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).
(% change vs first-half 2000)
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:
"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."
Hotel Asia Pacific
158 Wong Uk Tsuen
Tel: +852 2882-7352
Fax: +852 2882-2461
|Also See||The One&Only Sol Kerzner / HOTEL Asia Pacific / October 2004|
|Hotel Technology Butlers Can Be a Major Asset - Or a Huge Liability/ HOTEL Asia Pacific / September 2004|
|A Happy Union? Raffles Internationalís Recent Labour Troubles in Cambodia Raise Interesting Issues / HOTEL Asia Pacific / August 2004|
|Jerk Alert: Gung-ho Sales People Trying to Sell their Gadgets or Services to a Hotel / HOTEL Asia Pacific / July 2004|
|Le Meridien's First Art+Tech Property in Asia Aims to Raise the Benchmark; Typical Reception Desk has Been Banished / HOTEL Asia Pacific / July 2004|
|Le Meridien Revs Up the Momentum; Obtains New Long-term Partnerships with Several High-profile/ HOTEL Asia Pacific Asia Pacific Hotel Owners as Recapitalisation Strategy Continues / June 2004|
|Chef In a Suit; Christian Abell explains why he hung up his chef's whites and put on a suit and tie to take over as F&B director at the JW Marriott Hong Kong / HOTEL Asia Pacific / February 2004|
|Asia Pacific Hotel Leaders Michael Issenberg, Miguel Ko, Patrick Imbardelli and Koos Klein Look at What Lies Ahead; The Greatest Challenge is Uncertainty / HOTEL Asia Pacific / January 2004|
|Senior Hotel Executives Are Scratching Their Heads Over an Annual Dilemma: What, if Any, Adjustments Should They Make to Next Yearís Payroll? / HOTEL Asia Pacific / December 2003|
|Why Indian Hotelier Jagsish Rai Sood Chose to Partner with Shangri-La to Operate His Latest Property in New Delhi / HOTEL Asia Pacific / December 2003|
|The World's Biggest Hotel Chains Planning Major Expansion in Asia; China Hotel Industry is the Certain Winner / HOTEL Asia Pacific / December 2003|
|K.P. Ho, Chairman of Asian-based Banyan Tree Hotels & Resorts, Discusses the Strategy Behind the Award Winning Brand; Building Banyan as Told to HOTEL Asia Pacific / November 2003|
|Patrick Imbardelli, InterContinental Hotel Groupís Managing Director for Asia Pacific, is ĎDivorcingí Owners Who Donít Fit In with the Groupís Values / Steve Shellum HOTEL Asia Pacific / November 2003|
|HOFEX Organisers Faced a Tough Choice When SARS Devastated Their Plans; Rescheduled Event Poised to Bounce Back in Hong Kong / November 2003|
|Terrorism: Whoís Liable? The Legal Status of Hotel Owners and Management Companies / Andrew MacGeogh, HOTEL Asia Pacific / October 2003|
|The Inside Story on How InterContinental Hong Kong Managing Director Jennifer Fox Teamed Up with Michelin Chef Alain Ducasse to Create a/ HOTEL Asia Pacific New Benchmark for Hotel Restaurants in Asia / Steve Shellum, HOTEL Asia Pacific / October 2003|
|Preview of the Wonderful and Wacky World of the W Seoul; Aiming to Break the Mould of Asia's Traditional Hotels / Steve Shellum, HOTEL Asia Pacific / October 2003|
|Chiller Replacement Project; How The Grand Hyatt Singapore Applied a Holistic Commercial View / HOTEL Asia Pacific / October 2003|
|Assessing Hotel Security; HOTEL Asia Pacific Magazine / Pertlink Re-Issue Hotel Security Checklist / August 2003|
|Pressure Cooking: Florian Trento, Executive Chef at the Peninsula Hong Kong, Explains How He and His Team Coped During the Bleakest Days of the SARs Crisis / HOTEL Asia Pacific / June 2003|
|Crisis Management: Could You Cope if the Unthinkable Happened / HOTEL Asia Pacific / June 2003|
|Back to Normal After SARS? Letís Hope Not.../ HOTEL Asia Pacific / June 2003|
|Fighting Spirits! Rank-and-file Staff at Bali InterContinental Resort Talk About Their Hopes, Fears, Dreams / HOTEL Asia Pacific / April 2003|
|On the Chopping Block; Are You Prepared If You Get Your Marching Orders?/ HOTEL Asia Pacific / April 2003|
|Trevor Bilney, Executive Chef at the Bali InterContinental Resort, Fights Hard Since Last October 12; Keeps Morale Up and Costs Down / HOTEL Asia Pacific / March 2003|
|Hotels Stepping Up Security; Learning to Live with the Threat of Terrorism as Part of Conducting Everyday Business / HOTEL Asia Pacific Survey / March 2003|
|50% of Hoteliers Have Not Increased Investment in Security Ė More than a Year After the September 11 Attacks / HOTEL Asia Pacific Survey / December 2002|
|Security: Something No Hotel Can Ignore / Geoff Griswold / Summer 2002|
|Biometrics Lend a Hand to Hotel Security / Feb 2002|
|Hotels Near Airports Provide Better Safety and Security Features According to The Center for Hospitality Research - Cornell Hotel School / Dec 2002|