Pro-invest Group Deputy Chair and CEO APAC, Jan Smits, spoke exclusively to HM about opportunity in the co-living segment, sustainability targets, key investments and more.
Smits took to the stage at AHICE South East Asia on Wednesday February 26, in conversation with AHICE Group President and HM Editor-In-Chief, James Wilkinson.
What are the trends you are seeing in hotels?
Hyper-Personalised Guest Experiences: Advancements in artificial intelligence (AI) and data analytics are enabling hotels to offer highly personalised services. From pre-arrival preferences to curated itineraries, these technologies anticipate guest needs, providing unique and tailored experiences.
Integration of Advanced Technology: The adoption of smart technologies is enhancing operational efficiency and guest satisfaction. Mobile check-ins, digital keys, and AI-powered concierge services are becoming standard, providing guests with seamless and contactless experiences. From AI to procurement software, in-room entertainment, PMS and RMS systems, our Technology Team is creating best-in-class technology that will ensure our hotels lead the way in incorporating technology.
Event-Driven Travel: Travelers are increasingly planning trips around specific events, such as sports tournaments, cultural festivals, and concerts. We recognise this trend and are increasingly looking to partner with major events and stage shows to create memorable experiences for our guests. For example, next month we will sponsor the Race of Champions in Australia, and provide opportunities for our guests to get behind the scenes and ride with a Champion; and we are also a hotel partner of Mardi Gras, and musicals like Annie. Events bring
How important is F&B in your hotels and are you seeing any trends there?
F&B is increasingly about offering an experience and a taste of local culture. This is especially true in luxury and lifestyle hotels, where research shows that people will actually travel just for a dining experience. We have deep expertise in F&B operations and last year saw significant increase in our F&B sales. We don’t believe in a one-size-fits-all attitude to F&B. For example at Kimpton Margo, we collaborate with Luke Mangan and offer themed brunches that appeal to luxury guests looking for memorable moments. With Holiday Inn Express, we recently launched a new partnership with Local Brewing Co. to create a signature Pale Ale which raises money to provide meals for vulnerable Australians.
How do you expect the Australia and NZ hotel sectors to perform in 2025?
According to recent research by the Mastercard Economics Institute, the APAC region is seeing stronger travel momentum than other parts of the world and within that, Australia really stands out.
Australia and New Zealand’s hospitality sectors led the world in terms of occupancy in 2024, achieving occupancies of 78.1% vs 68.9% in the US, 71.2% in Europe and 65.1% in the Middle East.
International visitor arrivals in Australia are projected to grow by 10% annually over the next five years, fuelled by the region’s middle-class expansion and the growth of low-cost airlines making travel more accessible. The middle-class population in APAC is expected to swell to 3.49 billion people by 2030, bringing with it increased spending power and a heightened desire to travel.
As we step into 2025, the hospitality markets in Australia and New Zealand are seeing continued growth, fuelled by strong domestic demand and a rebound in international tourism. At the same time, a return to the office for many companies and increased business travel bode well for the MICE sector. However, rising cost of living pressures and the increasing risk of climate impacts mean that the journey to full recovery is not without its hurdles.
With rates set to ease this year, we expect travel will continue to be a priority for people over other forms of spending.
Length of stay is also slightly higher, with people staying 1 – 2 days longer. However, cost impacts and increased supply continue to erode profitability for those hotels which are not able to stand out above the competition.
New Zealand entered a recession in the third quarter of 2024, and apart from Queenstown, occupancy and rates have been constrained. Add in the fact that New Zealand has trebled its tourism tax for some visitors, and we can see that 2025 will be challenging for that market.
What would you say to any investors in the room?
I would say that hotels are a safe bet and a lucrative opportunity! Changing work patterns, strong demand for travel, and the demonstrated resilience of hotels makes them the smart choice.
In today’s volatile economic climate, investors are seeking asset classes that offer a hedge against inflation. Hotels, with their ability to adjust daily room rates, provide this advantage, allowing investors to better navigate fluctuating markets. In contrast, office and retail spaces are typically bound by long-term lease agreements, limiting their ability to adjust to inflationary pressures. This flexibility makes hotels an appealing option for savvy Singaporean investors looking for stability.
