HOTEL INSIGHTS A quarterly digest of key trends in the hospitality sector - COLLIERS INSIGHTS - Colliers International
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Govinda Singh
Executive Director
Valuation & Advisory | Asia
+65 6531 8566
Govinda.Singh@colliers.com
HOTEL INSIGHTS
A quarterly digest of key trends in the hospitality sector
COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
2020 Hospitality Trends: FOREWORD
WHAT YOU CAN EXPECT?
“… Millennials are driving change starting with
sustainable travel. Hotels of the future must go
green if they want to attract the millennials …”
“Technology driving decision making. …
Modern travellers turn to online channels to
surprise and help them make travel decisions –
from where to go to best accommodation
options and best local experiences.”
“A rising expectation of a frictionless
experience with smarter hotels and Welcome to the Q1 2020 edition of Colliers Hotel Insights, our quarterly magazine for hotel and
other accommodation stakeholders across Asia. This edition features key destination trends across
personalized service. Thanks to technology,
Asia, a highlight of key industry disruptors, and a technical section. We also provide insights and
guests want more without doing much – they opinions on topical issues within the gaming and leisure sectors.
expect you to know … Some implementations
of this are smart keys, cloud‐based check‐in, Hotels across Asia Pacific have had a mixed performance in 2019, with overall room occupancy and
facial recognition, smart electrical controls in average daily rate (ADR) showed decreases to 69.3% and US$97.35 respectively. This resulted in
Revenue Per Available Room (RevPAR) for the region showing a decline of some 5.4% year‐on‐
the room … and this is just the start …”
year. However, we note this figure may have been negatively impacted by forex currency
“Hoteliers aim to drive up direct bookings… movements together with declines in Australia, New Zealand, China, Malaysia and Vietnam. In
through wins on their website and a booking terms of room occupancy, Delhi‐NCR, Hanoi, Manila, and Seoul remain the stand out performers,
engine that works smarter, supported by with year‐on‐year growth in excess of 2.0%, according to STR. Hong Kong, HCMC, Phuket and
integrated social and email marketing to Jakarta led the field in being the worst performers.
deliver the message.” In local currency terms, Bali, HCMC, Hanoi, Manila and Tokyo, all witnessed increases in excess of
3.9% in terms of ADR. Hong Kong, Kuala Lumpur, Osaka, and Phuket witnessed declines.
“Hoteliers adopt homestay concept … and
evolve it…while Airbnb expands into hotels, Evidently, the trade dispute and political impasse between the USA and China had weighed on
hotels are expected to continue extending into business and consumer confidence, thereby tempering demand in 2019. Looking ahead, global
home‐sharing …” economic outlook is expected to remain muted in the near term given the developing situation of
the novel coronavirus outbreak notwithstanding the relief from the easing of the trade tensions
between the USA and China. As such, the outlook for the hospitality sector in the region is
– Extract from Hotel News Resource article
expected to be moderate to negative in the near term while intra Asia and growing domestic travel
(December 2019) in the larger destinations across Asia is likely to continue to underpin demand in the region in the
longer run.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
TABLE OF CONTENT
Page Page
HOTELS 4 CRUISE 15
Opinion: Disruptors In The Hotel Industry 4 About Colliers Hotels 16
Destinations of the Quarter – Singapore 10 Next Quarter / Contacts 16
Destinations of the Quarter – Ho Chi Minh 13
HOTEL INVESTMENT AND VALUATION 14
Capital markets insights 14
Recent notable transactions 14
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
HOTELS OPINION
Disruptors in the hotel industry
Disruption is changing the face of a broad range of industries and its happening at a staggering rate. Underpinning this is an intermeshing of technology
development, shifts in demographics, and globalization which has also brought about rapid urbanization. This in turn has led to a change consumers’
expectations and needs. In the face of the disruptive market forces, companies need to be agile and able to evolve, innovate and/or reinvent to sustain or stay
at the top of their industries . This ultimately means adopting to technologies and changing attitudes as the way we consume and experience evolves.
The hotel industry is no exception and has not gone unscathed amidst waves of disruption. New technologies, online platforms and markets are seen
manifesting in new initiatives of all sorts ranging from metasearch engines evolving into one‐stop reservation options, chatbots, and robots providing butler
services to alternative accommodation options. The initiatives are sometimes driven internally by major players within the industry, while at other times by the
changes made in response to disruptors playing in the accommodation space. Although disruptions are commonly perceived by incumbent players as threats to
their businesses, disruptors could also be sources of significant opportunities for incumbent players to create newer cum better services and experiences for
their guests, hence entrenching themselves even more within the industry. The hotel industry is not new to technology, just consider the evolution of the in‐
room entertainment system and room control pads. Considering this, hoteliers should be prepared to proactively embrace and seize these opportunities to
strengthen their relevance and competitiveness.
