Hotel Online  Special Report

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Asia Rising RevPAR for Asia Pacific As a Whole During
the First Half of this Year Soared 41% Compared
to the Same Period Last Year

by Steve Shellum, HOTEL Asia Pacific, November  2004

Occupancies, room rates and revPAR are heading skywards throughout the region. 

Forget 2003 - Asia Pacific is now up, up, up and away the world's most dramatic tourism performer. Let's also forget 2002 and, while we're at it, 2001, and zip back to the last "normal" year - 2000 - to get a clearer picture of just how explosive the region's growth really is.

Average revPAR for Asia Pacific as a whole during the first half of this year soared by 41% compared to the same period last year, according to the HotelBenchmark Survey by Deloitte.

That sounds like a phenomenal increase but, of course, it's from a diabolically low base, courtesy of the devastation wreaked on the industry in 2003 by SARS. 

But it's still solid growth over 2000 - the last "halcyon" year for the hotel industry in the region - sandwiched, as it was, between the end of the Asian financial crisis and the horrors of 9/11, Bali and SARS. 

The most telling figure is that average revPAR throughout the region is now 13% higher than in 2000 (see charts below).
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First-half 2004 results 
(% change vs first-half 2000)
Destination Occupancy
ARR
Auckland
19.2 
-7.8
Bali
-7.4
2.7
Bangkok
9.0
22.0
Beijing
-2.2
28.9
Guam
-10.3
4.9
Ho Chi Minh
-0.4
53.7
Hong Kong
0.6
5.3
Jakarta
31.2
-8.4
Kuala Lumpur
6.0
34.2
Manila
7.1
-0.3
Melbourne Central
0.0
-6.4
Phuket
-1.5
-5.3
Seoul
-7.6
-1.5
Shanghai
23.0
46.0
Singapore
-9.6
0.6
Surabaya
44.0
9.0
Sydney Central
2.8
-0.5
Taipei
-2.6
3.8
Tokyo
-8.6
-3.7
Source: Deloitte HotelBenchmark Survey
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Given the brutal market of the past three years, that 13% growth is considerably more impressive than the 41% increase over last year's rock-bottom figures.

"Before the start of the decade, extreme events like 9/11 and SARS only featured in Hollywood blockbuster movies," says Julia Felton, executive director of Deloitte's HotelBenchmark.

"But, despite the challenges of the past years, hotels in Asia Pacific have still managed to record a 13% increase in US$ revPAR, with growth in both occupancy and average room rate (ARR) contributing to this achievement. 

"With the global recovery now in full swing, the region appears poised to improve revPAR significantly and, therefore, profits."

The star performer, of course, is China. In just four short years [although, looking back, they certainly don't seem particularly "short"], the country's tourism juggernaut has set new records - not just for its growth, but also for the breakneck speed of that growth.

Shanghai stands head and shoulders above the rest of the region in terms of revPAR growth since 2000 - up a staggering 69%, due mainly to a 46% jump in room rates. 

Beijing also witnessed strong average room rate growth, up 29%, although occupancy fell by 2%. 

Growth in Hong Kong and Taipei has not been as staggering as on the mainland, as these markets are in a more mature phase of the cycle, according to Felton. 

Reflecting this fact, both cities experienced a revPAR premium over the mainland Chinese markets, reporting half-year revPAR of US$103. ARR increases, rather than occupancy, have fuelled revPAR growth in both markets.

But Shanghai is rapidly closing in on those mature markets, and is striving to achieve similar revPAR premiums. At $98, the half-year revPAR is a staggering 56% above that recorded in 2000. 

In local currency, revPAR growth has resulted from substantial increases in ARR, as well as healthy occupancy growth.

Of all the Asia Pacific markets tracked by the HotelBenchmark Survey, hotels in Tokyo reported the largest decline in revPAR. 

"At 75%, occupancy levels in Tokyo are still some way off the 80%-plus performance achieved in 2000, and ARR has also not yet recovered," says Felton. 

"Nonetheless, business analysts are speaking of Japan's economic recovery, and an influx of internationally branded hotels will hopefully help to jump-start a recovery." 

Southeast Asia experienced the most impressive overall growth as a sub-region, especially considering the political instability and terrorism connections that plague the area. 

Surabaya and Ho Chi Minh take the number two and three spots for the highest revPAR growth over 2000, with increases of 57% and 53%, respectively. 

But the similarities end there. While occupancy growth dominated Surabaya's fantastic revPAR results, in Ho Chi Minh average room rate growth was the dominant factor. 

"Increased ARR in Ho Chi Minh may be attributed to a growing domestic market with rising disposable income," says Felton. 

"In addition, Vietnam's newly acquired image as a haven of stability in the turbulent Southeast Asia region has also played a role. Inter-regional travel is booming and there is an increasing selection of quality places to stay throughout the country."