Operating 24/7, hotels serve a multitude of purposes: they are not just places to stay, but also venues for business meetings, conferences, and social gatherings. This multi-faceted usage ensures that hotels remain relevant even as work patterns and lifestyles evolve. For example, while office buildings may only see peak usage a few days a week due to hybrid work models, hotels continue to operate at full capacity, hosting leisure and business travellers alike.
With our international experience, highly skilled team and reputation for turning under-performing hotels around, we are your best partner for long-term growth.
I would also say that this is the time to invest in flex-living as this is gaining traction with consumers seeking more flexible, affordable, and community-driven living options.
Sustainability has been a key topic for hoteliers in the past years, but recent global events have highlighted that this is even more important than ever. What does Pro-invest to in this space?
We have always put sustainability as a key consideration in our operations and investment decisions. Since our inception, we have been a pioneer in integrating environmental considerations throughout the investment process, asset development, management and guest experience. When Pro-invest launched its first Hospitality Fund in 2016, it was one of the first of its type to integrate energy efficiency into its investment criteria. Their ‘One Earth, Countless Experiences,’ promise is fundamental, underscoring the link between sustainable practices, strong governance, and financial returns. Pro-invest has also set a Net Zero target by 2030.
Pro-invest’s hotel network was one of the first in Australia to commit to NABERS five-star ratings in 2016, and we have been lobbying for industry-wide commitments to ESG for over a decade.
In 2004, there were just ten commercial office buildings with a NABERS Energy rating of 4.5 stars or higher. There are now more than 1500, and these buildings have cut their energy by more than 40% and emissions by over 50%. This new ruling is expected to lead to a similar transformation in the hotel sector, with investors sure to jump on board the trend, especially as compliance can mean a huge premium on real estate assets.
As of August 2023, out of 2100 hotels in Australia, there were just 32 hotels (1.5%) which held an active NABERS Energy rating and nine of those were under Pro-invest’s management, clearly showing our first mover advantage.
The NABERS rating is key to securing more government business thanks to the fact that this is now a pre-requisite for contracting, as sustainability concerns move even more to the fore. With the increased climate events happening across the world, from the catastrophic fires in LA to our own increased risk of floods and fires in Australia, our industry must do more to protect the environment, and our way of life.
You have been talking about getting into co-living. Can you update us on this?
This year, we will launch our new flex living platform, leveraging our expertise in hospitality to meet the growing demand for this sector. We are looking at flex-living over co-living because it appeals to an ever bigger demographic.
Moreover, our roots in hospitality excellence provide a distinct advantage in developing flex-living because we are experts in guest-centric design and delivering outstanding guest experiences, from world-class restaurants and bars to house-keeping and concierge. Having successfully introduced three international hotel brands into the Australian market, we know how to create welcoming environments where people want to stay.
Our fully integrated platform blends development, operations, and active asset management to ensure our flex-living projects are managed across the entire life cycle, creating significant value for investors.
Flex-living offers a fresh take on urban housing, combining affordability, community, and convenience in a model that appeals to a broad demographic, from young professionals to digital nomads. We will bring our deep hospitality expertise to the flex-living model to deliver world-class design and best-in-class services to residents.
Flex-living is not just a financial decision, it’s a strategic move toward a future where hospitality is at the heart of global commerce.
Flex-living offers a fresh take on urban housing, combining affordability, community, and convenience in a model that appeals to a broad demographic, from young professionals to digital nomads. It offers more than just a place to live, but a community experience with shared spaces such as gyms, co-working areas, and communal kitchens, which cater to a rising number of people who value flexibility and social interaction. Pro-invest will bring its rich hospitality experience to the flex-living model to deliver world-class design and best-in-class services to residents.
Three themes will drive investment in co-living: sustainable living, prime locations, and quality design. Pro-invest has built a reputation as an industry leader on all three fronts, having developed a world-class hotel portfolio nationally.