Luxury hotels shine as Asia Pacific deals rise 77%

Tightly held ownership and limited new supply continue to support the city’s premium hotel market.

Hong Kong remains one of Asia’s key gateway hotel markets, with its luxury hotel segment outperforming despite limited transaction activity, according to JLL.

This comes as luxury hotel transaction volumes across Asia Pacific rose 77% between 2017 and 2025 to around $16.5b (US$2.1b), marking one of the highest annual investment levels for the sector since the pre-COVID period.

In Hong Kong, prime luxury hotel assets remain tightly held by local conglomerates, family offices, long-term strategic owners, and high-net-worth capital. JLL said this has constrained transaction liquidity and limited the availability of benchmark deals.

The market remains event-driven rather than highly liquid, with few comparable transactions since major deals such as the 2015 sale of InterContinental Hong Kong and ADIA’s acquisition of a 50% stake in a New World hotel joint venture.

Supply in Hong Kong’s luxury hotel segment also remains constrained, with recent activity largely involving refurbishments, repositionings, or reopenings instead of major new supply.

These include Regent Hong Kong’s return in 2023, the addition of Mondrian Hong Kong, the upcoming Andaz Hong Kong Central, and The Landmark Mandarin Oriental’s reopening in 2026.

JLL said this scarcity has supported the trading performance of Hong Kong’s luxury hotels, which are benefiting from improving Mainland Chinese, long-haul, corporate, and event-related demand.

Well-located and recently upgraded assets are expected to be best positioned to capture average daily rate growth.

However, rising labour, utilities, maintenance, and other operating costs mean owners and investors are increasingly focused on whether revenue recovery can translate into sustainable gross operating profit margin recovery, rather than relying only on headline revenue per available room growth.

“For investors, Hong Kong luxury hotels remain an asset class to monitor closely, not because opportunities are frequent, but because that very scarcity is what drives value,” said Cleavon Tan, senior vice president at JLL Hotels & Hospitality Group in Hong Kong.

Tan said recovering demand, constrained prime supply, high replacement costs, and tightly held ownership can create meaningful value when rare entry points emerge.

JLL expects the Hong Kong market to remain highly selective, with the most compelling opportunities tied to asset quality, capital expenditure strategy, operational repositioning, and real estate optionality rather than broad market growth alone.