On this note, what are some of the disruptors that are influencing the landscape of the hotel industry.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Pop‐up hotels
While pop‐up restaurants, pop‐up exhibitions and pop‐up shops are
a common sight nowadays, pop‐up hotels have caught on as well.
This is unsurprising given consumers’ increasing emphasis on
immersive and authentic experiences when they travel, and pop‐up
hotels have the agility of providing on‐demand accommodation in
locations that traditional hotels could not and/or travelers would
not necessarily have access or ease of access to alongside
customizable accommodation settings, thereby delivering an entire
bespoke guest experience.
The pop‐up hotel concept may have owed its origins to the ice hotel
in Sweden; contemporary pop‐up hotels have however come in
various other forms such as yurts, tropical villas, sand hotels, canvas
tents, shipping containers amongst others. Take for instance,
“Blink”, launched by travel company Black Tomato, a temporary on‐
demand pop‐up hotel that is customized to guests’ needs in terms
of experience, type of accommodation (from yurts to tropical villas
to canvas accommodations) and location (including remote and Source: Black Tomato
hard‐to‐reach locations).
Concurrently, the company offers developers with a new way to utilize units during
Other concepts include Zand Hotel in the Netherlands which
lease‐up and provides guests with a new way to travel.
opened two pop‐up one‐bedroom hotels made from sand – with
reinforced walls of course – and complete with furnishings, a In Asia, Singapore has its first shipping container hotel in operation in January 2020.
bathroom with running water, electricity, windows and intricate Targeting millennials as its primary consumers who are more adventurous and
carvings. These pop‐up hotels were built to coincide with the looking for an experience, the shipping container hotel will shift to a different
Brabant and Friesland sand sculpture festivals in the Netherlands location every two to three years, allowing guests to explore various parts of
and will close once the festivals end in late September and Singapore. Each cabin features a 300 sq ft air‐conditioned room with two queen‐size
early October. beds, a study table, living and dining space, kitchen and bathroom. Similar to the
traditional hotels, guests will have access to a 24‐hour customer service hotline and
One of the recent players that have come into the space is
the rooms will also be cleaned after each stay.
WhyHotel, a D.C.‐based hospitality service provider, that operates
pop‐up hotels within newly built apartment buildings during the Key players of the pop‐up space are predominantly boutique groups although major
lease‐up phase being a hybrid of a hotel and a Airbnb‐style unit. brands such as Marriot and Accor have started to experiment with pop‐ups. Indeed
How WhyHotel does this is by turning vacant apartments in these this may well lead to other brands exploring the feasibility of pop‐up hotels,
buildings into furnished apartments offering guests with considering that consumers’ increasing desire for personalized experiences is
accommodation that combines the home comforts of Airbnb‐style expected to continue for years to come. However, the planning, resources and
rental units with high quality amenities that one would expect in a financial outlay required may put a dampener on the interest. Therefore, it remains
hotel, such as smart concierges, dry‐cleaning services or a gym. to be seen if pop‐up hotels will go mainstream.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Facial recognition technology for hotels
For travelers, checking in to a hotel can be a laborious process
involving hotel staff performing manual checks on travel
documents, for example. In addressing this, other than mobile
check‐in which is hardly a new concept, more hotels are seen taking
it a step further with the use of biometric technology such as the
facial recognition technology to speed up guests’ check‐in time and
thereby improve the customer experience, make processes more
efficient and enhance security.
In China, facial recognition technology has already come into play at
multiple properties, including at selected Marriott hotels and
FlyZoo, a futuristic hotel built by tech giant Alibaba. At Marriot
hotels, facial‐recognition technology is used at lobby kiosks to
speed up the check‐in process. At Flyzoo, facial recognition
technology is incorporated as part of the guest reservation and
access journey in which a Chinese customer uses the Fliggy app (via
Alibaba) to choose his/her hotel room and make reservations. Once
on premises, the guest’s face is scanned as he/she enters—
matching him/her to his/her Fliggy photo. The technology grants
access to the elevator, which will lead him/her to the right floor and
a face scan will open the guestroom door.
