Hotel Online  Special Report



 Patience, It May Take Until 2006 Before Hotel Performance
Levels Seen in 2000 Are Matched Again / Deloitte


2003 hotel data suggests that a recovery in the
global hotel industry may be starting

LOS ANGELES – January 19, 2004 - Today at the Americas Lodging Investment Summit (ALIS) Deloitte and Smith Travel Research shared the platform to reveal year-end performance data for the global hotel industry. US data was presented by Randy Smith, CEO of Smith Travel Research, whilst international data was presented by Marvin Rust, partner for HotelBenchmark at Deloitte. 

The data shows that while 2003 proved to be another tough year for the hotel industry, with the war in Iraq and outbreak of SARS compounding the already challenging operating environment, some markets began to show signs of recovery. In US dollar terms Europe was the best performing region with revPAR improving 10%. However, this growth was fuelled entirely by an increase in average room rate, which is attributable to the weakness of the US dollar to the Euro. In fact when measured in euros, the European market came under significant pressure with revPAR falling 8% as average rates came under pressure in most markets across the region. 

Encouragingly, despite the troubles in the region, hotels in the Middle East also managed to report positive revPAR growth, with revPAR increasing 6% compared to 2002. This improvement in performance was entirely driven by growth in average room rate, whilst occupancy levels remained stable. Countries such as Kuwait and Qatar benefited from demand from the military and journalists during the war and then subsequently from corporations involved in the rebuilding of Iraq. Consequently revPAR in Kuwait was up 80% as occupancy leapt from 49% to 85%.

The spring outbreak of SARS severely hampered performance of hotels across Asia, particularly those in China, Hong Kong, Singapore and Taiwan. At the height of the SARS epidemic hotels in these countries were reporting single digit occupancy and as a result revPAR in many of these markets has fallen by over 20%. However, the region has proved resilient and bounced back strongly resulting in overall revPAR for the region falling just 2% for the year. Encouragingly, Asia’s hoteliers have not entered in price wars during this period and so have managed to improve average room rates by 5%, however this growth has been offset by the 7% fall in demand.

After being the only region of the world to report negative revPAR growth in 2002, the US market picked up to end the year with revPAR up just 0.4% compared to 2002. While this is only marginal growth it may signal a period of prolonged growth.

Marvin Rust, partner for HotelBenchmark at Deloitte said: "Although the 2003 trading numbers are disappointing, we are encouraged that there are signs that a recovery is underway in some markets. However, we anticipate that it will take until 2006 before the levels of performance seen in 2000 are matched again." 

Commenting on the outlook for the US market, Randy Smith, CEO Smith Travel Research added: "With all economic indicators pointing to vibrant growth in 2004 we expect the lodging industry to benefit with measurable growth in all key indicators."

Performance of Global Hotel Industry 2003

Average Room Rate
% Change
% Change
% Change
USA 59
Europe 65
Middle East 61
Asia 64
Note: all analysis in US$
Source: International data HotelBenchmark Survey by Deloitte; US data STR

About Deloitte & Touche LLP

Deloitte & Touche LLP is the UK's fastest growing major professional services firm based in 21 UK locations, with over 10,000 staff nationwide and fee income of £1,228 million in 2002/2003. It is a member firm of Deloitte Touche Tohmatsu, a leading professional services organisation, delivering world class audit, tax, consulting and corporate finance services, with around 120,000 people in over 140 countries. Deloitte Touche Tohmatsu is a Swiss Verein, and each of its national practices is a separate and independent legal entity.

Deloitte & Touche LLP
Laetitia Mowat
+44 (0) 20 7303 4820
Also See: 2002 Hotel Data Suggests Regional UK Hotel Industry in Recovery, But Average Room Rate Continues to Fall in London / Jan 2003
Outlook Brightens for European Hotel Industry / Deloitte & Touche LLP / October 2003

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