Japan, China and Korea Lead US$8 Billion Asia Pacific Hotel Investment Market
Investment activity increases
Hotel investment activity in Asia Pacific reached US$8 billion in the first half of 2026, increasing 21% from the same period a year earlier, according to CBRE’s Asia Pacific Hotels and Hospitality Performance and Outlook Report.
The increase reflected continued investor interest in hotel properties as travel demand improved and the development pipeline remained constrained in many markets. Japan, Mainland China and Korea accounted for much of the activity during the six-month period.
Mainland China recorded one of the region’s strongest recoveries. Hotel transaction volume more than doubled year over year, supported partly by the extension of China Real Estate Investment Trust eligibility to hotel assets rated four stars and above. The policy change expanded potential investment and financing options for qualifying hotel properties.
Japan continued to draw domestic buyers and cross-border capital. Korea also attracted investment, supported by hotel operating performance and increased international visitor demand. CBRE said investors were concentrating on markets where travel growth and supply-demand conditions were supportive.
Room rates support hotel performance
Operating conditions improved across much of Asia Pacific during the first half of 2026. Average daily rates, or ADRs, were at or close to historical highs in most markets, CBRE said. Revenue per available room, known as RevPAR, continued to rise in most locations, mainly because hotels could charge higher room rates.
Occupancy levels in much of the region remained below those recorded before the COVID-19 pandemic. Hotel operators have generally prioritised higher rates rather than pursuing occupancy growth, according to the report. This approach has contributed to revenue gains even where the number of occupied rooms has not fully recovered.
Korea and Vietnam were exceptions in occupancy performance. Both markets exceeded their pre-pandemic occupancy levels amid continued travel demand. Their results indicate that demand has recovered at different speeds across the region and that visitor flows remain an important factor in hotel performance.
Tourism recovery continues despite flight disruption
Tourism activity in Asia Pacific continued to recover despite disruptions to some long-haul flight routes linked to the conflict in the Middle East. Korea and Vietnam were among the stronger tourism markets, benefiting from arrivals from within Asia Pacific and Europe.
Korea has attracted a wider group of international visitors through demand connected to K-pop, Korean television and film, and medical tourism. Vietnam has also strengthened its tourism position, particularly as a leisure destination. The recovery in arrivals has helped support hotel demand in both markets.
CBRE said travel demand was a central factor supporting both hotel operations and asset values. However, it also noted that higher borrowing costs could slow investment activity in some markets during the second half of 2026.
New hotel supply remains constrained
Limited new supply remains a significant feature of the regional hotel market. Higher construction costs have restricted development in many locations, while financing costs have created further challenges for new projects.
Excluding Mainland China, hotel supply in Asia Pacific is expected to grow by about 1% annually between 2025 and 2029. The low projected growth rate means that existing hotel assets may face less competition from newly built properties in many markets.
Mainland China is expected to remain the region’s largest source of future hotel supply. It accounts for nearly half of projected new additions, according to CBRE. The contrast between China and other Asia Pacific markets could lead to different supply conditions and investment strategies across the region.
Investors pursue conversions and repositioning
With new hotel development more difficult, investors are increasingly examining existing assets for repositioning, renovation and conversion opportunities. CBRE said this trend is particularly visible in Hong Kong SAR, where some hotels are being acquired for conversion into student accommodation and other living-sector uses.
Adaptive reuse can allow investors to change an asset’s purpose when hotel demand, financing conditions or local housing needs make another use more viable. Such strategies may also reduce the cost and time associated with ground-up construction.
CBRE said constrained supply, sustained travel demand and improved hotel operating results continued to support the case for existing hotel assets. The report also cautioned that financing costs could affect transaction volumes in the second half of the year, even as investor interest remains focused on markets with favourable growth conditions.
To read the full report, click here.