In Singapore, the Singapore Tourism Board (STB) and the Singapore
Hotel Association (SHA) have jointly launched a new initiative, the
E‐Visitor Authentication System (EVA), in November 2019. Through
the use of the EVA, participating hotels in the country can enable
faster verification of guests’ stay validity and facilitate a seamless
While the benefits of the facial‐recognition technology can make it an invaluable
check‐in experience for guests. According to the stakeholders, the
asset to the hospitality industry, it does have its limitations and privacy concerns. In
EVA system involves guests using a mobile app or a standalone
order for the facial‐recognition technology to go mainstream in the hotel industry, it
kiosk to scan their passports using facial recognition technology
is imperative that hotels recognize and make it a top priority to address these
similar to that employed at airports. Concurrently, a guest's data
privacy concerns and adhere to the applicable regulations concurrent to ensuring
will be sent to the Immigration and Checkpoints Authority (ICA) to
the quality of the stored data and system.
verify the validity of their stay. Once the verification is completed,
the guest will receive his/her keys. By eliminating the process of In addition, whilst this may well serve high volume and ‘business’ hotels, its use in
performing manual checks on travel documents, the amount of luxury hotels, where the personal touch matters, may well have to be adapted to
check‐in time is expected to be reduced by up to 70%. ensure it is seamless and less impersonal.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Voice assistants
Voice assistants ‐ such as Amazon Alexa, Siri and Google Assistant –
are one of the fastest growing technological fields today, becoming
commonplace as a feature of the internet of things. Therefore, it is
only a matter of time before voice assistants become a standard
feature in hotel rooms. This is reflected in the findings of the
Hospitality Technology’s 2019 Lodging Technology Study, produced
in partnership with the UNLV Harrah College of Hospitality:
> 79% of respondents named voice‐enabled technology as the top
choice when asked to identify technology that has the most
potential in the near‐future;
> 62% of hoteliers named voice technology as a transformative
technology that makes an impact;
> 50% of data leaders will prioritize augmenting service with AI
and voice‐enabled devices;
Hoteliers are prioritizing adding voice‐enabled devices to their
properties for the first time over adding other technologies like Source: Amazon
mobile apps, mobile payments, tablets at the front desk and in
rooms, location‐based technology, chatbots, and lobby kiosks. desk employee. In turn, the data gathered can be analyzed and utilized to enhance
the hotel offerings and hence firming its competitiveness.
In anticipation of the rising demand of guests for more personalized
experience, hotels’ adoption of voice assistants in their properties Separately, hotels could potentially streamline operations processes and thereby
has therefore been gaining traction. In recent years, Marriot has improve operational efficiency and achieve cost‐savings through automating some
introduced voice assistants in some of its hotels enabling guests to of the daily hotel operations via the voice assistant. For example, voice assistants
perform tasks from ordering room service, adjusting the light, can be available 24/7 to provide guest support (such as offer real‐time
thermostat or blinds in their hotel rooms, asking for housekeeping, recommendations, lighting control, and answer critical queries from guests).
seeking concierge advice without the need to pick up the phone.
As with some other technology solutions, the use of voice assistance can be of great
Aside from enabling the hotels to deliver a more personalized guest benefit to the hotels but at the same time gives rise to privacy concerns. Hence, it
experience, voice assistants could potentially be used by hotels to should be of priority to the hotels to consider and address these concerns
gather actionable insights and feedback as guests may be more concurrent to ensuring a complete integration of the voice technology into the
encouraged to speak to the voice assistants and comment candidly existing hotel systems for the implementation to be a complete success. Clearly
sitting in their room and avoid the awkwardness in facing the front communicating how data is stored, shared and used will be paramount.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Robots
The use of robots within the hotel industry is a form of automation
that is becoming more prevalent as hotel chains and individual
hotels have become increasingly cognizant that the concept of
automation and self‐service is playing an increasingly vital role in
the customer experience. Notwithstanding, at the same time,
hoteliers are aware that the use of robots could also bring about
efficiencies in operations and costs, and can be a boon in tight
labour markets.
The use of robots in hotels is varied and some of the practical
applications include:
> Robot providing check‐in and check‐out services including
responding to enquires from guests;
> Artificially intelligent robot (such as “Connie” adopted by Hilton)
providing in‐person customer service such as the provision of
tourist information (such as nearby attractions and hotel
information) to guests who interact with it, in addition to having
the ability to learn and adapt to individuals as more guests speak
with it; Source: Savioke
> Robotic butler (such as A.L.O adopted by Aloft Hotels) to deliver
amenities such as towels and toothbrushes to guest rooms;
> Luggage carrying robot (such as Yobot adopted by Yotel Hotels);
> Robotic servers to make deliveries of meals in restaurants.
