Report: Mixed Fortunes for Hoteliers Across Asia Pacific

As the global economy slowly emerges from a recession, reductions in the revenues of hotels across Asia Pacific have eased since May 2009, with monthly drops less severe than the year-to-date decline.

 

According to a report by business advisory firm Deloitte, the revenue per available room (revPAR) in Asia Pacific dropped 28.4% to US$68 year-to-August 2009. Average room rates fell US$27, while occupancy dropped 12.0% over the same period last year. Despite rivalling Europe for the steepest decline in hotel performance globally, reductions in revPAR have eased in Asia Pacific since May 2009, with monthly drops less severe than the year-to-date decline.

 

“Despite the good news about some major world economies lifting out of recession, it’s too early to rule out another dip in hotel performance. Regardless of whether the bottom has been hit or not, Asia Pacific’s tourism industry is well placed as we enter economic recovery,” says Alex Kyriakidis, global managing partner of tourism, hospitality and leisure at Deloitte.

 

Kyriakidis notes that some of the world’s fastest-growing economies are in the Asia Pacific and with a strong correlation between hotel and economic performance, the hotel industry is bound to benefit. He adds that intra-regional tourism should rebound faster than international demand, and with over half of the world’s population living in the Asia Pacific, travel demand should return quicker here than in regions that rely more on international tourism.

 

SUCCESS STORIES

 

Despite falling revPAR across the region, there are still some notable success stories, says the Deloitte report. Seoul was the only city in Asia Pacific to experience an increase in both occupancy and average room rates, and achieved the highest occupancy of 78.6%. The weakness of the Korean Won against source market currencies helped attract 21.9% more visitors from East Asia and the Pacific, which accounts for over three quarter of Korea’s international tourists.

 

Bali achieved the strongest average room rate and revPAR growth in the region, up 23.5% and 11.4% respectively, as the destination continues to recover from the 2005 bombs combined with strong demand from Australia. Low-cost airline expansion between the two should further boost the resort.

 

VACANT ROOMS

 

In China, Beijing is suffering from a post-Olympic slump and has witnessed 12 consecutive months of double-digit revPAR decline, leading to the worst drop across Asia Pacific, down 56.2% year-to-August 2009.

 

Meanwhile, hotels in India suffered from some of the largest drops in revPAR, down 39.6% in New Delhi and 36.9% in Mumbai as thousands of new rooms open across the country. In addition, suppressed demand and escalated security concerns in the wake of the Mumbai terrorist attacks in November 2008 have also had an effect on performance.

 

“Spiralling unemployment, reduced consumer confidence and dampened travel demand were some of the most immediate side effects of the economic downturn,” says Marvin Rust, global managing partner for hospitality at Deloitte. “Now that the worst recession since the great depression appears to be coming to an end in a number of countries, the aftermath and side effects will become evident, continuing to challenge us in all aspects of business.”

 

Rust notes that now is the perfect opportunity for hoteliers to evaluate what has happened, make important strategic decisions to navigate out of the economic turmoil, and leverage their businesses into more fruitful times.
 

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