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Depressed Rooms Rates In South-East Asia Will Deter Investors
The depressed hotel room rates in South-east Asia should be viewed seriously as it would cause capital to flow out of the industry, said Ichigo Umehara, president of Pan Pacific Hotels and Resorts.
He argued that the low rates or under-pricing of rooms in the region puts the hotel industry at peril.
`From the investors point of view, such low room rates cannot be justified and this will draw investment away from the industry in the region`, He warned that in order for South-east Asia's hospitality industry to remain healthy there has to be continued investment.
But because of the relative low returns, `Investors will shift their attention to other industries and even away from the region,` he said.
He cited Malaysia as an example, ` where room rates are so low, investors will not find it viable to invest in the hotel industry.`
Umehara's view is echoed in a hotel investment strategy survey by Jones Lang Lasalle Hotels that said investors now seek an adequate return on investment and opportunity for capital growth. Before a significant number of investments were driven by emotional factors.
Singapore 26/10/04