Clearly, the use of hotel robots may yield operational and cost
efficiencies to hotels, it is however critical that a balanced approach
is adopted by hoteliers to ensure that automation does not
supplant quality service hence alienating hotel guests as a
consequence.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
OYO Hotels & Homes (“OYO”)
In India, the hotel sector is massive and fragmented. More than
90% of the hotels in India is less than 100 rooms and almost none
of the world's major hotel chains operate properties with fewer
than 100 rooms. Consequently, there is a lack of branding and
standardization across the bulk of the hotels in India which make
the quality of hotel stay highly variable and very often fall short of
expectations. Seeing the market potential in the large under‐
cultivated room inventory and an under‐served accommodation
needs in India, OYO was launched in 2013 to address the
aforementioned issue by offering a consistent guest experience
with standardized basic amenities at low prices.
In the beginning, OYO built its business model around the
aggregator business model that involved organizing the
partnership with hotels, lease a portion of the room inventory,
and sells them under its own brand to hotel guests at profits. Over
time, OYO’s business model evolved. For hotel rooms, the rooms
are no longer leased but operated as OYO Rooms franchised at Source: OYO
pre‐determined standards (i.e. the hotels and place owners have
become franchisees) with franchise fees of approximately 20% on competitive landscape, alongside the negative publicity about the company
room revenues. In 2017, OYO launched OYO Townhouse (i.e. recently. If the lessons of WeWork are to be learnt from, aggressive growth should
operating as 25% Hotel, 25% Home, 25% Cafe and 25% Store) not come at any price and sustainable business models will also prevail. Horses for
which is positioned to become the social hotspot of the courses as the saying goes!
neighborhood catering to the millennial travelers. Following that,
OYO expanded its branches into the home rental space for long Conclusion
stays like corporate stays and commercial space whereby
Change is constant and the disruptive forces will undoubtedly result in uncertainties
customers can book office spaces on OYO as well as ancillary
and challenges for the hotel industry. Underpinning these is the ever‐evolving
businesses in wedding services. Concurrently, OYO has expanded
consumers’ expectations cum needs and the relentless progression of technology
geographically with presence in China, Indonesia and Malaysia
ensuring that the latter will remain as a catalyst in the process. With risks from
amongst others.
disruptions, come opportunities as well. Therefore, hoteliers could instead focus on
Having experienced exponential growth over the last six years seizing these opportunities and convert them into their competitive advantages to
since its founding, OYO has grown to become among the world’s ensure its relevance and competitiveness through improving their services and with
largest hotel chains with more than 23,000 hotels in 18 countries enhanced hospitality offerings. Concurrently, hoteliers should tread cautiously in
under its management across hotels and homes. However, OYO is leveraging technology as an enabler to improve their operations and revolutionize
yet to be a profitable business. In light of the company’s target to guest experience rather than alienating its guests in the process. After all, the
list publicly in 2022‐2023, it remains to be seen how OYO would human touch is at the core of hospitality and operating a hotel successfully comes
be advancing on its path to profitability amidst an increasingly down to meeting guests’ needs.
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COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
DESTINATIONS OF THE QUARTER
Singapore
Singapore Tourism Statistics 2011–2019 (latest stat available)
Room stock Tourism arrivals (m) Tourism receipts (S$bn)* Visitor days (m)
80,000 67,084 66,994 69,367 80
60,908 63,850
55,006 57,172
51,664
Room Stock
60,000 49,719 60
58.8 61.6 64.1
54.2 56.0 55.0 56.3
40,000 49.1 51.4 40
23.5 23.6 25.7 26.8 26.9 27.1
22.3 23.1 21.8
20,000 20
13.2 14.5 15.6 15.1 15.2 16.4 17.4 18.5 19.1
0 0
2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: STB Note: * 2019 Tourism Receipts are preliminary estimates
Hotels in the Garden City continue to do well rebounded strongly in 2016, continued to increased by circa 4.1% into
2017 and another circa 0.5% in 2018. The increase in tourism receipts was
For the fourth consecutive year, Singapore saw growths in both visitor boosted by more tourist arrivals from high‐spending markets such as China,
arrivals and tourism receipts in 2019 despite global headwinds. South Korea, the US and the UK. For 2019, total tourism receipts is expected
Tourism arrivals in Singapore increased by 3.3% to 19.1m in 2019 following to grow marginally by circa 0.5% year‐on‐year to S$27.1b (US$19.5b), due
a relatively strong performance in 2018. This is a robust performance after mainly to the inclination of more cautious spending as a result of the global
the stagnant figures in 2015, and strong growth in 2016, and is mostly economic uncertainties.
