Apac Hotels Continue Attract Investments Supported Resilient Hotel Performance Colliers
The hospitality industry in the Asia Pacific (Apac) region has experienced a strong rebound in recent years, following the global Covid-19 pandemic. However, going into 2025, this momentum has shifted to a more measured pace, as the sector moves from recovery to stabilisation, according to real estate consultancy Colliers.
Govinda Singh, Colliers’ executive director for Apac capital markets, hotels and hospitality and advisory, comments on this transition, stating that as high-performing markets begin to stabilise, the narrative is moving towards a new norm.
During this time of change, the Apac hotel investment sector has seen a dip in deal activity at the start of the year. In its May 2025 report on Asia Pacific Hospitality Insights, Colliers notes that hotel investment volume in the Apac region fell 19% year-on-year to US$2.1 billion ($2.71 billion) in the first quarter of 2025. This is happening as hotel investment yields in Apac rose for a second consecutive quarter, reaching an average of 5.4% last quarter.
Despite this decrease, investors are still targeting hospitality assets in high-liquidity markets such as Japan, South Korea, and Australia, which saw the most activity in the first quarter, according to Colliers’ report. Singapore, meanwhile, continues to attract generational wealth investment.
Singh notes that the year-on-year decline in hospitality real estate deals is not surprising, considering that the first quarter is usually a slow period for transactions. Additionally, geopolitical uncertainty may have contributed to investors taking a cautious “wait-and-see” approach.
However, Singh believes that instead of backing out, investors are recalibrating. “With pricing remaining stable, investors are shifting their focus from cap rate compression to value-add strategies that prioritize cash flow and income growth to generate returns,” he says. He expects a pickup in hotel deal activity for the remainder of the year as market conditions stabilise and the need to invest capital increases.
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Colliers’ positive outlook for the sector is supported by resilient hotel performance in the first quarter of 2025. According to data from CoStar, the US real estate data and analytics firm, RevPAR across Apac increased by 2.1% year-on-year last quarter, up from 0.4% growth in the previous year.
The increase in RevPAR was driven by improved average daily room rates (ADR), which rose 3.3% year-on-year to US$92 in the first quarter of 2025. Among the key regional markets, Thailand and Japan were the biggest contributors, recording ADR gains of 14.7% and 11.9% respectively, reaching US$154 and US$127.
In contrast, some traditionally high-value markets such as Singapore and Hong Kong reported a decline in rates last quarter. Singapore’s ADR fell 5% to US$232, while Hong Kong’s ADR dropped 3.8% to US$171. “This reflects a shift in pricing dynamics as established destinations adapt to changing trends and guest expectations,” the report adds.
Although ADRs drove RevPAR gains in the first quarter of 2025, the momentum for rates is slowing. According to Singh, the next phase of growth in the hotel sector will depend on increasing occupancy, operational efficiency, and guest experience, especially as supply remains limited due to high construction costs.
Some destinations leading the way in this regard include Phuket, Tokyo, New Delhi, Mumbai, and Osaka, all of which saw strong ADR growth last quarter, supported by domestic demand, a surge in international travel, and effective market positioning. “These markets exemplify a strategy focused on rate-driven performance while also establishing a benchmark for value-oriented expansion in the region’s hospitality sector,” Singh notes.
Colliers’ report also points out that countries that previously relied heavily on Chinese tourists are now looking to tap into a growing base of Indian travellers. “With India’s middle and upper classes growing rapidly, Indian travellers not only spend more during their stay but are also increasingly seeking unique travel experiences. As a result, they have become a reliable and consistent source market all year round,” Singh explains.