HOTELS in Asia Pacific continued to see moderate growth in the first half of this year with slight increases in both occupancy and average daily rates, according to a report by international real estate services provider CB Richard Ellis.
Average occupancy climbed from 64.6 percent in the same period a year earlier to 65.9 percent, CBRE said, after tracking markets in the region including China?s mainland, Hong Kong and Taiwan, Indonesia, Japan, Malaysia, Singapore, South Korea, Thailand and Vietnam.
Average daily rates, meanwhile, edged up 1.1 percent year-on-year to US$143.7, putting the hotel sector on par with its 2008 performance just before the impact of the global financial crisis, according to CBRE?s recent report.
The hospitality industry in Asia Pacific remains in good shape due to strong intra-regional tourism. Tourist arrivals to the region rose 4 percent year over year in April, decelerating from 10 percent annual growth in March. Of the sub-markets, Southeast Asia recorded the fastest growth of 9 percent, bolstered by the recovery of arrivals in Thailand - up 7 percent year-on-year - as well as robust demand within the region. Tourist arrivals to Singapore increased 9 percent while those to Cambodia, Myanmar and the Philippines all recorded double-digit growth mainly due to the smaller base for comparison.
The Chinese and South Koreans remain the largest Asian source markets while the Russian Federation is emerging as a key source of visitors from Europe as is the United Kingdom.
Northeast Asia, at the same time, reported a 5 percent increase in tourist arrivals in April, led by growth in South Korea, Chinese Taiwan and Hong Kong. The easing of restrictions on solo travel from the Chinese mainland helped boost traffic to Chinese Taiwan. International tourist arrivals to China's mainland rose a modest 4 percent in April from the same time a year earlier. Japan's tourism market is making a strong comeback as tourist arrivals in April rebounded 164 percent from a year ago. Last year's figures were skewed due to the nuclear power plant crisis caused by a powerful earthquake and tsunami.
The rapidly expanding low-cost carrier network in Asia will drive tourism growth in the region. Passenger revenues for Asia Pacific's LCCs are estimated to jump 23 percent in 2012, almost three times that of traditional airlines. The Asia Pacific market is expected to account for nearly half of the world's air traffic with an estimated annual growth of 6.7 percent. That compared to year-on-year growth forecasts of 2.2 percent in North America and 3.5 percent in Europe.
Supply and occupancy
A large pipeline, estimated at 374,604 hotel rooms, is expected to enter the Asian market over the next two to three years, with more than 60 percent of them belonging to the upscale or luxury segments, according to STR, a leader for lodging industry benchmarking and research.
In particular, Bangkok, Bali and Ho Chi Minh City will add more than 20 percent to their existing stock of four and five-star hotel rooms by the end of 2014 while Beijing and Taipei, on the contrary, are supposed to add no more than 3 percent to their current inventory in the next three years.
With the exception of Bali and Shanghai, all the markets across the region saw increased occupancy in June from a year ago.
Led by the recovery of inbound tourism, Tokyo hotel occupancy rose 10.2 percentage points to 79.7 percent in June. Other markets that recorded notably improving occupancy were Taipei (66.4 percent to 71.8 percent), Beijing (64.9 percent to 69.7 percent) and Bangkok (60.6 percent to 65.0 percent). A large supply increase over the past months in Bali pulled down the average occupancy by 0.7 percentage points to 72.3 percent while Shanghai, still reeling from a substantial overhang of rooms that were built for the World Expo 2010, saw hotel occupancy in June remain unchanged from 12 months ago at 58.6 percent.
ADR and RevPAR
All major Asian cities reported average daily rate increases in the first half of this year except for Taipei (-11.2 percent), Shanghai (-3.2 percent) and Kuala Lumpur (-0.1 percent). Jakarta (16 percent), Seoul (11.6 percent) and Bali (9.5 percent) led gainers in annual ADR growth while Hong Kong (US$248), Singapore (US$230) and Seoul (US$185) were the three cities with the highest ADR as of June.
Revenue per available room, meanwhile, rose 3 percent to US$94.6 in Asia Pacific in the first six months, benefiting from the rise in half-year occupancy.
Tokyo (27 percent), Jakarta (18 percent) and Seoul (14.9 percent) registered the largest growth in RevPAR while Singapore (1.6 percent), Hong Kong (3.5 percent) and Taipei (4.2 percent) were the three markets that witnessed the smallest percentage rise in the category.
The hotel investment market in Asia Pacific remained active in the first half though volume fell 20 percent annually to US$2.3 billion.
For the full year, between US$4 billion and US$5 billion worth of deals are expected to be completed, which will surpass the 2009 and 2010 figures, according to a CB Richard Ellis forecast.
Hong Kong investors, notably, dominated the buying scene in the first six months with purchases totaling around US$1 billion, or 45 percent of Asian hotel transaction volume achieved during the period.
òCompetition is growing considerably across the region. Every hotel company is not only competing with major hotel chains in national and international venues but also with home-grown hotels in regional markets,ó commented Robert McIntosh, executive director of CBRE Hotels, Asia Pacific.
"Heightened competition and potential addition ofnew supply will restrictmarket share."