underpinned by an increase in visitation from North and South Asia, and in According to the Singapore Tourism Board (STB), circa 51% of overnight
particular China, Indonesia and India. Tourist arrivals from India have seen stays are in hotels (latest available), and 51% of the visitors are repeat
the highest spike of 13% with cruise arrivals going up by 27%. This growth guests. The main purpose of visit is leisure/VFR (Visit Friends/Relatives)
represents a compound annual growth rate (CAGR) of 6.1% between 2010 (70%), with circa 14% here on business/MICE visits. Considering these
and 2019. In 2019, the average length of stay increased to 3.4 days, from statistics, it suggests that Singapore still requires a significant amount of
3.3 days in 2018. However, total visitor stays (what really matters to hotels), hotel rooms to accommodate its visitors, with growth in visitation being
grew by 4.0% year on year. With the changing travel habits of travelers from tempered by the low level of room supply especially at the mid‐market to
nearby source markets, the average length of stay is expected to dip slightly lower end. This is despite the addition of 2,942 rooms in 2016 and the
as day trips and shorter corporate trips become a common sight in significant 5.1% increase in 2017 (3,234 rooms). In 2018, total hotel room
Singapore. This is perhaps not surprising given the relative high costs of inventory stood at 66,994 given a limited new hotel room supply offset by
staying in hotels in Singapore, with ADR increasing 1.4% to S$221.5 rooms taken out of the inventory for renovation. During the course of
(US$159.3) by the end of 2019. 2019, a supply of 2,373 rooms had entered the market as room supply
Tourism receipt per capita decreased from S$1,692 (US$1,217) in 2011, to continues to be moderated in Singapore.
S$1,430 (US$1,028) in 2015, a drop of 15.5%. However, tourism receipts
10COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Hotel supply to remain muted in the short term STB, which indicates that room occupancies for 2013 were 84.9%, this
suggests only circa 59.4% of those requiring accommodation were able to
Including the two white sites at Marina View and River Valley available on do so in a hotel.
the government land sales reserve list, which can together potentially
accommodate circa 1,070 rooms, in our estimation, we expect another circa Fast forward to 2018, hotel room occupancy has increased slightly to 86.0%
5,700 rooms to be added between 2020 and 2025. Significant new hotels for the year, indicating that only 76.7% of the 51.0% of those requiring
scheduled to open in between 2020 and 2023 include The Clan (324 rooms), rooms would have been accommodated. We note that the implied room
the Pullman Singapore (342 rooms), Banyan Tree Mandai (338 rooms), and occupancy for 2018 would have dropped to 112.2%, given the increase in
Club Street (390 rooms). In addition, in circa 2025 we expect Marina Bay new supply. Nevertheless, while noting the near term risk posed by the
Sands (MBS) and Resorts World Sentosa (RWS) to add 2,100 rooms as part novel coronavirus outbreak, we expect implied room occupancy to rebound
of their integrated resort (IR) expansion plans. It is therefore likely that in the medium term, underpinned by the growing demand from
demand will continue grow as the IRs expand their offerings. international arrivals as the fundamental growth drivers for the tourism
sector remain largely intact. Therefore, perhaps its time to reconsider more
Singapore Hotel Room Stock vs Overnight Stays development and investment in this sector.
Continuing the momentum in 2018, 2019 saw average room occupancy
Room Stock Overnight Stays growing to circa 87.1%, with average daily rate (ADR) increasing by circa
80,000 70
60 1.4% year‐on‐year. Correspondingly, revenue per available room (RevPAR)
registered a growth of circa 2.6% year‐on‐year to S$192.8 during the period.
Overnight Stays
60,000 50
Room Stock
40 This was mainly underpinned by the substantially low supply of new hotels
40,000 entering the market against a backdrop of surging visitor arrivals facilitated
30
20 by the entrance of new airlines and flights roads to Singapore. Hoteliers
20,000
10 were therefore able to maximise their yield strategy through higher
0 0 room rates.
