�The hotel industry is starting to reap the benefits of increased business and leisure travel,� said Andreas Flaig, associate director of hospitality consulting, Arthur Andersen, Singapore. �Intraregional business travel has increased substantially and leisure travel from Europe, the US and especially Japan has rebounded. This resulted in double-digit growth in tourist arrivals for the first half of 2000 in several key markets including Singapore (11.8%), Hong Kong (15.7%) and Vietnam (18.1%).�
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Increased demand is finally translating not just into improved occupancies, but into room rate growth and stronger RevPAR* performance. Of the 27 markets tracked by Arthur Andersen, 19 markets recorded growth in average room rate (in local currency) over the first six months of 2000 compared with the same period in 1999. This compares with only 14 markets in the first quarter of the year. Meanwhile, 13 markets recorded double-digit growth in RevPAR over the first half of the year compared with 1999 � representing three more markets than over the first quarter; those markets include Jakarta, Kuala Lumpur and Singapore, recording RevPAR growth of 28.8 percent, 25.7 and 19.4 percent respectively. Typically, RevPAR growth in the region was driven by strong occupancy growth and was reinforced by smaller increases in average room rate. 
 

Among the markets surveyed, hotel performance in Jakarta was notable. The city recorded a 36.5 percent improvement in average room rate, driving RevPAR up by 28.8 percent. This placed Jakarta at the top of the regional RevPAR league table, despite the city being plagued by political and social instability, currency fluctuations and a substantial amount of debt-laden hotel real estate. However, a word of caution for the bulls in the marketplace - Jakarta is coming from a low base and still records the second lowest occupancy in the region at 42.6 percent. 

In Hong Kong, regional and local economic recovery drove demand to the city. Average occupancies increased 6.6 percentage points over 1999 levels to 81.2 percent, placing the city third highest in the region in terms of occupancy. The strongest performance was recorded on Hong Kong Island where corporate demand for hotels rebounded; occupancy jumped 9.3 percentage points and hoteliers took the opportunity to push average rates up seven percent over 1999 levels. As a result, Hong Kong Island was one of six markets in the region to record RevPAR growth (in local currency) of over 20 percent. 

However, not every market could report stellar performance. Manila has the dubious honour not only of remaining on the RevPAR losers table for a second consecutive quarter, but of being the only market to record contractions across all performance measures. Although there were signs of a recovery in average room rates from June 2000, the effect of earlier price discounting and weak demand resulted in an overall decline in RevPAR (in local currency) of five percent, with Makati recording a decline of seven percent. The hotel market in Manila is unlikely to see a sustainable improvement in performance until demand recovers; and demand will only recover when investors are confident that political and social stability can be maintained and tourists are reassured that the kidnappings and bombings are a thing of the past. 

�Overall, both hotel owners and operators should have many reasons to celebrate this first year of the Millennium as cash flows improve,� said Flaig. � We would not be surprised to see some of these profits being invested in e-business initiatives to improve out-dated processes and technologies in order to deliver better value to both their guests and their shareholders.�

Markets represented in the Asia Pacific survey include Auckland, Bali, Bangkok, Beijing, Guam, Ho Chi Minh, Hong Kong (Hong Kong Island, Kowloon), Jakarta, Kuala Lumpur, Manila (Bay Area, Makati), Melbourne, Osaka, Penang, Seoul, Shanghai, Singapore (Marina Square, Orchard Road), Sydney, Taipei, Tokyo, Xian and Yangon.  

Launched in 1996 as the definitive source of hotel performance data outside North America, the Arthur Andersen Hotel Industry Benchmark Survey comprises information gathered from more than 3,500 hotels in 200 markets in 140 countries.  

Arthur Andersen's vision is to be the partner for success in the new economy. The firm helps clients find new ways to create, manage and measure value in the rapidly changing global economy. 

* RevPAR (Revenue Per Available Room) is a measure of the average revenue generated from each available room in a hotel. RevPAR = average room rate x occupancy rate or RevPAR = total room revenues divided by number of available rooms in hotel