Global economic outlook is expected to improve by H2 2021, with travel to rebound over the next three years to at least pre-COVID-19 levels. some caution in the near term as borders reopen and the mechanism to facilitate mass travel is formalized between governments; nevertheless, we are of the opinion that travel will return. There will be changes and more emphasis on factors such as hygiene, but our inherent wanderlust, relatively cheap cost of travel and pent-up demand will drive our prediction of a V-shaped recovery for the sector over the next three to four years. Melbourne hotels performed at high levels, recording year-round occupancy levels of 84.2%. In 2020, however, in line with the rest of Australia, performance was affected by COVID-19, with hotels operating at half the occupancy levels of the previous year’s figures and demand predominantly from those undertaking the mandatory quarantine period in hotels and a small proportion of intrastate leisure demand.
Extent of new supply to enter the market in 2021 is anticipated to affect existing hotels’ ability to recover. Melbourne city currently has the largest hotel development pipeline in Australia, with 19 hotels currently under construction totaling over 4,800 new rooms. Singapore government has been actively promoting various tourism initiatives that should drive visitation in 2021, including the business travel lane, which allows corporate and diplomatic travelers to skip quarantine on arrival, and the launch of the “Air Travel Pass Program,” which allows leisure tourists to apply for travel to Singapore without undergoing the 14-day quarantine period. Planned new attractions and infrastructure projects scheduled between 2021 and 2030 – including the expansion of the two integrated resorts and Great Southern Waterfront– bode well for future visitation and, combined with the relatively low level of new room supply anticipated over the near term, this should continue to underpin hotel fundamentals over the medium term. Most liquid markets were South Korea, China, and Japan, while markets such as Singapore and Malaysia saw little investment sales during the quarter. With international travel restrictions in place, markets with large domestic investment bases continue to have an advantage during times of challenged cross-border investment, as Tokyo and Seoul maintain their top positions.