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Singapore Hotel KPIs
Source: STB ADR (SGD) RevPAR (SGD) Room Occupancy (%)
300 88
In terms of hotel performance, room occupancy remains well in excess of
83% despite the new supply. In any event, a closer look at the room stock 250 87
versus demand, suggest that hotels in Singapore are full almost all the time 86
200
during peak periods, and especially during Monday to Thursday, and
(SGD)
85
(%)
Saturday nights. This suggests that there is a high degree of existing 150
84
frustrated and latent demand, whereby visitors who wish to come to 100
83
Singapore either cannot find rooms or have to turn to alternative 50 82
accommodation providers.
0 81
From our 2013 analysis, given that 65% of overnight visitors would stay in a 2012 2013 2014 2015 2016 2017 2018 2019
hotel, based on the total number of available rooms at that time gives an
implied room occupancy of 142.9%. From the hotel statistics provided by Source: STB
11COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
Looking ahead, we do expect hotel performance in Singapore to moderate underpin hotel fundamentals over the medium term. In addition, the
in 2020, being impacted by the developing situation of the novel Singapore government constantly monitors land use to ensure there is
coronavirus outbreak. However, given that the fundamental growth drivers minimal demand/supply imbalance.
for the tourism sector remain largely intact alongside more advanced
Therefore, given this background, recent and anticipated trends, we expect
controls and experience from the SARS crisis, we do look towards a
overnight stays to continue to outstrip hotel room stock, as is evident in
turnaround of the situation not too far out. As such, we expect hotel room
previous years. This therefore bodes well for any planned new hotel supply
occupancy over the longer run to grow as tourist arrivals continue to
over this period.
increase post the novel coronavirus outbreak episode. In addition, given the
already high room occupancy levels, and the continued moderate levels of Final thoughts – capital values
new supply anticipated, hoteliers can be expected to maximise their yield
strategy through higher room rates. This would ultimately result in year‐on‐ The hospitality industry in Singapore saw record investment sales in 2019,
year income growth over the coming years. However, much of this will contributed in part by the mergers of the REITs.
depend on the global economic outlook, and the fallout from the trade Looking ahead, investment interest in hospitality assets is expected to
disputes between the US and the rest of the world. Indeed, much will also remain, underpinned by the sound hotel fundamentals as highlighted
rest on the outcome of the 2020 US elections. earlier. As such, we expect owners, investors, hotel operators to continue to
In our view, Singapore will continue to remain as a global hub, largely seek out strategic hotel sites. Additionally, those properties that can be
drawing on its largest source markets across the Asia Pacific region. The easily converted to hotel use within the existing plot ratio may also attract
planned new attractions and infrastructure projects scheduled between interest in light of the 45.6% hike on average in the development charge
2020 and 2030 bodes well for future visitation and combined with the (DC) rates for hotel since March 2019.
relatively low level of new room supply, we consider this should continue to
12COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
DESTINATIONS OF THE QUARTER Ho Chi Minh City – 2015 vs 2019 Visitor Arrivals
International Visitor Arrivals (m) Domestic Visitor Arrivals (m)
Ho Chi Minh City Total Visitor Arrivals (m) Tourism Receipts (VND)
Vietnam has enjoyed strong tourism growth for most of the past decade, 50 200
Visitor Arrivals (million)
establishing itself as one of Southeast Asia’s top tourist destinations. HCMC, 40 160
(VND trillion)
being the economic hub of the country, has also witnessed such growth.
30 120
Between 2015 and 2019, total visitor arrivals to HCMC have been on strong
growth trajectory, registering a 5‐year Compound Annual Growth Rate 20 80
(CAGR) of circa 14.7%. Underpinning this growth is the steady increases in 10 40
both domestic and international visitor arrivals, which grew at a 5‐year
CAGR of circa 14.2% and 16.9% respectively during the period. In terms of 0 0
international visitor arrivals, HCMC counts China, South Korea and Japan as 2015 2016 2017 2018 2019 2020F
it main source markets.
Source: Vietnam National Administration of Tourism
A key driver for the strong growth in visitor arrivals is HCMC’s strong appeal
In line with the growth in visitor arrivals, HCMC has enjoyed steady growth
to leisure visitors, being home to a vibrant mix of old and new, with well‐
in RevPAR between 2015 and 2019, albeit slower in the recent three years
preserved structures and war relics from the Vietnam War alongside sleek
as the market absorbs the influx of new room supply during the period.
skyscrapers, contemporary sports clubs, expansive retail malls and
Following the significant new room supply in recent years, new room supply
developing food and beverage scene. Another key driver is the strong
entering the market between 2020 and 2023 is expected to moderate. The
corporate support enjoyed by HCMC given its strategic position as the
tightening of approval policy for new development projects by the
economic, cultural, and scientific‐technological hub of Vietnam. In 2018,
government is expected to lend further support to this.
