March 2004 - Hotels located in resort destinations
around the world reported better than expected results during 2003 according
to the HotelBenchmark Survey by Deloitte. An analysis of the operating
performance of resorts throughout Europe, the Middle-East, South-East Asia,
Oceania and the Caribbean reveals that this sector generally performed
better than their city centre counterparts. Although a number of resorts
suffered from declining demand levels, average room rates still managed
some impressive growth, with resorts in the Caribbean, Middle East and
Oceania reporting an increase in revenue per available room (revPAR). The
pattern in South-East Asia was more varied with some destinations experiencing
positive revPAR growth whilst other markets reported significant revPAR
declines. Due to fluctuating exchange rates the performance of resort destinations
in Europe is somewhat of an anomaly. In US dollar terms the markets performed
strongly, whilst in Euro terms their performance was disappointing with
revPAR declines in nearly all markets.
Common influences
The HotelBenchmark Survey compared the performance of 25 global resort
destinations.
These destinations were selected to provide a broad representation of
resort performance across the world. For the consumer the propensity to
travel to one destination over another is a personal choice dependent more
on attributes and value for money than travel distance. Therefore, global
events can have a very real impact on the consumers decision and therefore
ultimately the performance of the resort destination. Throughout 2003 the
common factors influencing performance were:
Geopolitical tensions
The war in Iraq and security concerns continued to influence travel
patterns and consequently hotel performance. The World Tourism Organisation
estimates that global international visitor arrivals fell one percent in
2003 as travellers opted to stay closer to home. Resorts within Europe,
the Middle East and the Caribbean were beneficiaries of increased intra-regional
travel. The continued expansion of low cost airlines also supported increased
intra-regional travel, and with a number of low cost airlines being established
across Asia Pacific the demand from weekend and short haul travellers looks
set to continue.
Struggling economies
The struggling economies in the world�s major outbound markets - USA,
Japan and Germany - further compounded the decline in resort visitors.
Resorts on the Mediterranean and European Atlantic coast which are heavily
reliant on the German outbound market came under pressure as occupancy
levels fell.
Exchange rate fluctuations
The weakening US Dollar made European and Asian resorts even less attractive
to North-American visitors. Many changed their travel patterns to be closer
to home, therefore helping to improve the performance of resorts in the
Caribbean. Conversely, the weak US dollar also encouraged increased travel
to the Caribbean from Europe and the UK, particularly in the last quarter
of the 2003.
Unprecedented summer sunshine
Resorts generally promote sunshine, blue skies and hot temperatures,
but 2003 had a surprise in store for many Europeans - resort weather right
on their own doorstep. The prolonged weeks of sunshine and extreme temperatures
encouraged many Western and Northern Europeans to remain at home or closer
to home during the summer months.
SARS
The spring outbreak of SARS had a crippling impact on the Asian cities
of Hong Kong, Shanghai, Beijing, Singapore and Taipei but encouragingly
this did not materially affect the performance of resorts located in South-East
Asia and Oceania.
What�s hot and what�s not
Demand level
Despite the general fall in demand, the global resort market has proved
relatively resilient with 16 out of 25 resorts throughout the world reporting
only single digit declines in occupancy. Exceptions were the resort markets
in the Caribbean, Surabaya, Phuket, Fiji and the Canary Islands where growth
in occupancy was reported. The Caribbean resort markets of Cancun, Barbados
and Puerto Rico were the best performers achieving growth in demand and
reporting occupancy levels of up to 78 percent. This compares to 69 percent
occupancy achieved by the best performing resorts in Europe, Oceania and
the Middle East.
Average room rates
Over 84 percent of the resort destinations reported increases in average
room rates during 2003. In US Dollar terms double-digit growth was achieved
mainly due to the weakening of the American currency. In local currency
the picture was somewhat different with only 32 percent of locations experiencing
any growth. Resorts in the Middle East and the Caribbean reported the highest
increases in average room rate. Resorts in Hurghada reported the most improvement
in average room rate, up 58 percent, whilst destinations in South-East
Asia showed declines. Bali was hardest hit with average room rates declining
by 27 percent. Generally resorts in Oceania and Europe revealed single
digit increases in average room rate with only the Cote d�Azur, Algarve,
Antalya and French Polynesia experiencing slight declines.
RevPAR performance
Growth in average room rates fuelled the growth in revPAR with over
84 percent of the resort destinations reporting revPAR growth in US dollar
terms. However, in local currency only 60 percent of locations experienced
improvements. The resorts most affected by currency exchange rates were
those in Europe where the strength of the Euro continued to hamper average
room rate growth and therefore revPAR growth. The resort destination of
Bali reported the heaviest declines in revPAR during 2003, as the market
continued to suffer following the October 2002 bombings. Resort destinations
along the Red Sea coastline experienced revPAR growth, as these destinations
benefited from an increase in intra-regional travellers.
RevPAR performance of global resort markets
in 2003
. |
US $
|
Local Currency
|
Resort
|
RevPAR
|
% Change
|
RevPAR
|
% Change
|
Southern Europe |
|
|
|
|
Malta |
46 |
11 |
17 |
-3 |
Balearics |
77 |
22 |
68 |
2 |
Canary Islands |
47 |
23 |
41 |
2 |
Madeira |
59 |
14 |
51 |
-5 |
Costa del Sol |
105 |
5 |
92 |
-11 |
Algarve |
110 |
12 |
97 |
-5 |
Western Europe |
|
|
|
|
Cote d�Azur |
121 |
11 |
107 |
-7 |
East Medit. Europe |
|
|
|
|
Eilat |
55 |
7 |
245 |
0.6 |
Antalya |
20 |
-3 |
28,967,457 |
-12 |
Cyprus |
62 |
16 |
32 |
-0.3 |
Oceania |
|
|
|
|
Gold Coast |
59 |
27 |
89 |
4 |
Tropical North Queensland |
59 |
26 |
88 |
4 |
Fiji |
70 |
20 |
131 |
4 |
Guam |
66 |
-2 |
66 |
-2 |
French Polynesia |
131 |
12 |
12,076 |
0.1 |
Southeast Asia |
|
|
|
|
Bali |
33 |
-37 |
286,801 |
-42 |
Surabaya |
22 |
11 |
189,991 |
3 |
Phuket |
57 |
1 |
2,147 |
4 |
Penang |
22 |
-8 |
84 |
-8 |
Caribbean |
|
|
|
|
Cancun |
82 |
5 |
893 |
17 |
Barbados
21 |
187 |
18 |
366 |
21 |
Puerto Rico |
133 |
7 |
133 |
7 |
Middle East |
|
|
|
|
Hurghada |
22 |
19 |
135 |
55 |
Sharm el Sheikh |
31 |
12 |
184 |
43 |
Red Sea Resorts - Others |
20 |
14 |
123 |
48 |
Source: HotelBenchmark Survey by Deloitte
In
summary, the global resort industry proved relatively resilient during
2003 generally outperforming its city centre counterparts. Declines in
occupancy were kept to single digits and average room rates and revPAR
reported improvements in most cases, despite the adverse influences during
the year. The outlook appears encouraging as the last quarter of 2003 has
revealed a number of positive indicators that prospects for 2004 should
improve. This in turn should translate into further improved performance
for the resort sector.
Notes: All analysis US Dollars or as otherwise stated.
The HotelBenchmark Survey contains the largest independent source of
hotel performance data outside of North America and tracks the performance
of over 6,000 hotels and 1.1 million rooms every month.
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