Hong Kong Hotel Transaction Volume Doubles: Revealing the True Trends in Asia-Pacific Hotel Assets

Over the past year, the Asia-Pacific hotel market has quietly undergone structural change.

According to recent data, hotel investment in Hong Kong reached USD 456.6 million in the first three quarters of 2025, a 106% increase year-on-year. This growth is not merely a low-base effect—it reflects post-pandemic asset repositioning and recovering demand.

Ling Wei Tan, Senior Vice President at JLL Hotels & Hospitality Asset Services, observes:

Developers and high-net-worth individuals are deleveraging; institutional funds are seeking value gaps; and hotels are being repurposed into student accommodation and other uses, collectively driving transaction volume.

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1｜Asia-Pacific Hotels: Recovery, Improved Operations, and Fundamental-Driven Investment

In H1 2025, international visitor arrivals in Asia-Pacific rose 11%, reaching 92% of pre-pandemic levels. Key markets:

• Japan & Vietnam: >20% growth

• South Korea: +15%

This recovery has steadily increased RevPAR (Revenue per Available Room).

Key trends:

• Regional business travel, cross-border tourism, and conferences drive sustainable demand

• Institutional investors focus on operating performance and cash flow, rather than speculative price appreciation

At this stage, hotel asset value is increasingly tied to operations, not sentiment.

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2｜Hong Kong: Policy-Driven, Fast-Paced, Transaction-Focused Opportunities

Hong Kong’s market is characterised by:

• Government schemes, e.g., “Hostels in the City,” allowing hotels to convert into student housing

• Deleveraging by developers and ultra-HNWIs, prompting asset disposals

• Landmark transactions such as COZi Harbour View (~HKD 2 billion)

Investors are exploiting performance–valuation gaps, making Hong Kong opportunities transaction- and policy-driven, rather than purely operational.

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3｜Australia: Stable Operations, Supply Shortage, Institutional Preference → Scarce Core Assets

Unlike Hong Kong’s transactional boom, Australia demonstrates long-term stability and quality-driven value:

• Tourism recovery is broad-based, with international arrivals reaching 90%+ from China, US, UK, Southeast Asia

• Meetings, sports, and business travel support consistent demand

• Hotel performance 2025:

  • ADR (Average Daily Rate): +7–10%

  • RevPAR: +5–7% (above APAC average)

  • Occupancy: 70–75% (regional leader)

Supply-side advantages:

• New hotel supply at 10-year low

• Construction costs up 20–30%

• Tight financing → natural supply restriction

• Freehold ownership + stable cash flow → highly favoured by institutions

Compared with Hong Kong (high convertible supply), Vietnam (future oversupply risk), Japan (currency volatility), Australia offers scarce, stable cash-flow assets.

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Cornerstone Assets’ Perspective

Combining these trends, we see three clear takeaways for investors:

1. Hotel assets are shifting from price-volatile to operating cash-flow-oriented

   • Capital evaluates NOI, RevPAR, occupancy stability, and adaptive-use potential rather than speculative gains

2. Regional tourism recovery aligns demand with asset fundamentals

   • Provides a clearer basis for asset valuation

3. Alternative-use potential is an undervalued opportunity

   • Policy-enabled conversion (e.g., student housing, mixed-use) adds structural value in major cities

For HNW investors exploring commercial real estate, this represents a window for fundamentals-driven investment, independent of short-term sentiment.