HCMC accounted for circa 22% and 29% of the country’s GDP and financial
capital respectively, despite that the city accounts for only 0.6% of the land The government has identified the tourism sector to become a spearhead
area in Vietnam and circa 10% of the country’s population. Therefore, as the economic sector and is committed to focus its efforts to develop the sector.
most well‐developed city in Vietnam, HCMC is very often the city of choice Some of the prioritized tourism development initiatives include: creating
for many multinational and technology companies when entering Vietnam. favourable conditions for tourist activities; implementation of tourism
Further, facilitating the growth in visitor arrivals was the increase in flight promotion programmes; developing signature tourist offerings;
connectivity between HCMC and its source markets as well as the easing of infrastructure developments (e.g. construction of the third terminal in Tan
the visa policies. Son Nhat International Airport); and enhancing the image of the city.
HCMC, being the core hub of the Southern Key Economic Region (SKER) and With a more moderate hotel room supply and as the city continues to
having a young workforce and fast economic growth coupled with high appeal to both corporate and leisure travellers on the back of the
urbanization rate, is expected to hold its appeal to corporate travelers developments highlighted earlier and with HCMC remaining as the
moving forward as the city develops to become an international gateway to economic hub of the country, outlook for HCMC’s hotel industry is expected
the south, and other parts of the country in the medium to longer‐term, to remain positive in the short to medium term, while downside risks such
as Vietnam plans to develop the SKER into an economic engine for the as geopolitical tensions and volatility in foreign exchange amongst others
whole country. should be noted.
13COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
HOTEL INVESTMENT AND VALUATION
Capital markets insights
Recent notable transactions
2019, despite being a year marked by a slowing global economic growth and geopolitical uncertainty,
has witnessed strong investment interest in regional hotel assets with a total hotel investment volume In this quarter, most of the transactions
of more than USD14 billion, representing an increase of circa 14.4% year‐on‐year. across Asia were in gateway cities,
The most liquid markets were Japan, South Korea, Singapore and China with Hong Kong (despite the where investors remain very active.
protracted citywide protests), and India also witnessing strong interest. Relatively active, but smaller
markets included Taiwan, Vietnam and Thailand.
Value per
Looking ahead, notwithstanding the uncertainty of the past year and near‐term risk arising from the Hotel Location room (USD)
outbreak of the novel coronavirus, we expect the investment momentum to continue and hence drive
the region’s hotel transaction volumes in 2020 in consideration of factors such as the easing of trade
tensions, continuing low interest rates across markets, and the long‐term growth prospects of key Asian Citadines Mercer Hong Kong 1,751,000
markets underpinned by strong fundamentals. Markets which we expect to remain active in going
forward include Japan, Singapore and Hong Kong. However, with investors chasing yields, we expect
more interest in emerging destinations, secondary cities and four‐star and below hotels in key
gateway cities. Waterstones Hotel India 1,050,000
Quarterly Volume Rolling 4‐Quarter Volume
6 16
Rolling 4‐Quarter Volume (billion)
Oakwood Residence
Japan 911,000
Quarterly Volume (billion)
14 Shinagawa
5
12
4
10
3 8 Pudong Supreme
China 901,000
Tower Hotel
6
2
4
1
2 Hotel Vista Premio
Japan 740,000
0 0 Tokyo
03/2010
09/2010
03/2011
09/2011
03/2012
09/2012
03/2013
09/2013
03/2014
09/2014
03/2015
09/2015
03/2016
09/2016
03/2017
09/2017
03/2018
09/2018
03/2019
09/2019 Source: Colliers Research
Note: USD conversions are at time of transaction and represent
approx. values.
Source: Vietnam National Administration of Tourism
14COLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
CRUISING
A note on cruising in Asia
Continuing on an upward growth trajectory, Asia saw cruise
passengers reached a record‐high of 4.24 million in 2018, an
increase of 4.6% year‐on‐year, according to Cruise Lines
International Association (CLIA). Underpinning this is the double‐
digit growths in multiple source markets: Singapore (39.9% to
373,000), India (28.1% to 221,000), Indonesia (54.9% to 72,000),
Philippines (49.1% to 61,000), South Korea (13.5% to 44,000),
Thailand (14.5% to 30,000) and Vietnam (53.7% to 10,000).
