APAC hotel transactions surge 52 percent as investors favour existing assets

Asia Pacific’s hotel market recorded USD 17.0 billion in transactions in 2025, up 51.9 percent from USD 11.2 billion in 2024, as investors increasingly favoured acquiring existing hotel assets, according to the APAC Hotel Transactions and Market Outlook FY 2025 and H1 2026, from Global Asset Solutions.

The study found that new development was restricted due to expensive financing, high labour and construction costs, supply chain constraints and limited availability of development sites. As a result, investors were increasingly looking to acquire existing hotels that could be repositioned, refurbished or converted rather than taking on the cost, complexity and extended timelines associated with new construction.

While upscale and midscale and economy hotels accounted for the majority of transaction volume, luxury assets continued to demonstrate strong pricing power.

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Luxury transaction volume declined from 41.1 percent of the market in 2024 to 16.1 percent in 2025, but average luxury pricing increased 24 percent to approximately USD 585,000 per key.

Alex Sogno, CEO, Global Asset Solutions and one of the report’s authors, said: “Expensive financing, high labour and construction costs and constrained supply chains have fundamentally changed the economics of hotel development. When we look at transactions from an underwriting perspective, the cost and complexity of new build can make it very difficult to achieve the returns investors are targeting.

“In many markets, buying an existing hotel and improving or converting it makes considerably more sense than building a new one. The high proportion of midscale and upscale transactions reflects this reality. At current construction and financing costs, there are very few segments where the economics of a new build work, and luxury is increasingly the only part of the market where room rates can justify that investment.

“That is creating an interesting divergence. Luxury hotels have pricing power because supply is limited, but the broader hotel market remains under significant pressure.

“While luxury remains a desirable investment, operations are becoming ever-more complicated as guests become more sophisticated and demanding. Higher labour and operating costs, expensive capital and increasingly sophisticated guests mean that simply owning a prime hotel is no longer enough. Owners need to actively manage performance and continuously test whether the asset is delivering its full potential.”

Singapore remained the region’s most expensive hotel market, with average pricing of approximately USD 656,000 per key across all segments. Its upscale hotels traded at approximately USD 636,000 per key, while its single luxury transaction during the period, the 634-room JW Marriott Hotel Singapore South Beach, was sold for close to USD 701,000 per key.

Australia recorded the highest luxury pricing among the featured markets at approximately USD 673,000 per key, including transactions involving the Park Hyatt Melbourne and The Ritz-Carlton Perth.

Sogno said: “Luxury assets can generate exceptional returns, but their economics are less forgiving. High payroll, food and beverage, maintenance and capital expenditure costs can quickly erode the benefit of a strong ADR.

“This is where specialist asset management becomes critical. The objective is not simply to protect revenue, but to maximise the conversion of revenue into sustainable cash flow and ultimately asset value.”

The wider market also demonstrated why active ownership was becoming more important, with investors favouring acquisition over development, as new supply becomes harder to build in many gateway cities.

Japan provides the clearest example, recording 92 transactions in 2025, with 90 of its 122 transactions across the 18 months to June 2026 involving midscale and economy hotels. Luxury supply remains constrained, with new openings in Tokyo pushed back to next year.

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Across the region, Japan, South Korea, Singapore and parts of Australia were seeing increased scarcity, while Hong Kong offered the potential for conversion from other uses.

The market continued to be supported by international travel, with Japan welcoming 42.7 million international visitors in 2025, exceeding 40 million for the first time, while South Korea recorded a record 18.9 million visitors. Singapore reached record tourism receipts of SGD 32.8 billion (USD 25.8 billion), and Australia recorded AUD 39.2 billion (USD 27.9 billion) in international visitor expenditure.

Sogno said: “The next phase of the cycle will be less about benefiting from market growth and more about capturing the value within each individual asset.

“For luxury hotels, that means having the right commercial strategy, managing the operator effectively, challenging budgets and CapEx, protecting margins, optimising the brand proposition and ensuring the guest experience continues to justify the premium. Owners need someone who looks at the hotel not simply as an operating business, but as an investment whose value has to be actively created and protected.”

The need for specialist asset management has grown this year, as the Iran war, higher energy prices and renewed inflationary pressure saw interest rates rise. As debt becomes more expensive, investors have flexibility and will demand higher revenues to compensate.

Sogno concluded: “The opportunity for investors is to be found increasingly in the existing hotel stock. Owners and investors do not necessarily need to build to create value; they need to identify where an existing asset is underperforming and determine what can be done to unlock its potential.

“But the challenge is that achieving target IRRs increasingly requires a change in approach. If investors rely on very bullish assumptions around future operational performance to make the numbers work, they are effectively taking on more risk.

“Geopolitical uncertainty is a good example. Changes in travel patterns, flight capacity and the cost of air travel can have a direct impact on hotel demand. It is becoming harder to underwrite strong and sustained operational growth with the same degree of confidence as in previous cycles.”

Representatives from the Global Asset Solutions team will be attending the International Hospitality Investment Forum Asia, 16-18 Sept in Hong Kong and welcome the opportunity to meet and discuss current research, market insights and the evolving dynamics shaping the sector.