Asia-Pacific Hotel Investment Surges to $8 Billion with Rising ADRs in 2026

Hotel investment in Asia-Pacific surged to $8 billion in the first half of 2026 and leapt by 21% over the corresponding period in 2025, according to CBRE research, thanks in large part to higher travel volumes, stronger average daily rates (ADRs) and a dwindling pipeline of new hotel supply.

As for the countries and regions where hotel investment increased the most, Japan, mainland China and South Korea topped the list, with China’s hotel investment more than doubling year on year thanks to extension of REIT framework to hotels rated four stars and above. Hotel ADR in the Asia-Pacific region has already hit or approached a new high in recent years and as a result hotel revenue per available room (RevPAR) is increasing.

The two biggest performers in terms of pricing and occupancy are South Korea and Vietnam, with ADR growth of 13% YOY in South Korea through July, and 12% YOY in Vietnam, in addition to both countries now averaging above the pre-pandemic levels of occupancy.

Though the hotel sector is recovering from the recent downturn, challenges remain. The current Middle East conflict has led to numerous long-haul air routes being affected; as a result, aviation fuel costs have shot up, leading CBRE to revise down its forecast for passenger traffic growth in Asia-Pacific for 2026 to 5.1% (from 7.3% previously).

Construction and financing costs remain at high levels and, therefore, new hotel supply is expected to increase by only 2.3% per annum by 2029, a level significantly below the historical average of 5.1% and even lower than 1% outside of China.

With new supply in check, be aware that hotel investors are beginning to look at alternative methods of generating returns, ie hotel repositioning and hotel conversions such as student housing in Hong Kong. But be aware that the cost of new development is not going to decrease anytime soon.

Borrowing costs are another area that CBRE is keeping an eye on. Higher financing expenses could put a dent in hotel investment returns in the second half of the year, deterring transaction volume.

What This Means for Your Portfolio:

1. The rate of increase in ADR in destinations that are experiencing high growth (such as Korea and Vietnam) is indicative of stronger hotel income potential.
2. Consider alternative development opportunities, including hotel repositioning and/or adaptive reuse projects, where new hotel supply is constrained but asset values are rising in key cities.
3. Geopolitics and fuel prices will continue to impact tourist flows into destinations across the region, adding volatility to demand for hotel assets.
4. Verify the costs of borrowing and associated terms and conditions, as the interest rate environment is going to impact investment returns and the ability to service debt.

A Forward Look:

In summary, Asia-Pacific hotel investment is not about volume in hotel development but rather about extracting maximum value from existing assets, within the constraints of supply and increasing costs. It’s wise for investors to think outside the box of new development and focus on maximising returns through creative asset reuse in destinations where tourism is performing better than the rest of the region.