Back by the sustained growth in cruise passengers, Asia continues
to be the cruise industry’s third largest market source after North
America and Europe, maintaining a market share of 14.8% of the
total global ocean passenger volume.
While the Chinese market saw a marginal 1.6% decline in
passengers as it was undergoing a period of adjustment, it retained
its dominance as a source market accounting for 55.8% of all Asian
passenger volume. Other top source markets include Taiwan, Source: CLIA
Singapore, Japan and Hong Kong.
On cruise durations, short cruises still dominate the itineraries in Asia, with 4‐6
With the increasing number of millennials, young families and
nights cruise accounting for the highest share of all cruises.
multi‐generational families making up the cruise passenger volume,
Asian cruise passengers are found across the age spectrum. According to CLIA, nine out of ten Asian cruise travellers choose to cruise in Asia. On
Recognising this trend, cruise operators have and are expanding the back of the foregoing together with the trend of more than 66% of Generation X
their offerings to cater to the varying needs of the cruise and 71% of Millennials having a more positive attitude about cruising compared to
passengers including curated theme cruises, dining options, water two years ago, outlook for the cruise industry is promising as cruising continues to
slides, rock climbing, nursery, as well as unique events like music grow in popularity. To seize upon the opportunities brought by the burgeoning
festivals on board ships. cruise market, cruise operators should do well by focusing on enhancing the
passenger experience through innovation in its offerings aside from just capacity
In terms of cruise destination, Asian cruise passengers
expansion and or upgrading of the cruise facilities.
predominantly sail in Asia with more than 50% cruising in Mainland
China, Hong Kong and Taiwan and almost 40% cruise in the rest of At the time of writing, the spread of the coronavirus has led to cruise ships being
Asia. Beyond Asia, Mediterranean, Caribbean/South America, quarantined and travellers with Greater China passports and who have visited China
Baltics Baltics Northern Europe, and Alaska have been popular recently not being allowed to board. We expect this fall out to be near term, with a
choices for cruise destinations. bounce back as the situation recedes.
15
THINKING OF INVESTING IN A GOLF FACILITY? SPEAK TO OUR SPECIALIST TEAMCOLLIERS INSIGHTS HOTELS | ASIA | Q1 2020
ABOUT COLLIERS HOTELS
Colliers International launched its specialised hotels division in 1985. NEXT QUARTER
Our dedicated hotel specialists are based in Australia, Hong Kong,
Singapore, Tokyo, London, Nairobi, Dubai, Boston and Los Angeles.
Whether you are a start‐up or well‐established We provide timely, relevant and forward‐looking OPINION
owner, developer or investor, we will help you advice. This global division has exceptional
go through the business life cycle by providing relationships with investors worldwide, required SARS vs Coronavirus –
specialised, value‐added advices that are tailor‐ for the timely and effective sale of assets. assessing the fall out
made to your specific needs:
Our specialised sector expertise includes:
> Market and feasibility studies
> Hotels and resorts
> Property and business valuation
> Theme parks
> Capital markets
> Travel trade
> Internal Business Reviews
> Golf
DESTINATION OF
> Operator Search and Selection
> Spas and wellness facilities THE QUARTER
> Due Diligence
> Casinos > Bali
> Transaction Advisory, IPO and REITs listing
> Conference and Convention Centers > Hong Kong
> Management Agreements and Lease Reviews (MICE venues)
> Extensions, refurbishments > Racecourses
> Benchmarking and Forecasting > Sports stadiums
> Tourism Strategy and Master Planning > Integrated and mixed‐use
> Asset Management > Destination Consulting
> Needs Analysis / Economic Impact Studies
> Litigation Support and Dispute Resolution GAMING UPDATE
> Business Restructuring – opco / propco
> Highest and Best Use /Concept Designs
> Project Management and Leasing
16Primary Authors: Govinda Singh Executive Director | Valuation & Advisory | Asia +65 6531 8566 Govinda.Singh@colliers.com Hotel & China Specialist: Pei Yee Lee Associate Director | Valuation & Advisory | Asia +65 6531 8549 PeiYee.Lee@colliers.com About Colliers International Group Inc. Colliers International (NASDAQ, TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning approximately 40% of our equity, have delivered industry‐leading investment returns for shareholders. In 2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management. For the latest news from Colliers, visit our website or follow us on Copyright © 2020 Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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