In Indonesia, two of the three markets monitored - Jakarta and Surabaya - reported impressive revPAR gains on year-to-June 2000 results, despite continued political instability and terrorism threats. 

Surabaya's occupancy has been heading upwards since early 1999 and, at 66%, has nearly doubled in the past five years. 

Jakarta's 20% growth in revPAR can also be attributed to double-digit growth in occupancy. 

[Indonesia, which was not impacted by SARS as much as markets in Northeast Asia, has reported a 30% year-on-year increase in tourism arrivals year-to-April 2004. But Western embassies have recently re-affirmed warnings of a threat of terrorist attacks, which may impact future trends from continuing in a positive light.] 

Oceania's 25% growth in US$ revPAR has been primarily influenced by the positive exchange-rate differential in both Australia and New Zealand. 

"In local currency, the revPAR growth is considerably more modest," says Felton. "Encouragingly, occupancy levels across the Oceania markets have returned to their 2000 peak - but ARR remains under pressure." 

Auckland posted 80% occupancy in the year-to-June, 19% higher than in 2000 - but this impressive occupancy growth was not supported by ARR, which fell 8%. [Still, the 10% revPAR growth in local currency was the largest of any of the Oceania markets studied by Deloitte.]

Hotels in both central Melbourne and central Sydney also failed to achieve year-to-June average room-rate growth when compared to 2000. 

Despite Melbourne's occupancy levels being identical to those experienced in 2000, at 76%, declines in ARR drove revPAR down 7%. 

Hotels in Sydney also experienced a fall in ARR, but this was offset by growth in occupancy, enabling the city to achieve a 2% improvement in revPAR.

Meanwhile, early 2004 statistics for international visitor arrivals (IVAs) to 30 Asia Pacific destinations show 21% growth, with an additional 15.3 million visitors to the region, according to the Pacific Asia Travel Association (PATA) Strategic Intelligence Centre (SIC).

"The PATA region is on track for IVA growth of more than 15% for calendar-year 2004 compared to 2003," says SIC MD John Koldowski. 

"The 2004 result is the best - in volume terms - since 2000. The destinations that were most directly affected by SARS last year are collectively well ahead in volume terms in 2004, largely due to the dramatic increases in flows to and from mainland China."

Key trends from the PATA report:

  • While Singapore and Taipei are still behind the high levels of 2001 and 2002, respectively, the lag is minimal and - assuming no new negative factors - should soon exceed those levels;
  • In South Asia, India and the Maldives have begun their first reporting periods of 2004 with exceptionally strong growth rates; 
  • In Northeast Asia, China, Hong Kong, Japan and Macau are showing strong growth rates; 
  • In Southeast Asia, arrivals through 13 ports into Indonesia are at the highest levels for the reporting period since 2000. Malaysia, the Philippines and Vietnam also showing the highest arrivals in five years; 
  • Australia and New Zealand are showing signs of moving into positive growth territory after some periods of stagnation.
The growth in the industry in the region is being fuelled, in part, by global optimism, according to the World Toursim Organisation (WTO).

"With the easing of major geopolitical tensions and despite uncertainty all over the world, the signs are that travel confidence is back," says the latest issue of the WTO World Tourism Barometer.

Positive economic performance and prospects in the major tourism-generating markets indicate that conditions are present for demand to be get back on track. 

Long-haul travel is finally also picking -up, particularly out of Europe, although short-haul and domestic travel are still performing comparatively better. 

"Results are boosted by the existing pent-up demand after three hard years," says Augusto Huescar, head of market intelligence for the WTO. 

All regions, but particularly Asia Pacific, show a strong rebound "in reaction to the difficulties lived through", with "exceptional growth rates" taking place in most destinations in Asia, which have fully recuperated their 2003 losses.

Globally, there has been a "consistent change for the better" of conditions in both the economic and geopolitical basics, says the WTO.

"Confidence has returned among travellers and the industry, and the tourism sector is heading for a robust rebound in 2004 on the weak figures of the past years. 

"Of course, uncertainties remain - such as the threat of further terrorist attacks and high energy prices - but these hardly seem to be affecting tourism for the moment." 


Copyright HOTEL Asia Pacific. The lastest edition of the multi-award-winning HOTEL Asia Pacific (64 pages) can be downloaded in PDF format from www.hotelasiapacific.com . It is free to hospitality industry professionals and requires a simple one-time registration.

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Contact:

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Subscription Information
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Hotel Asia Pacific
Steve Shellum
158 Wong Uk Tsuen
Yuen Long
New Territories
Hong Kong
Tel: +852 2882-7352
Fax: +852 2882-2461
http://www.hotelasiapacific.com
steve@hotelasiapacific.com

 
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