, and Hilton to suggest consumers may be pulling back on travel demand in the second half of 2024, and they have modestly lowered their full-year outlooks. IHG, on the other hand, remained cautiously optimistic, with the exception of China travel.”
Ross Beardsell has over three decades of experience in the hotel industry in senior management roles in operations and development. Working initially with Southern Pacific Hotels, then IHG and the Carlson Group, Ross worked in GM positions across the Asia Pacific. In 2008, he joined JLL’s Hotels & Hospitality Group, providing asset management services on behalf of hotel owners to maximise profitability and to provide strategic guidance. He has provided hotel advisory services to the owners of luxury, upscale, mid-market, new hotels, limited-service accommodation, resorts, convention hotels, and pubs – both nationally and internationally.
