Mid-year review
With tourism arrivals close to recovering to pre-pandemic levels in 2025, growth in 2026 is expected to slow y-o-y. While mainland Chinese outbound travel is yet to fully rebound, weak domestic demand and economic concerns may see a full recovery pushed back to 2026 and beyond.
Forecast made in January 2026
Prepare for a post-pandemic tourism recovery plateau
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Although lower flight capacity resulting from the Middle East conflict and rising fuel costs have constrained occupancy growth, hotels in most markets continued to record y-o-y increases in RevPAR in H1 2026 by adjusting pricing strategies.
Surprise: Intra-regional travel has been less affected compared to long-haul flights. Vietnam and Korea have both recorded double digit growth in tourist arrivals due to their reputation for value-for-money, reliability and safety.
Forecast Accuracy
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Hotel conversions remained a prominent trend in Hong Kong SAR in H1 2026, with nine hotels acquired for conversion to student accommodation. Limited supply and the wave of conversions supported both ADR and occupancy growth during the period. Together with the continued recovery in visitor arrivals, these factors ensured the city was one of the top RevPAR performers.
Surprise: Office oversupply, more attractive hotel pricing, and strong policy support have led to an upturn in office-to-hotel conversions in Shanghai so far this year.
Mid-year review
As the living sector gains traction, investors should explore conversion opportunities in markets where demand for living assets is high. Approaches include converting hotels into co-living and student accommodation, especially in Hong Kong SAR.
Forecast made in January 2026
Convert hotels to living spaces
Forecast Accuracy
Events and concerts have emerged as key drivers of Asia Pacific hotel performance as they can generate spikes in occupancy and room rates as well as create demand during the low season. Seoul and Tokyo are strong markets for domestic concerts, while Singapore and Hong Kong SAR are regional leaders in hosting international events.
Surprise: During the first week (April 5th - April 11th) of BTS's comeback concert series in Korea, strong domestic and international demand pushed up Seoul hotel ADR and occupancy to their highest levels so far in 2026, achieving RevPAR of 34% greater than the same period of 2025.
Mid-year review
With growth in tourist arrivals in many Asia Pacific markets set to be increasingly driven by events and concerts, hotel owners and operators must capitalise on this trend by utilising strategies such as real-time pricing to respond quickly to shifts in demand during events or peak times. This flexibility can help them make the most of high-demand periods even if overall occupancy is low.
Forecast made in January 2026
Adapt to event-driven tourism trends
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Forecast Accuracy
With construction costs remaining elevated in developed markets, new developments are limited and focused on high-end product. However, soft brands and conversions can provide owners with a cost-effective method to refresh their brands and create value add opportunities.
Surprise: Consumers' willingness to spend on experience is enticing investors to consider converting existing hotels to lifestyle brands. Growth in smaller size (US$ <100 million) hotel transactions, which totalled approximately US$ 4 billion in H1 2026, a rise of almost 60% y-o-y, can provide investors with opportunities to ride on this trend.
Mid-year review
High construction costs mean hotel owners looking to convert or rebrand in 2026 should further consider soft brands in order to keep conversion costs low. Soft brands can provide hotel owners with greater independence on brand requirements while enjoying access to core-brands’ membership and booking platforms.
Forecast made in January 2026
Consider soft brands amid elevated construction costs
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Forecast Accuracy
