APAC tourism market continues growth – but hoteliers must respond to evolving demands

Asia Pacific continues to lead the world as the fastest-growing tourism economy – but the pace of expansion is easing. As growth moderates and macroeconomic conditions evolve, hoteliers are seeking fresh strategies to sustain performance and meet financial targets.

A new report from real estate consultancy CBRE shows that Asia-Pacific may be set to become the tourism hub of the future. That is according to an analysis of emerging travel trends and impacts, including changes in foreign exchange rates and travel planning via social media.

Investment in hotels in the region remains strong, especially in Japan, Korea, and Australia. Private equity capital is the most active, as investors look for good opportunities in markets that have low debt costs – and ultimately better returns.

Growth so far this year in tourism in Asia Pacific (APAC) has been led mainly by Japan, Vietnam, and Korea. These three markets have cheap currencies, which have made them more accessible and affordable for travellers from other regions with stronger currencies.

The report also notes that Mainland China has been experiencing a domestic tourism boom. Shanghai and Beijing are ranked in the top seven cities globally for year-on-year increases in summer travel. Hong Kong and Taiwan have also seen strong growth this year, especially when it comes to international travellers.

Travelers rely on social media

More and more people are using social media not just for vacation inspiration, but also for travel planning. Around 42% of travellers use social media to research their trips, which is far more than use other sources like official platforms, review sites, or search engines.

That may not come as a surprise considering the growing share of millennials and Gen Z travellers, who are largely digital natives and use social media for everything. A survey from Klook showed that nearly 80% of younger travellers booked activities, accommodations, and experiences based on social media recommendations.

The report from CBRE shows that 40% of respondents were ‘somewhat’ or ‘very comfortable’ with booking accommodations or experiences directly on social media. Travellers in Southeast Asia were the most likely to act on travel recommendations from social media – more so than those in Japan or Australia.

Cleary, there is an opportunity for hoteliers and other players in the tourism industry in APAC to tap this important source of attention.

Challenges ahead

As macroeconomic headwinds prevail, hospitality players in Asia-Pacific countries are increasingly adopting flexible pricing, while investors are focusing on value-add opportunities in liquid markets and capitalizing on limited luxury supply.

Those are some of the strategies to counteract a continued limit in supply, which is being felt especially in Japan. With occupancy mostly recovered from pandemic lows, some tourism players are looking to capture more guest demand.

There is a significant shortage of specifically luxury hotel accommodation in the Asia-Pacific tourism hotspots, a persistent trend that needs to be addressed. That shortage is especially notable when benchmarked against Europe and the United States.

Japan and mainland China – two of the largest markets in Asia-Pacific by population – lag the rest of the region in their share of luxury rooms. Mainland China alone has the potential to support the development of an additional 1,000 luxury hotels based on population size.

India has seen a sharp rise in demand for luxury goods and experiences as more and more consumers have greater expendable income. The number of HNWIs in India grew by 5.6% in 2024, outpacing most major economies globally. With domestic demand contributing to around 87% of total tourism, investing in more luxury hotel properties in India is a smart move.

“Despite the positive data, macroeconomic and geopolitical factors continue to impact travel decisions,” said Ada Choi, CBRE’s head of research for Asia-Pacific. “As global markets adjust to the changing interest rate environment, and the subsequent impact on foreign exchange rates, hoteliers will need to be conscious of evolving tourism and guest demand in order to meet budget and operational targets.”