However, the business cycle will finally restore a balance between demand and supply, creating opportunities for investors.
Hotel prices in Asia have increased more than 30-40% on average over the past few years, thanks to an uptick in the tourism industry, and prices are expected to rise further in the future.
Chanin Donavanik, chief executive of Dusit International, a local hotel management company, said investment demand in resort or gateway destinations is 20 times higher than supply. Global investors are entering to find potential deals in Asia due to the region's bright tourism prospects.
"That's why we could not secure any deal in the past several years although we have tried to take over several hotels in many Asian countries," he said.
Currently, a four-star hotel in Singapore is priced at about S$1.6 million (41.2 million baht) per room, four times higher than in Thailand. This makes property prices in Singapore as high as in Britain.
Ronnachit Mahattanapreut, senior vice-president for finance and administration at Central Plaza Hotel Plc (Centel), said many hotel deals in the region could not be settled because owners asked to sell their properties at very high prices.
"For us, each property should have its value measured by EBITDA (earning before interest, tax, depreciation and amortisation)," he added.
Centel offered to take over a hotel in Singapore at a price 14 times higher than its EBITDA and but could not get it because another investor offered up to 18 times higher than its EBITDA. In the end, there was no transaction as the hotel owner raised the price beyond the offers.
Centel has found that property prices in resorts and city gateway destinations in Asia are too high. However, the company strongly believes that property and land prices go up and down similar to the economic cycle. For example, property prices in the US have fallen due to lingering economic problems.
Mr Ronnachit said tourism in Asia-Pacific still has room to grow in the next 5-10 years and then it will be Africa's turn. Many investors have already entered African countries such as Nigeria and Kenya.
"For Africa, it depends on the vision of each executive. For Asia and Asean, I think the right time for investment will belong to people who wait," Mr Ronnachit said.
According to Hotel Investment Outlook Global 2014 by Jones Lang LaSalle (JLL), hotel trade activities surged in 2013, increasing 160% to US$9.5 billion, as investor confidence surged across Asia-Pacific.
Australia, China, Japan, and Singapore dominated the deals with all four countries recording the highest annual volume in the post-crisis era, but with asset sales occurring in many countries across the region. Overall, 2013 represented the second highest year on record following 2007.
The transaction volume in Asia-Pacific is projected to stabilise in 2014 to around US$6 billion. Its hotel investment market is dominated by well-capitalised, generational investors.
Australia, Japan, Thailand and the Indian Ocean will attract the most investor attention in 2014 but increasingly, investors are considering Myanmar and Sri Lanka, while revisiting investments in Cambodia and Laos.
Vietnam has had a difficult year, but green shoots are emerging. Deals will be opportunistic, but not priced as an absolute steal, as banks have shown little willingness to write down debts. Investors remain interested in Indonesia, but the market lacks liquidity as most assets are family owned, said JLL.
The research said Asia-Pacific hotel development increase is projected to average 5.4% per year across 23 major markets over the next two years although commencements have slowed in India, Southeast Asia and China as cities suffer a glut following significant new hotel openings in recent years.
For Thailand, Andrew Langdon, executive vice-president at JLL’s hotel & hospitality group for Thailand and Indonesia, said the hotel transactions in Thailand were worth over 10 billion baht in 2013.
Mr Langdon added this was an achievement on the back of strong hotel trading environment and credit expansion as well as lower risk aversion towards hotel assets. Strong demand also comes from Asean real estate investment trusts searching for yields in emerging markets.
Based on hotel transactions completed in Thailand in 2013, sellers were institutional and corporate investors. In reverse, investor interest has been generated from a wide range including private investors, public companies, investment funds and high net worth individuals.
Mr Langdon said looking forward Thailand continued to face the twin challenges of limitations on foreign ownership and political instability. Transaction volumes would benefit if foreign capital had more channel to acquire Thai assets.
"Thailand is well positioned to benefit greatly from Asean integration given its location, key strength in tourism and strong potential as a meetings, incentives, convention and exhibition hub that will underpin hotel performance in the medium term," he said.