Opportunities abound in hotel development across the Asia Pacific with many groups reporting strong interest in white-label management and franchising partnerships.

Here, Wyndham Hotels and Resorts, Vice President of Business Development SEAPR, Matt Holmes, discusses the challenges and opportunities in the market.

Persistent interest rate hikes have a knock-on effect on the construction of new hotels as cost of debt for hotel developers and would-be buyers has increased significantly.

This higher cost of debt further compounds the existing challenges that the industry has been experiencing for the last few years – higher costs for construction, materials, labour, as well as labour shortage which also results in longer build times.

Thankfully, this can be partially offset by better valuations from a greatly improved trading environment; buoyed by strong corporate and leisure travel demand. The hotel industry is on firmer footing as hotels remain to be viable inflation hedge, with the ability to adjust room rates dynamically to accommodate an environment of higher operating costs and demand.

Despite these challenges, hotel development opportunities abound. According to hospitality analytics firm STR and discussed at the recent AHICE 2023, the Revenue Per Available Room (RevPAR) between new and incumbent hotels has never been smaller.

Recent trends reflect that travellers are more interested on experiencing stays at newer hotels, adopting them at a far quicker pace than previously. This means that the protracted stabilisation periods are either greatly retracting or becoming non-existent.

We warmly welcome the increasing interest in the franchise model – with more companies that were more heavily focused on direct management now moving into this space.

Alongside this trend is also the emergence of white label management operators that we continue to engage with. In fact, some of our recent signings across Australasia and Southeast Asia have been in conjunction with these white label hotel management partners, and we will continue to leverage this model where it makes sense for the overall betterment of hotel owners.

Hear from more leading development experts about the current and prospective hotel trading environment in HM’s 2023-24 Hotel Development Outlook.