Accommodation Sector in 70 Percent of Asia Pacific Countries on Track for Full Recovery in 2022

The Asia-Pacific region’s (APAC) lodging industry, in line with the overall industry, registered massive losses as a result of the pandemic.

In 2020 and 2021, fluctuating demand, revenue loss, reduced staff, and rising costs tied to public health measures were among the multiple challenges faced in the accommodation sector in the region. Small businesses suffered most, with many lacking the capital to service fixed running costs. However, accommodation providers adapted their business models by adopting contactless and physically distanced services  or function as quarantine facilities. Some developed new businesses, such as food delivery.

Indeed, accommodation sectors in seven of 10 countries have in the region are on pace to hit 2019 levels this year.

We published our latest Skift Research report on June 23. Below, we share a snippet of the report.

Hotel Sector Market Analysis by Country

In this section, we will provide an analysis of different performance indicators to understand the hotel market dynamics in APAC, including revenue, the size and scale of companies, occupancy rates, revenue per available room (RevPAR) and average daily rates (ADR).  

Revenue and Forecasts

Based on 2019 revenue data, the 10 largest markets for hotels in APAC are, in order: China, Japan, Australia, India, Indonesia, South Korea, Turkey, Thailand, Singapore, and Malaysia. Collectively, the top three markets themselves represented $94 billion in sales, 55 percent of the APAC hotel market in 2019.

Source: Skift Research; Historical data drawn from Australian Bureau of Statistics, Chinese Statistics Office, Horwath HTL, Japan Productivity Center, Department of Statistics Malaysia, National Statistical Office Thailand, UNWTO

China is, by our estimates, the largest hotel market in APAC. We estimate that it will generate $36 billion in sales in 2022, a 24 percent share. Although hotels in China were performing extremely well in 2021 and the overall revenue close to 2019 levels, the rise of Covid cases and the resulting travel restrictions imposed by the government in 2022 has again slowed down the growth in hotel revenues. Matthew Parsons, corporate travel editor at Skift, in his recent article highlighted how China’s ongoing Covid crackdowns have put the brakes on an almost-there recovery for hotel companies in the region. 

The hotel industry in Japan is expected to reach 2019 revenue levels in 2022. Revenue grew at an average rate of 7 percent year-over-year till 2019 before it fell down by 70 percent due to the pandemic. Japan has maintained some of the strictest border controls in the world over the past two years in an effort to stem the spread of Covid-19, hammering inbound tourism. However, the country is opening up in a phased and swift manner now. From the beginning of March 2022, authorities raised the number of people allowed to enter to 5,000 a day, from 3,500 before. Starting from June 2022, Japan increased the maximum number of people allowed every day to enter at border crossings to 20,000. 

It is noteworthy that the revenue of the hotel industry in Australia has remained more or less stagnant in the past decade, growing at an average of 2 percent year-over-year between 2008 and 2019. Revenues of hotels in Australia are expected to reach 85 percent of 2019 levels in 2022, around $10 billion, and will maintain a steady share of around 7 percent in 2019 and 2022. Australia reopened its border in February 2022, the first time since March 2020, for travelers to Australia from anywhere in the world as long as they are vaccinated. It is estimated that the country will reach pre-pandemic travel levels by the end of 2022. In a recent interaction with Skift, Ben Hall, CEO of Australian-based tour operators AAT Kings and Inspiring Journeys, commented, “I think that we will see people booking travel here. It’ll gradually progress as we get through the winter months into summer. And I think it will be back and booming by September and October.”

The growth trajectory of hotel revenues in India has remained topsy turvy since 2008 predominantly due to dropping ADRs which was not matched by an equivalent rise in occupancy rates. However, the future seems bright for India with 2022 hotel revenue surpassing 2019 levels reflecting a strong recovery from the pandemic. A recent analysis by STR validates our estimations. According to STR, India’s hotel performance recovery resumed early in 2022 and April seemed to be the turning point, with the country outpacing pre-pandemic comparables in occupancy and ADR for three consecutive weeks. Additionally, data shows that forward bookings appear healthy for the remainder of the year. 

Hotel revenues in Indonesia consistently grew at an average of 8 percent year-over-year between 2008 and 2019 to achieve the fifth spot on the chart with a revenue of around $11 billion in 2019. Like India, Indonesia’s hotel sector revenue is also expected to surpass the 2019 levels by 2022. Peden Doma Bhutia, Asia Editor at Skift, reported that the country dropped all quarantine requirements, on-arrival test requirements, and declared that foreigners from nine ASEAN countries would be able to enter the country without a visa earlier this year, resulting in a rapid increase in foreign tourist arrivals. 

South Korea, Turkey, Thailand, Singapore, and Malaysia collectively accounted for 21 percent of the total hotel sector revenue of the APAC region in 2019. The hotel sectors of these countries are expected to recover from losses and surpass the 2019 revenue levels by 2022, except Thailand, which would be at 70 percent of its 2019 revenue level in 2022. As recently reported by Skift, Thailand has been late to the party. The country eased entry restrictions much later in the year as compared to its geographical counterparts and hence, a full recovery this year seems like a bleak possibility. 

Asia Pacific Accommodation Sector Market Estimates 2022

The accommodation sector in APAC is witnessing a fast-paced recovery with 2022 revenue levels not far from reaching pre-pandemic levels. However, the composition of the industry remains unclear with short-term rentals revenue share decreasing in 2022.

Read More