Asia Pacific hotel profits set to rise 2-6% despite challenges

Hotel operators in Asia Pacific are forecasting a moderate increase in profitability in 2026 amid ongoing economic and geopolitical challenges, according to JLL's latest sentiment survey.

The APAC Hotel Operators' Sentiment Survey 2025/2026, conducted by JLL, indicates that industry stakeholders expect gross operating profits to rise by between 2% and 6% year-on-year in 2026. This cautiously optimistic sentiment is reflected in a continued focus on operational efficiency, talent retention, and sustainable operations as core strategic areas.

Geopolitical and economic risks

Responses reveal that 17% of hotel operators across the region consider geopolitical uncertainty to be the most significant threat to their business performance in 2026. This figure exceeds those naming economic slowdown (15%), increased competition (15%), and inflationary pressures (11%) as primary risks. The sector's ability to navigate these challenges is punctuated by the perceived need for adaptability in uncertain circumstances.

"There is a clear consensus from hotel operators in Asia Pacific that the unpredictable global geopolitical and economic situation requires a higher degree of flexibility with their business plans to be able to quickly adapt to different market conditions. With the backdrop of volatility, the hotel sector in Asia Pacific continues to perform robustly and we expect continued growth in operational profits in 2026," says Xander Nijnens, Senior Managing Director, Head of Advisory and Asset Management, JLL's Hotels & Hospitality Group, Asia Pacific.

Tourism demand and sector performance

Tourism is showing consistent growth across Asia Pacific, with an increase of 10.7% in international visitor arrivals during the first half of 2025, according to data from UN Tourism. As a result, hotels have recorded steady advances in Revenue Per Available Room (RevPAR), mostly attributed to higher Average Daily Rates (ADR) rather than rising occupancy, compared to the strong performance base of the previous year.

Analysis from JLL identifies Vietnam as the regional leader in expected profitability growth for 2026, with a predicted 6% increase in Gross Operating Profit (GOP). India is anticipated to see a 6% rise in total revenue and a 4% increase in GOP compared to 2025. Japan and South Korea are expected to follow, each with projected profitability growth of 4%, supported by robust travel demand and constrained new hotel supply. In contrast, Greater China is forecast to face declining profits, with margin compression and ongoing weak demand causing accelerated profit contraction relative to revenue falls.

Food and beverage outlook

Food and beverage operations remain an area of confidence for many hoteliers. Approximately 60% of respondents anticipate stable margins and positive performance in 2026, with lifestyle hotel brands particularly optimistic due to their emphasis on experiential dining and beverage options that align with current traveller preferences.

Talent and retention strategies

The survey highlights persistent challenges in attracting and retaining talent, with half of hotels reporting ongoing staff departures for higher pay either within or outside the hospitality sector. Despite remuneration being the leading incentive for turnover, salary increases rank only fifth among measures applied to retain staff, indicating a disconnect between causes and retention strategies in the workforce.

Capital expenditure priorities

Hotel operators' capital expenditure plans are focused mainly on operational excellence, with particular attention on product optimisation. The top three priorities for capital spend in 2026 are investment in operating systems, upgrades to mechanical, electrical, and plumbing (MEP) systems, and ensuring compliance with brand standards.

Sustainability initiatives and barriers

Thirty percent of APAC hotels have achieved sustainability ratings, with adherence to brand standards as the main reason for investment in environmental practices. Ongoing obstacles include limited funding for green initiatives, uncertainty over the return on investment for sustainable technologies, and a need for clearer measurement metrics for sustainability impact. Nonetheless, the implementation of sustainability measures is advancing, driven by both customer demand and corporate responsibility commitments.

"The 2025/2026 survey results demonstrate an industry that has learned to navigate uncertainty while maintaining strategic focus," said Nijnens. "The projected GOP growth of 2-6% reflects operators' confidence in their ability to drive both revenue and operational efficiency improvements. With profit grow decelerating in many markets, owners must work much harder to unlock value in their assets and to drive performance uplift. Embracing innovation, adopting new technologies, and leaning into experiential and lifestyle trends are avenues to creating this uplift."