Hospitality investments in the Asia Pacific (APAC) region remain resilient in the first quarter of 2025, as capital continues to gravitate toward high-liquidity markets like Japan, South Korea, and Australia. According to Colliers’ latest report, Asia Pacific Hospitality Insights – May 2025, the sector is transitioning from post-pandemic recovery to sustained, performance-led growth.

The report highlights that hotel transaction activity is being led by established markets, with Japan, South Korea, and Australia topping the list in terms of deal volume. Singapore has emerged as a preferred destination for generational wealth investments, while India and Southeast Asia are evolving as crucial demand engines.

India’s Rising Influence in APAC Hospitality

A key highlight of the report is the role of Indian outbound travel in shaping the regional hospitality landscape. Indian travelers are emerging as a year-round, dependable demand source, especially in destinations like Thailand, Vietnam, and South Korea. This surge is attributed to rising disposable incomes and a growing preference for experience-driven travel, helping maintain strong room rates and reshaping regional hospitality dynamics.

“India is driving a structural shift in Asia Pacific’s hospitality landscape,” said Nikhil Shah, Managing Director, Hospitality & Alternatives at Colliers. “With strong demand across the luxury, lifestyle, and MICE segments, and rising investor confidence in experience-led assets, India is now central to regional tourism flows, sustaining premium pricing and reshaping travel dynamics.”

Spiritual Tourism Fueling Domestic Growth

Domestically, India’s hospitality sector is poised for robust growth, with Tier II cities and spiritual destinations becoming the next frontiers of expansion.
Places like Ayodhya, Dwarka, Puri, Shirdi, Tirupati, and Varanasi are witnessing infrastructure upgrades and government-backed initiatives, making them attractive for hospitality investments.

“Spiritual tourism is emerging as a key growth driver, backed by focused policy support and infrastructure development,” said Vimal Nadar, National Director and Head of Research at Colliers India. “These destinations are unlocking new investment avenues and reshaping India’s hospitality map.”

Q1 2025 Performance Overview

Despite a 19% dip in overall APAC hotel deal volumes in Q1 2025, hotel performance remained strong, supported by a rise in Revenue per Available Room (RevPAR) and Average Daily Rates (ADR). RevPAR grew by 2.1% year-on-year, a significant improvement from the 0.4% growth seen between 2023 and 2024.

Leading markets in ADR growth include Phuket, Tokyo, New Delhi, Mumbai, and Osaka, buoyed by strong domestic demand, effective market positioning, and a resurgence in international travel.

“These markets exemplify a rate-driven performance strategy and set a benchmark for value-oriented expansion,” the report notes.

Investor Strategy Shifts Toward Value-Add

While geopolitical uncertainties contributed to a cautious Q1, investors are expected to become more active as market stability improves. According to Govinda Singh, Executive Director, APAC Capital Markets at Colliers, the focus is shifting from cap rate compression to value-add strategies aimed at boosting cash flow and long-term income.

“With pricing holding firm, the imperative to deploy capital is intensifying. We anticipate a pickup in activity through the rest of the year,” Singh said.

Looking Ahead

The Asia Pacific hospitality sector is entering a new phase of stabilized, performance-focused growth. With India emerging as both a powerful outbound force and a robust domestic market, the region is expected to see deeper investment interest and a renewed focus on operational excellence, occupancy-driven strategy, and guest experience.

Also Read: Indian Hospitality Sector Booms: Strong Growth in RevPAR and Investments

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