A major conference in any industry is a helpful barometer, and the recent Hotel Investment Conference Asia Pacific in Singapore provided some key insights for the hospitality business in Asia.
STR's Jesper Palmqvist attended this year's conference, and he shared his observations with CoStar News Hotels' Sean McCracken in a recent podcast interview.
One of Palmqvist’s main takeaways from the conference is that 2025 has been a mixed year where investors are ready and interested in deals, but margins are tighter on the performance side.
“The spread is interesting,” he said. “For a neutral, it makes the conference more interesting because it’s less about everything is awesome or everything is gloomy.”
The top markets of interest to hotel investors continue to be Singapore, Japan and the Maldives, he said. These markets are similar in that they have high barriers to entry but they have such a stable and high yield. They’re good for upper-upscale and luxury hotels.
One difference in Japan is there’s a value-add potential where a hotel owner can flip a property for efficiencies in seven to 10 years, Palmqvist said. Singapore has something similar but on a different time frame. During the conference, Pan Pacific Hotels Group CEO Choe Peng Sum said the company recently sold a hotel for $500 million that was on its books for $100 million.
“That’s a nice pocket of $400 million,” Palmqvist said. “What other industry can you do that over that time frame? It’s a good example of why people get in on that thing and why so many family offices have opened that long-term income and stability is what so many like.”
Palmqvist said a highlight for him about Japan is that investors need to look at operational costs being different now. While he’s not sure how the new prime minister will change the narrative overall, the country has seen food prices increase 7%, the highest increase in 40 years.
“You have a new reality where all these costs need to be flushed out to the hotel guests ultimately, so if that big revenue increase didn’t happen, you’d have not a crisis but a much different scenario,” he said.
Investors can go and buy great properties in one of the big markets in Japan or even smaller properties in regional locations, but the cost reality is going to be different for the next 10 to 15 years, he said.
When looking at other markets that are less expensive to enter, the competition between Thailand and Vietnam is interesting, Palmqvist said. Some are arguing that Thailand is becoming too complacent in its tourism strategy and construction, but the country is still a great place. Companies want to grow their brand there on a wider platform across the country, and many are looking at second-tier cities to grow.
Vietnam is so different because the growth numbers are different, particularly on the coastline on regional resorts, Palmqvist said. Even if there are a lot of resorts planned, the value-add to get something out quickly is a huge opportunity. There are some issues with supply chain keeping pace, but he believes it can achieve it over time.
For the rest of the interview with STR’s Jesper Palmqvist, listen to the podcast above.