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Asia Pacific recovery depends on domestic travel…or suitable substitutes

Hotel demand can be categorized into a variety of travel buckets: leisure and business, transient and group, and today’s focus, international and domestic. Recovery in the Asia Pacific region demonstrates the importance of that third bucket, as a country’s historic reliance on domestic demand directly impacts its hotel performance today.

Regional recovery can be divided into three tiers dependent on historical domestic demand and the state of the country’s borders today.

Asia Pacific Recovery

Strong domestic demand pushes occupancy near 2019 levels

Three Asia Pacific markets—Mainland China, Papua New Guinea, and Singapore—have returned to near-normal occupancy levels. Preliminary October data reveals occupancy down 8% year over year in Singapore and just 4% in China. Papua New Guinea actually increased occupancy 4.3% from October 2019.

For China and Papua New Guinea, a historically strong reliance on both business and leisure-based domestic travel has helped bring hotel performance closer to normal. For China especially, residents’ inability to travel internationally has boosted the domestic leisure market, and in vacation markets like Sanya, performance has improved from 2019.

The opposite is true in Singapore, where government intervention and quarantine demand has helped sustain a city-state almost completely reliant on international arrivals.

Travel corridors allow business travel to resume

While China, Singapore, and Papua New Guinea lead the way, occupancy in Australia, New Zealand, and Japan continues to climb. Preliminary October occupancy in these middle-tier countries remained 20 to 30 points below prior year levels, but absolute occupancy reached between 46% and 58%, putting these countries within range of China hotel performance.

Improvement has occurred for a few reasons. The advent of ‘green lanes’ allowing international travel into Australia and Japan from certain countries has helped business travel to resume and lessened these countries’ reliance on domestic leisure demand. In New Zealand, where borders remain closed, a seemingly successful COVID-19 elimination strategy has allowed business, leisure, and even group travel to resume, with no restrictions on gathering size.

These advancements, in addition to the arrival of spring and summer in the Southern Hemisphere, should allow the middle-tier countries to continue improving occupancy over the coming months.

Border closures forestall recovery

In areas where borders remain closed and tourism is a key economic driver, the hotel industry has not yet begun to recover. Preliminary October occupancy in Fiji, the Maldives, and Myanmar hovered between 15% and 20%, a mild improvement for the Maldives but a sustained trend for Fiji and Myanmar.

For Maldives and Myanmar, borders closures and an inability to drive domestic demand continue to depress occupancy. Domestic demand is virtually non-existent in the Maldives, but international travelers are welcome, and minor occupancy improvements throughout October may be a sign of things to come.


Green shoots of hotel occupancy recovery are evident across much of the Asia Pacific region. China continues to trailblaze a path forward, but other countries are closing the gap to reach similar occupancy levels. In stark contrast, countries where borders remain closed and tourism drives economic growth struggle to improve occupancy. Finding key factors of demand—whether domestic, leisure, business, or the elusive international—remains key to recovery.

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