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Fitch Upgrades Its APAC Outlook

Alan Woinski
June 27th, 2024 at 7:02 AM EDT

Skift Take

Fitch Ratings revised its 2024 outlook for APAC lodging to improving from neutral due to robust recovery in travel and RevPAR in 1Q24, anticipating strong rebound in China’s outbound tourism to support overall APAC hotel occupancy and growth.

STR reported China hotel data for the week ended June 22. Hotel RevPAR in China for the week was up 2.2% year over year, up against a +43.9% year over year comparable result in 2023. The Dragon Boat Festival Holiday timing may have boosted results as it was 12 days earlier than in 2023. Occupancy for the week in China was up 14.6% year over year.

Fitch Ratings revised its 2024 outlook for APAC lodging to improving from neutral, reflecting what they see is a robust recovery in travel volume and RevPAR in 1Q24 that exceeded the agency’s previous expectations. Fitch-rated issuers in the region include hotel operators and REITs based in Singapore, Japan, Maldives, Thailand and China. China has the most subdued economic outlook so Fitch is cautious that this may soften average daily rates within its domestic tourism sector. They expect a strong rebound in China’s outbound tourism, historically the cornerstone source market for the APAC region. Fitch expects 2024 outbound visitation from China to return to only 86% of the level prior to the pandemic but that should be enough to help APAC hotel occupancy rates to outpace any softness in rates, resulting in faster RevPAR growth compared with other global markets in 2H24. Thailand, Indonesia, Malaysia and Singapore’s visa-free travel for Chinese tourists should further fuel outbound trips from China in 2H24. Fitch is forecasting 2024 visitation volumes for the APAC region as a whole to reach roughly 92% of 2019 levels this year.

CBRE said the Asia Pacific hotel market continues to undergo structural change with hotel owners and operators fine-tuning operational and branding strategies. Increased labor and utilities costs, limited new supply, and the prolong peak of the interest rate cycle are the driving factors. Five hotel groups – Marriott, Accor, IHG, Hilton and Wyndham account for almost half the new hotels in the development pipeline. CBRE said that despite the prolong high interest rates globally, hotel investment in the Asia Pacific has been resilient, driven by continued interest in Japan and Australia, a record-breaking year for serviced residence sales in mainland China and a steady flow of deals in the Korean market.

The Pacific Asia Travel Association’s mid-year report predicts strong gains in APAC international visitor arrivals this year. The update will soon be released and continues to expect 2024 levels to exceed 2019 for the first time under the mild scenario and in 2025 by the medium one. The severe scenario predicts arrivals in 2024 will be -31% below 2019 levels. Considering we are halfway through the year, the severe scenario seems to be there just to keep hoteliers and tourism officials on their toes.

Western Australia’s visitor economy has broken another record with $17.9 billion spent in the State by travelers in the year ended March 2024. The new figures from Tourism Research Australia shows WA’s tourism recovery led to a spending increase of $200 million compared to YE December 2023, $4.4 billion or 32% ahead of the 2019 pre-pandemic figure. International visitor spending has passed the 2019 value for the first time, reaching $2.5 billion or 3% above 2019. Obviously spending from the Chinese is causing this, with China reclaiming their pre-pandemic position as the number one market for Western Australia when ranked by visitor spending. That reached $303 million by year end March 2024, up from $230 million in the year ended December 2023 and ahead of Singapore (second place) by $45 million. The volume of Chinese visitors to Western Australia is now just -10% behind 2019 figures, compared to -49% nationally.

Macau’s average hotel occupancy rate rose by 4.9 percentage points year on year to 83.6% in May. The number of guests rose by 8.4% to 1.196 million. That occupancy rate was 3.3% higher than the same period in 2019. A total of 143 hotels offered accommodation services in May, up 13 from a year ago while the number of rooms rose 9.3% to 47,000. 5-star hotels had an average occupancy rate of 85.3% in May, up by 6.4 percentage points year on year. 4-star hotels were at 79.7%, up by 2.6 percentage points but 3-star hotels saw a slight decline to 80.8%. In the first five months of the year, the average occupancy rate of hotels in Macau is 84.3% with the number of guests up 25% to 6.14 million.

Wyndham Hotels & Resorts announced the grand opening of Wyndham Sun Moon Lake in partnership with LeaLea Group. The hotel opening marks the first Wyndham hotel and internationally branded resort in Taiwan. The hotel is nestled on the shores of Sun Moon Lake, Taiwan’s largest natural lake. The property offers 203 rooms, accommodating both leisure and business travelers, featuring cozy family-friendly rooms and private hot springs baths in every room. Other amenities include a fitness center, spa, two restaurants, two bars and a family friendly café along with spacious banquet and meeting rooms. Wyndham Sun Moon Lake joins two other Wyndham Hotels & Resorts in the market – Ramada Encore by Wyndham Hualien and TRYP by Wyndham New Taipei Linkou.

ONYX Hospitality Group has unveiled Shama Hub, an extension of its service apartment brand, Shama. The new concept is described as transformational to the fundamental nature of accommodation, offering a lifestyle that celebrates creativity, flexibility and community engagement. ONYX announced two new properties – Shama Hub Qiantang in China and Shama Hub Metro South, Hong Kong. The Hong Kong property offers 26 floors and 139 rooms with seven room types ranging from studios to two bedroom units. Shama Hub Qiantang Hangzhou features a variety of room types that cater to short and long term residents, from studio kings, one bedroom suites, or studio flex twin room.

Personnel Move

The Ascott Limited, a unit of CapitaLand Investment, announced the addition of six roles across its business development, strategy and operations divisions, part of their strategic plan to surpass S$500 million in fee revenue by 2028. Ms. Venessa Koo was named VP of Business Development for Hong Kong, Taiwan, the Philippines and Vietnam. Mr. Teo Junrong was named VP of Business Development for Singapore, Malaysia and Indonesia while Mr. Thomas Lamson was named VP of Business Development and Product & Technical Services for Europe, the Middle East and Africa. Current Managing Director for China, Joseph Wong, will also lead business development efforts while managing all operations facets within the market. Additionally, Steven Chan was appointed VP of Global Franchise Services and Regional GM for Indochina and Ms. Sophie Mogul was named VP of Strategy and Regional GM for the Philippines and Malaysia.

Alan Woinski
June 27th, 2024 at 7:02 AM EDT

Companies: Fitch Ratings, Accor, CapitaLand Investment, Hilton Hotels & Resorts, IHG Hotels & Resorts, Marriott International, ONYX Hospitality Group, Ramada Encore, Shama, The Ascott Limited, Tryp, Wyndham, Wyndham Hotels & Resorts

Locations: Australia, China, Hangzhou, Hong Kong, Japan, Macau, Maldives, Singapore, South Korea, Taiwan, Thailand

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