Family offices lead APAC hotel investment surge
The hospitality sector in Asia Pacific is experiencing a significant resurgence, with family offices emerging as pivotal players in the investment landscape.
Recent research from global real estate consulting firm JLL highlights a substantial increase in hotel transactions, totalling $5.7 billion in the first half of 2024. This surge aligns with the heightened interest in the sector that several family offices have been discussing with AsianInvestor.
JLL
The financial flexibility of family offices allows them to outmaneuvre traditional investors, especially in the current environment of high debt costs, according to Marina Bracciani, vice president of hotels research for Asia Pacific at JLL.
"Owing to persistent high debt cost environment, we observe a shifting investment focus towards hotel assets in the region. Well-capitalised buyers such as sovereign wealth funds and family offices are increasingly entering the market," Bracciani told AsianInvestor.
JLL research projects a record $11.6 billion in hotel transactions for the full year 2024, representing a 2% year-on-year growth for the region and solidifying Asia Pacific's return to pre-pandemic transaction levels.
DIVERSE APPROACHES
Family offices are making strategic moves in the hospitality sector across various markets in Asia Pacific.
"In Singapore, family offices, less reliant on debt financing, have outbid private equity players to become the most active buyers," said Bracciani.
JLL’s research also reveals the growing interest in niche segments within the hospitality sector.
"Investment interest in boutique/lifestyle hotels and wellness retreats in Asia has been growing steadily in recent years. Investors aim to tap into the growing market demand for holistic wellness experiences and cater to the evolving preferences of travellers seeking wellness, relaxation, and rejuvenation," said Bracciani.
This trend moves in line with the long-term vision typical of family office investments, where intrinsic value and stable income sources for legacy planning and wealth preservation are prioritised.
MARKET DRIVERS
The data shows promising signs of recovery, with Revenue Per Available Room (RevPAR) in Asia Pacific reaching 89% of 2019 levels. However, Bracciani cautions that the recovery is uneven across the region.
"The recovery trend varies across subregions. Southeast Asian countries like Thailand, Malaysia, and Indonesia experience sustained momentum with increased tourist arrivals, supported by visa facilitation schemes,” she said. “In contrast, Mainland China witnessed stronger domestic demand, leading to the implementation of visa facilitations for select nationalities to boost inbound tourism."
Meanwhile, Japan continues to experience high demand owing to the weak yen, which attracts international tourists and encourages domestic travel due to higher costs of travelling abroad.
Looking ahead, several factors could influence future investment patterns in the hospitality sector.
"Global mega events such as the Singapore Formula 1 and MotoGP in Indonesia have a significant impact on these countries. These events attract a large number of international visitors, resulting in a boost in tourism, hotel occupancy rates, and overall revenue generation for the host countries, leading to increased positive sentiment from hotel investors," said Bracciani.
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She also underscored the importance of broader economic factors.
"It is important to consider the movements in interest rates as a major key factor shaping the economy. Changes in interest rates directly affect the cost of borrowing and lending, influencing consumer spending, business investments, and overall economic growth."
The electoral changes in Europe and the upcoming US elections in November could also have far-reaching consequences for the global markets and investor sentiments, including in Asia Pacific, said Bracciani.
“Hotel investors in Asia Pacific will closely monitor these events and make investment decisions based on the perceived impact of electoral changes on the global economy and financial markets," she said.
FAMILY OFFICE STRATEGIES
As the Asia Pacific hospitality sector continues its upward trajectory, family offices are playing an increasingly significant role in shaping its future.
Several family offices have recently been vocal about their investment strategies in the hospitality sector.
In April 2024, Samuel Wu, chief investment officer (CIO) and executive director of Tridel Capital, shared with AsianInvestor, "We favour the mainstream hospitality and tourism sectors in Asia, as more people are travelling."
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Similarly, Timothy Tsui, CIO of Arbutus, a Hong Kong-based single-family office, discussed their strategic shift towards hospitality investments in November 2023.
"Real estate is definitely still on the radar but traditionally we are a bit more into residential and commercial. Now we may be focusing more on hospitality," Tsui told AsianInvestor.
Tsui expressed particular interest in boutique hotels in France and Spain, expecting a boost from events such as the Paris Summer Olympics in 2024.
Iu-Jin Ong, co-founder and managing partner of single-family office Augventive Limited, also disclosed plans to explore opportunities in the hospitality sector within emerging markets across Asia, such as Cambodia.