Asia Pacific Hospitality Sector Enters Stabilisation Phase: Colliers
Capital continues to target hospitality assets in high liquidity markets in the Asia Pacific region as the sector moves from recovery to stabilisation in 2025, according to Colliers’ report, ‘Asia Pacific Hospitality Insights May 2025‘. The report has found the steady momentum of 2024 has carried through to 2025, signaling a shift toward more deliberate, performance-led growth in the Asia Pacific hospitality sector.
The most transacted hotel markets during this period were Japan, South Korea and Australia, with Singapore standing out as a key destination for generational wealth investment. India and Southeast Asia are also emerging as key demand engines.
Interestingly, Indians, are emerging as a key growth driver for the Asia Pacific hospitality sector, especially in markets like Thailand, Vietnam, and South Korea. With rising disposable incomes and growing appetite for experience-led travel, Indian tourists are becoming a dependable, year-round source of demand in hospitality sector. This shift is helping sustain strong room rates and marks a structural change in regional hospitality dynamics.
“India is driving a structural shift in Asia Pacific’s hospitality landscape, fueling resilient domestic growth while emerging as a powerful outbound force. With strong demand across the luxury, lifestyle and MICE segments, and rising investor confidence in experience-led assets, India is now central to regional tourism flows, sustaining premium pricing and reshaping travel dynamics. Despite limited liquidity in the investment market, robust valuations persist— not necessarily driven by cap rate-based transactions, but by long-term conviction in the sector’s future." Nikhil Shah Managing Director Hospitality & Alternatives, said.
“The outlook for the Indian hospitality sector remains strong, with Tier II destinations set to become key contributors to the next phase of expansion. Interestingly, spiritual tourism is emerging as a key driver of inbound travel within India, driving the growth of the hospitality sector. Backed by focused government policy support and rapid infrastructure development, towns such as Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi, are poised to unlock new investment avenues and fuel long-term growth in these emerging hospitality markets." Vimal Nadar, National Director and Head of Research, Colliers India, said.
Hotel performance across Asia Pacific remained resilient in the first quarter of 2025, supporting ongoing deal activities. Whilst Asia Pacific deal volumes fell 19% in Q1 2025, with yields rising to 5.4% in the first quarter of this year, capital continues to target high-liquidity markets.
Hotel performance remains resilient, with increasing Revenue per Available Room (RevPAR), primarily driven by Average Daily Room Rates (ADR) growth. RevPAR across APAC is up 2.1% year-on-year (year-on-year), a significant improvement compared to the modest 0.4% growth between 2023 and 2024. This uptick is primarily driven by higher occupancy rates, reflecting stronger demand and improving market conditions.
Phuket, Tokyo, New Delhi, Mumbai, and Osaka led the region in ADR rate growth in Q1 driven by strong domestic demand, a surge in international travel, and effective market positioning. These markets exemplify rate-driven performance strategy but also set the benchmark for value-oriented expansion in the region’s hospitality sector. “The next phase of growth will hinge on driving occupancy, operational precision and guest experience, especially as supply remains measured given high construction costs.
“The first quarter has traditionally been a slow period for transactions, and given geo-political uncertainty, it is not unexpected that many adopted a cautious, ‘wait-and-watch’ approach. However, as market conditions stabilise and the imperative to deploy capital intensifies, a pickup in activity is anticipated as the year progresses. With pricing holding firm, investors are shifting away from cap rate compression and toward value-add strategies focused on cash flow and income growth to drive returns.” Govinda Singh, Colliers’ Executive Director, APAC Capital Markets, Hotels & Hospitality and Advisory, said.
