AP Hospitality Bulletin Asia Pacific - September 2024

New AP article: Taiwan Hotel Market Update: International Operators Are Expanding Their Presence on the Island

Taiwan has been a popular destination in East Asia with a majority of visitors from Asia, and the market evolves toward more diverse in terms of visitor arrivals and hotel brands. The article features an overview of Taiwan hotel market and outlook, as well as industry insights from Hilton on the development of Taiwan market. Click the link here to read the full article.

Deal that matters.

Singapore-based Collective Hospitality acquired Selina Hospitality PLC, including about 100 hotels in 22 countries after Selina’s bankruptcy. Once valued at USD1.2 billion and listed at Nasdaq, Selina is a lifestyle hospitality brand targeting digital nomads in their 20s looking for flexible workspace and local experience around the world. In Asia Pacific, there is currently one Selina property in Phuket, while the rest of the locations are in the Americas, Europe and Israel. Collective Hospitality plans to revive the brand as well as Remote Year, a travel company under Selina, and potentially rebrand some of the Selina properties to Socialtel, an existing brand under Collective’s portfolio. Collective Hospitality is owned by Destination Group, which was founded by Gary Murray in 1996 which has been active primarily in the Thai hotel and resort space.

Transactions that matter.

1. Hilton Fukuoka Sea Hawk, Japan

• Singapore sovereign wealth fund GIC divested the 1,052-key to ML Estate, a subsidiary of Mizuho Leasing, for reportedly JPY70 billion (USD468 million) or USD445,000 per key, 18%lower than its asking price range between JPY85 and 90 billion in January. Opened in 1995 and rebranded to a Hilton property, the property was sold to GIC in2007 as part of its acquisition of Hawks Town. The hotel was GIC's last asset of Hawks Town after divestment of the mall in 2015 and stadium in 2012.
• Despite the age, the prime location and extensive facilities of the property is considered a key asset in Fukuoka. With over 5,500 sqm of meeting space, the property is popular among both leisure and business travellers. Additionally, the acquisition would help Mizuho strengthen its portfolio in the area, after Mizuho Financial Group recently acquiring the naming rights for the Fukuoka Dome, which is now known as Mizuho PayPay Dome.

2. Capri by Fraser Changi City, Singapore

• The 313-room Capri by Fraser Changi City was acquired by a JV consortium led by Atelier Capital Partners with TPG Angelo Gordon and Far East Consortium for SGD170 million (USD130million) or USD416,000 per key in March 2024. Dorsett Hospitality is appointed to manage the property, which is now Dorsett Changi City Singapore, the third hotel under Dorsett’s portfolio in Singapore.
• Opened in 2012 and sold to Fraser Property in 2014, the property is located at Changi Business Park with a 10-min drive away from the airport. The property registered a strong RevPAR of SGD224 in FY2023, a 50% increase from the previous year. While the overall occupancy in Singapore market was slightly below the levels in 2019, the rate grew significantly amid the increasing demand from both leisure and business travellers.

Deal Watch

• It is reported that Singapore's CapitaLand Group subsidiary CLI is in advanced talk to acquire a minority stake in Club Med from Fosun International, about 20-30% of the stake for €500 million. The news follows a previous report that Fosun was exploring the sale of a minority stake aiming a valuation of the business at USD800 million in February this year in order to manage the firm’s debt. Such transaction would value the company with more than 60 resorts in 40 countries at around €2bn.
• The owners of the 52-room The Connaught at Sai Ying Pun, Hong Kong, recently lowered the asking price from HKD1 billion to HKD600 million (USD77 million). The price equals to HKD11.5 million (USD1.5 million) per key. Featuring unblocked sea view and a short drive to the CBD, the property has potential to convert to co-living space. It is reported that the property is valued at HKD950 million. Clearly, Hong Kong valuations are not worth much these days.

Are Chinese travellers back?

In 2019, China was the largest feeder market to many destinations in Asia Pacific and the globe, reaching 155 million outbound travellers according to the Ministry of Culture and Tourism of PRC. While the border reopened later than any other major economy, the number of Chinese outbound travellers seemed to be returning rapidly to over 87 million in 2023, according to a report by China Tourism Academy in early 2024. However, it might be too early to call it a strong recovery for Chinese outbound travellers.

The number of Chinese travellers across 13 markets we tracked in Asia Pacific started to show signs of recovery in late 2022, except Hong Kong SAR and Macau SAR, because of the special travel arrangements prior to the official reopening. To facilitate the return of Chinese travellers, some countries announced visa-waivers for Chinese travellers and expanded marketing campaigns on Chinese social media.

In view of economic development and the weakening yuan, as well as challenges in obtaining new passports, many Chinese choose domestic destinations for their next holidays. Overall, Chinese outbound travellers were back but with different travel behaviour, and the recovery pace varied between figures.

Maldives, Korea, and Singapore are the top three destinations with the strongest recovery in Chinese travellers in July, as well as year-to-date figures. On the other hand, Macau and Hong Kong were struggling to bring back Chinese travellers at the same volume as in 2019/2018. Some Southeast Asian countries were also hoping for the return of Chinese travellers. For example, Thailand now welcomes Chinese travellers with a visa-free policy, but negative news on social media, namely the shooting last October and rumours of human trafficking, slowed down the recovery.

Unlike the mass tourism days prior to the pandemic, Chinese travellers are now looking for a better travel experience, and luxury destinations have particularly benefited from the return of these Chinese high spenders. At the same time, another major segment of travellers is managing their expenditures more carefully. With the rise of Duty-Free shopping on Hainan Island, shopping is now at a much lower priority than it used to be. Experiences are most sought after.

Overall, the recovery of Chinese inbound travellers was slower than the overall recovery in most of the markets, with the exception of Korea. The table below shows the recovery path of all travellers and Chinese travellers in selected countries and regions in year-to-date and monthly figure in July 2024.

The table below presents the market share of Chinese travellers in selected countries and regions from year-to-date through July 2019 and 2024.

While most markets have yet to see the expected return of Chinesetravellers, China became the largest feeder market for many of thedestinations, including the Maldives, Korea, and Singapore. At the same time,some countries and regions now register more diverse feeder markets than pre-pandemic. Once heavily relied on Chinese travellers, Cambodia’s top two feedermarkers are now Thailand and Vietnam. The key factor affecting the return ofChinese travellers remains connectivity, as only direct flights between Chinaand Siam Reap are available to Kunming. Additionally, visa-on-arrival is stillrequired for Chinese citizens. As a result, Chinese travellers are yet toreturn to Cambodia at the levels registered in 2019. Taiwan, on the other hand,also sees a significant decline in travellers from China due to the tensionacross the Taiwan Strait, but the shift of feeder markets pushed the island todiversify its feeder market after the pandemic.

Altogether, China remains a key tourism feeder market for many countries and regions in Asia Pacific. However, the recovery is not balanced between destinations. Other factors include the macroeconomic development in the medium to long term, as well as the ease of travel, from visa policy, over passport issuances, to connectivity.

So, are Chinese travellers back? Well, they’re on their way, but not at the same pace as in 2019.