The ongoing expansion of interregional travel in Asia has emerged as a significant success story, driven by the region’s diverse cultures and its immense population. This was highlighted at the recent International Hotel Investment Forum (IHIF) Asia in Hong Kong, where industry leaders discussed the remarkable rise of travel within Asia.
“Ten to fifteen years ago, Asia was predominantly a long-haul destination for Europe,” said Alan Watts, president of Hilton Asia Pacific. “There was no ‘Asia for Asia’ back then. But now, if you examine travel trends within the region, you’ll find Chinese, Japanese, Indonesian, and Indian travelers exploring various Asian destinations. Asia’s interconnectedness is big news.”
Kenneth Macpherson, CEO of IHG Europe, Middle East, Asia, and Africa, noted the importance of understanding both individual markets and broader regional trends. “Japan and India are booming, while China’s growth is flat. But that doesn’t tell the full story. Asia represents 54 percent of the global population, and each year, 100 million people join the region’s consumer class. Our strategy is to deploy our brands to capture their attention,” he said.
China’s Role as a “Sleeping Giant”
Despite facing economic challenges, China remains a key player in the region’s tourism growth. Gary Rosen, CEO of Accor Greater China, acknowledged that China’s recent slowdown has been well documented but emphasized its potential for a comeback.
“This is the first time China’s economy has taken a significant hit, and people are reacting to it,” Rosen said. “However, when you look at the global stage, the next China is still China.” While he admitted the market is currently difficult, he pointed out that Chinese consumers remain passionate about travel. “Travel is embedded in their culture. While many industries are suffering, travel is not. The difference now is how they travel – they’re exploring new destinations instead of returning to familiar ones.”
Rosen also emphasized the strength of China’s domestic tourism market, predicting that it will soon become the largest in the world. While outbound travel from China has slightly declined since 2019, Rosen highlighted the continued presence of affluent Chinese travelers.
The Immense Potential of China
Watts echoed Rosen’s sentiments, stressing that China’s sheer size makes it a critical market. “China is currently the second-largest tourism market in the world, and its pipeline of new hotels surpasses the rest of the Asia-Pacific region combined,” Watts said. He acknowledged that while outbound travel numbers have yet to fully recover, the market’s return is inevitable. “Even with 4-5% annual GDP growth in a sluggish economy, China remains an economic powerhouse.”
Rosen added that China’s travel patterns are highly dynamic. “Right now, we’re seeing a surge in Chinese travelers heading to Japan, but that could change overnight. The key to success in this market is staying flexible – you can’t set rigid rules.”
New Opportunities for Investors
Despite some markets experiencing stagnation, Watts reported that Hilton is set to open more hotels in Asia this year than ever before, driven by increasing interest from investors. “We’re witnessing a significant shift post-pandemic, with real estate investors focusing more on hospitality,” Watts said. In the past, retail, offices, and residential properties were the top choices for investors, but that has changed.
He described the hospitality sector as the only industry that generates daily income, positioning it as a stable investment amid the uncertainty surrounding other parts of commercial real estate. “Travel and tourism have seen a resurgence in terms of investment returns, which is crucial for the future. Adaptive reuse is a prime example of this trend, with investors buying obsolete office buildings, converting them into hotels, and reaping substantial returns.”
The overall sentiment at IHIF Asia was one of optimism, with industry leaders confident that interregional travel within Asia will continue to grow, presenting significant opportunities for investors and operators alike.