According to a report, demand for luxury hotels in the Asia Pacific region has grown significantly, with transaction volume in 2025 surging 77% compared to 2017 to approximately US$2.1 billion. This represents one of the largest annual capital deployments since before the pandemic, which saw over US$2.4 billion in 2019.
Performance across regional markets varied, with Hong Kong maintaining its position as a core gateway hotel market in Asia. Despite a highly concentrated ownership structure and structural barriers locally, its overall performance remains outstanding.
The report notes that prime luxury hotel assets in Hong Kong are primarily held by large local conglomerates, family offices, long-term strategic investors, and high-net-worth capital. This ownership structure limits market liquidity, resulting in very few reference transactions, making it difficult to provide institutional investors with consistent benchmarks. Consequently, the Hong Kong luxury hotel market continues to exhibit a pattern of highly concentrated ownership driven by individual transactions, rather than being a highly liquid trading market.
New supply is also limited, and this scarcity provides strong support for hotel operating performance. Recent market activity has mainly focused on renovations, repositioning, or re-openings, rather than adding new supply. With cautious expansion and limited new supply, the Hong Kong luxury hotel market benefits from a demand recovery driven by mainland Chinese tourists, long-haul travelers, and business and event-related demand.
Assets with prime locations and recent investments are best positioned to capture upside from Average Daily Rate (ADR) growth. However, facing significant pressure from operational costs such as labor, utilities, and maintenance, owners and investors are no longer interpreting the market based solely on surface-level Revenue Per Available Room (RevPAR) growth. Instead, they are more focused on whether revenue recovery translates into a sustainable rebound in Gross Operating Profit (GOP) margin.
A senior executive from the Hong Kong Hotels & Hospitality Advisory team stated: "For investors, luxury hotels in Hong Kong remain an asset class worth close attention, not because entry opportunities are frequent, but precisely because their scarcity drives up asset value. The combination of demand recovery, limited supply in core locations, high replacement costs, and concentrated ownership means that rare entry opportunities can often create substantial value. Looking ahead, the market's investment approach is expected to remain highly selective. The most attractive opportunities will depend on asset quality, capital expenditure strategy, operational repositioning, and property use flexibility, rather than relying solely on overall market growth."
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