Asia's hotels bounce back - Brief Article - Statistical Data Included

Business Asia, May, 2001 by Nadia Cameron

Asia's hotels have pulled themselves out of a rut, as a new report by Jones Lang LaSalle shows.

SINGAPORE WAS THE STAR performer of the Asian hotels market in 2000, according to the latest Jones Lang LaSalle Hotels Asian Hotel Property Digest.

Although the entire region experienced positive growth and increased investment throughout 2000, Singapore's hotel market outshone its Asian counterparts and will continue to lead the way to the end of 2001, the report found.

Singapore hotels recorded the highest occupancy levels out of all major Asian hotel markets during 2000, reaching 84 per cent from 74.7 per cent in 1999. In addition, Jones Lang LaSalle executive vice president Scott Hetherington says the growing investment interest and record eight million international arrivals into Singapore predicted in 2001 made it an exciting year for the island state.

"Not only has occupancy rebounded above pre-crisis levels, but the four and five star hotels have recorded the highest revenue per available across South East Asia," he said.

"International hotel owners, operators and opportunity funds have expressed keen interest in investing in Singapore due to the market transparency, its well established legal system and the easing of the central bank ruling as of December 2000, which allowed funding for foreign acquisitions in the local currency."

The results from the fourth annual edition of the digest are not only favourable for Singapore, but also present exciting and positive news for hotel operators throughout the Asia-Pacific region. Hotel investors worldwide are continuing to look to the Asian hotels market for new investment opportunities, and are pushing increasing amounts of new development and expansion into all of the 10 countries profiled by the report. Even in countries where an oversupply of hotel rooms was being experienced, such as in Kuala Lumpur, Malaysia, increasing demand growth and improved hotel performance during 2000 saw fruitful results, with average occupancy increasing by over 20 per cent to 65 per cent from the year before.

While most of the region presented potential investment opportunities for international hotel owners and operators, the digest identified mainland Chinese cities Beijing and Shanghai as key growth areas in 2001.

"The outlook for growth of inbound tourism and corporate demand is excellent," Hetherington said. "China's imminent membership to the World Trade Organisation is likely to stimulate economic activity as China further liberalises trade and investment, and opens domestic markets to foreign competition."

A continued eye on investment in Hong Kong has also pushed up the profile of that country's hotels market, Hetherington said. Key factors driving this interest are buoyant occupancy levels, improving average daily rates and the country's status as a gateway to China. Market-wide occupancy levels in Hong Kong were second only to Singapore's, rising five per cent to attain 83 per cent during 2000.

"Looking forward, the hotel performance is likely to improve further as international visitor arrivals are forecast to grow a further eight per cent to above 14 million in 2001," he said.

Despite a slight decline in hotel operating performance in Mumbai and Delhi, investment interest into the Indian hotels market was also strong, with 2000 new rooms planned over the next three years under the Taj brand alone.

"Across India, room demand declined whilst room supply continued to grow, thus continuing a downward trend in occupancy rates," Hetherington said. "Despite these results, the majority of Indian hotel chains are undertaking expansion plans to gain market share in these strategic cities. Investors also anticipate increased room demand from the corporate sector as the Indian economy, growing at its fastest pace since 1996, stimulates business activity."

ACCOMMODATING GROWTH

Asia's hotel sector at a glance

Country        number     occupancy   ADR(*)   % change
               of rooms     (%)       (US$)    in ADR(^)

Beijing         5,389       69        102         13
Shanghai        6,022       68        105          7
Hong Kong       9,563       82        157          8
Mumbai          2,055       60        152        -12
Delhi           4,720       58        117        -13
Kuala Lumpur    5,683       67         54         13
Penang          6,675       72         53          9
Manila          3,110       68         85        -15
South Korea     8,490       78        173         17
Bangkok         4,735       70        105         11
Phuket          3,777       77         99          4
Singapore      12,043       80        101          7

(*) Average daily rate

(^) percentage change from 1999/2000

Source: Jones Lang LaSalle