JLL: Asian investors of hotel properties continue shopping

PETALING JAYA (Feb 16): Asian investors of hotel properties will continue to feature in 2017, with groups from Singapore at the fore, according to global real estate firm JLL.

“Hong Kong-based buyers with capital connected to mainland China stand to be active as well,” said JLL Hotels and Hospitality Group, Asia Pacific head of research, Frank Sorgiovanni.

In its latest “Hotel Investment Outlook 2017”, JLL noted that hotel investment volumes in Asia Pacific are projected to remain in the US$8 billion (RM35.66 billion) to US$9 billion range this year, in line with the US$8.5 billion transacted in 2016.

Chinese appetite for hotel real estate remains even though Beijing has announced tighter measures on outbound capital in mid-December for “non-core” business activities.

“The potential weakening of the renminbi means investors will be on the lookout for opportunities in the US and Europe as a means to maximise returns and Chinese investors will always be seeking for trophy assets in global markets such as New York, London, Paris, Hong Kong, Tokyo and Sydney.

“Although Chinese capital will be active across global hotel markets, the overall deal flow however, will reduce, especially for transactions above US$1 billion, due to tighter capital controls,” noted Sorgiovanni.

Eyes on Japan, Australia and Southeast Asia

In the report, JLL noted that investors are keenly watching out for buying opportunities in Japan and Australia in 2017 with the former expected to see at least one trophy asset deal and limited service hotel portfolios entering its market while the latter has more hotels coming up to meet the demand from growing tourism, particularly in Sydney and Melbourne.

On Southeast Asia, buyers are looking at markets such as Thailand, Vietnam, Hong Kong and Singapore as these markets continue to record solid trading performance and strong tourism growth fundamentals.

“In fact, Singapore hit a record high for tourist arrivals last year. The long-term arrivals profile is proven with both leisure and corporate travellers across resort markets and financial hub cities,” said Sorgiovanni.

He added that Malaysia, Cambodia and Myanmar, where several high-profile transactions took place last year, are also prompting increased interest as inbound arrivals grow year-on-year.

Research from JLL also revealed that home-sharing platforms such as Airbnb and Homeaway account for about 10% of room bookings in top global markets.

“The hotel industry will be looking at creative partnerships with these alternative accommodation platforms, such as AccorHotels’ acquisition of Onefinestay in 2016,” said the report.

More M&A in the hotel industry

Mergers and acquisitions including high-profile deals such as Marriott International’s acquisition of Starwood Hotels & Resorts and HNA Tourism Group Co Ltd’s purchase of Carlson Hotels, are likely to continue this year, said JLL.

JLL noted that portfolios with a full range of offerings from service levels to geography are most attractive to investors.

“Hotel brands will always look to bolster their supply pipeline and the surest way to grow is often by acquiring operators with management and franchise contracts.

“We expect to see more consolidation among operators and real estate owners alike due to key players’ need to remain competitive through efforts that align growth strategies,” said JLL Hotels and Hospitality Group, senior vice-president, Lauro Ferroni.