March 2004 marks the second consecutive quarter of revenue per available room (revPAR) growth for four Asian markets that reported cases of SARS last year. One year has now passed since the World Travel Organisation (WTO) announced the SARS outbreak on 12 March 2003. To mark the anniversary, the HotelBenchmark Survey by Deloitte looks at the performance of four key markets where the outbreak was reported; Beijing, Hong Kong, Singapore and Taipei. As shown in the table below, the first quarter of 2004 (Q1 2004) represents the first quarter that all four markets reported revPAR growth since fourth quarter 2002. In addition to all four markets achieving double-digit revPAR growth, Q1 2004 also represents the second consecutive quarter of revPAR growth for three of the four markets noted.

Annual revPAR performance - seasonally adjusted
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Beijing shows impressive rate performance

Despite experiencing the longest period of WTO travel advisories following the outbreak of SARS, Beijing reported the highest average room rate growth of the four markets in Q1 2004 (12.9 percent). Beijing�s ability to maintain average room rates is a direct result of how the market reacted during the height of the crisis, as operators chose to hold firm on rates.

Although the city did see a decline in average room rate of 5.5 percent during the second quarter of 2003 (Q2 2003) this was minimal compared to the double-digit declines experienced by other markets. By comparison this decline was also short lived. By the end of the third quarter of 2003 (Q3 2003), Beijing was the only market studied that posted year-on-year rate growth (2.2 percent). The city has benefited from the quick return of the corporate market; assisted by the planning and development that is underway for the Olympics in 2008.

Recovery in Hong Kong took longer than other markets

As the last area to receive the all clear from the WTO on 22 June 2003, Hong Kong has taken the longest of all markets examined to see revPAR growth return. During Q2 2003 Hong Kong�s revPAR decline of 82.1 percent exceeded any of the other markets studied. Hong Kong was also the only market still reporting declines in occupancy, average room rate and revPAR in the fourth quarter 2003 (Q4 2003).

However by Q1 2004 the city had once again moved into positive territory, with revPAR increasing by 18.8 percent compared to the same period in 2003. Most impressively this is the largest growth in revPAR seen by any city in this study. The Closer Economic Partnership Agreement (CEPA) signed with China in June 2003 is expected to further influenced growth from the corporate market. Hong Kong is also looking forward to increased demand from Japan�s �Golden Week� holidays in May. As the holiday period this year is longer than years previous, many hope it will lure the long awaited Japanese travellers back to the marketplace.

Singapore first to see occupancy improvements

Singapore was the only SARS affected market to report two consecutive quarters of occupancy and revPAR growth. The city�s unique occupancy performance in Q4 2003 may be linked to the fact that it was not issued with a WTO travel advisory and was also the first market in this analysis to be declared SARS-free by the WTO on 31 May 2003. Had traveller confidence not been challenged by both the Marriott Jakarta bombing in July and a sole SARS related incident in August, the nominal occupancy decline of 0.9 percent in Q3 2003 may instead have been the start of three consecutive months of occupancy growth.

Singapore achieved the strongest occupancy growth in Q1 2004 of 10.4 percent, largely attributable to increased demand from �Asian Aerospace�, the region�s largest (and the world's second most important) aerospace and defence exhibition. Held biennially in February, Singapore hotels are nearly always full during the exhibition due to demand from this event.

Taipei still reporting quarterly occupancy declines

Taipei was the last area to be declared SARS-free by the WTO on 5 July 2003. Taipei remains the only market examined to still be reporting occupancy declines in Q1 2004, albeit nominal at 0.1 percent. Following double-digit declines in tourism both in January and February the Taiwan Tourism Bureau expects visitor arrivals for Q1 2004 to remain below previous years due to political instability. Fortunately increases in average room rate have resulted in increases in revPAR in both Q4 2003 and Q1 2004. Since reporting the largest dip in average room rate during Q2 2003 of all four markets, Taipei has made a relatively swift recovery to the 10.5 percent revPAR growth recorded in Q1 2004.

Looking at Taipei�s performance over recent months, with the exception of November, the market has experienced revPAR growth each month since September 2003. Like other markets in the region, demand quickly returned once the area was declared SARS-free. However, while awaiting the full return of Japanese tourists, Taipei still has to find alternative source markets to fill its beds.

The future looks bright

Although events such as the Marriott bombing in Jakarta and Asian bird flu have affected hotel performance across the region this has not been to the extent seen in the wake of SARS. Despite markets affected being given the all clear, according to the WTO, experts were still concerned that SARS could be a seasonal disease that could return during the winter. Now that winter is officially over however and a second outbreak has not occurred, people are less cautious to admit that the outlook for the region looks good.

Hotel performance across Asia should continue to improve over the coming months, assuming no major demand shocks. Despite this the region still faces the challenge of how to restore visitor numbers from key markets such as Japan and the United States to their previous levels. Hoteliers also face the challenge of how to effectively manage room inventory now that the average booking lead times have shrivelled to less than a week in some markets.

Asia continues to be seen as a region of opportunity and future prosperity. This is reinforced by companies such as Accor, InterContinental and Shangri-La recently announcing plans for mass expansion in the region. Although the impact of SARS will never be forgotten, at least after a turbulent year the region can at last start to move on again.

Notes: All analysis in US$.

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 1.2 million rooms every month. 

HotelBenchmark Survey
Mindi Holtsmark
+44 (0) 20 7007 1235.