With the Southeast Asia run of the Australasian Hotel Industry Conference and Exhibition (AHICE) opening today, 10th March, in Singapore, industry experts and professionals are set to discuss the dynamic evolution of the industry and how it seeks to face the challenges posed by ongoing global issues.
Given how West Asia will take time to recover from the ongoing armed conflict, many interested in investing in the hospitality industry are setting their sights on the rest of the region, particularly Southeast Asia.
But the interest isn’t a sudden flash in the pan; it’s actually been rising since 2023, at which point Southeast Asian hospitality stood to attract US$10.1 billion in investment volumes.
Given how the industry has evolved since then, recovering from the impact of the pandemic almost to pre-2020 levels, investors remain keen on putting their money into this dynamic region.
Getting into immersive experiences
Southeast Asian accommodation providers’ current thrust towards immersive experiences and quality tourism is one of the factors that is working in the region’s favour.
In recent years, the sector has undergone a shift towards experiential, wellness-focused, and sustainable travel.
With this came the rise of mixed-use developments offering a broad range of services, amenities, and attractions ranging from extensive shopping malls and dining enclaves, to performing arts centres and state-of-the-art cinemas, all a few steps away or even right within one’s hotel or resort.
One good example of this comes from Malaysia’s Sunway Hotels and Resorts, of which its chief operating officer Alex Castaldi said: "At Sunway, we integrate seamless experiences across hospitality, retail, entertainment, and wellness to cater to the modern traveller’s evolving needs. For example, Sunway City Kuala Lumpur is designed as a one-stop destination where guests can enjoy world-class dining, premium shopping, and interactive leisure experiences all within a single, sustainable ecosystem."
Resorts as a potential growth sector
Resorts are another potential growth area within the sector: the report from Jones Lang Lasalle (JLL) cited earlier points out that, even as early as 2021, there was already a surge in interest among investors for resort destinations.
As of end-2021, more than 11 percent of total hospitality investments in the Asia Pacific were put into resort developments, representing a significant jump from the six percent reported in 2016.
Experts likewise pointed out that investment interest will continue to grow, not only for the usual venues in Indonesia, Thailand, and the Maldives, but also island getaways in the Philippines and Vietnam.
Indeed, we are already seeing major developments outside Manila, Cebu, and Boracay with regard to resorts, given emergent properties in areas like Palawan, Siquijor, and Dumaguete.
In Vietnam, we are also seeing the rise of Danang and Phu Quoc not only as resort destinations, but key venues for the MICE sector.
Factors to consider
Moving forward, investors should look into the following points prior to making any inroads towards areas with potential:
- Infrastructure and connectivity measures Some of the most lucrative properties and developments took proximity to airports, seaports, attractions, and local transportation hubs in their planning phases, and are now reaping the benefits of their prudence. Especially given traffic and urban congestion issues throughout Southeast Asia, those involved in planning and development need to study their locations well ahead of construction;
- Regulatory matters Investors also need to look into visa policies which are being liberalised or, at least, less constrained throughout the region as less trouble for entry often means more arrivals. Likewise, given the ongoing geopolitical conflicts affecting West Asia and even some parts of Southeast Asia, it also pays to be on the lookout for political and socioeconomic tensions;
- Keeping an eye on costs We have mentioned in a previous article that rising operational costs will be an issue throughout the travel and tourism sectors, which means hospitality will take a hit. In which case, careful budgeting matters even in the earliest phases of development, with an eye towards dealing with inflation whilst giving potential markets reasonable rates; and
- The right partners Strategic partnerships are key to success in hospitality, and in this region, it matters to team up with homegrown companies and businesses who are more than familiar with local traditions and customs. By partners, we also recommend that investors look into their human resources component and hire well-trained locals who can add a touch of local warmth to a property’s service.
