Southeast Asia’s Hotel Markets Shift Focus As Growth Cools

Southeast Asia’s hotel performance is showing signs of a reset. After years of dependable growth in destinations like Thailand, Singapore, and Indonesia, newer markets such as Phnom Penh, Manila, and Hanoi are beginning to outpace their regional neighbors in year-on-year growth. The shift, according to Bousserind Comson, Director of Hospitality Intelligence-APAC, signals a new chapter for investors and operators who are keeping a close eye on performance margins and demand dynamics in the region.

While RevPAR remains on an upward trend across most Southeast Asian markets, the gains are increasingly driven by rate rather than occupancy. This means travelers are paying more, but volume isn’t keeping pace. “Thailand and Singapore aren’t growing the way we’ve come to expect,” said Comson. “The momentum is shifting to less saturated destinations where year-on-year gains are more pronounced.”

Figure 1

Room bookings and golf operations are driving up costs per occupied room in Southeast Asia, with golf cost of sale surging nearly 28%. While F&B costs are mixed, undistributed costs—especially labour—continue their slow but steady climb.

That decoupling of rate and occupancy is most visible in Thailand, where rising ADR has helped shore up top-line revenue, but occupancy is softening. F&B performance varies widely by market, and catering continues to trail pre-pandemic levels. However, health club revenues—typically a minor line item—are quietly on the rise. First noted in India, the trend has now emerged across several Southeast Asian markets, likely tied to wellness-focused properties and greater local usage by gym members and resort guests alike.

From a profitability standpoint, the narrative is also evolving. Luxury and select-service properties continue to report the strongest gross operating profit margins, but the most notable growth this year has come from full-service and extended-stay hotels. Lifestyle hotels, while frequently discussed, are seeing a flatter margin progression due to rising costs. Labour remains the most significant cost pressure, especially in rooms, IT, and property maintenance—departments, now absorbing the brunt of new tech and refurbishment investments.

Figure 2

Room bookings and golf operations are driving up costs per occupied room in Southeast Asia, with golf cost of sale surging nearly 28%. While F&B costs are mixed, undistributed costs—especially labour—continue their slow but steady climb.

Southeast Asia may not be growing at its usual pace, but it remains one of the stronger subregions in APAC compared to East Asia, where markets like Hong Kong, China, and Japan are still lagging. For investors, the takeaway is clear: the growth story is still there—it’s just moved a few cities over.

If you’re looking for margin over momentum, this might be the year to rethink your map.

“The markets are changing. And just like in poker, you don’t win by playing the same hand every round,” said Comson.

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