Asia is insulated from Europes current economic woes
The 2012 outlook for key geographic markets Exclusive situation reports from Horwath HTL :
- China :
Emerging markets are those that have yet to see any significant entry of international 5-star hotels (or have just had new branded hotels enter) and are just now starting to mature as viable hotel markets for the international brands. Cities in this category include Changsha, Wuxi, Hefei, Fuzhou, Foshan, Guiyang, Zhengzhou, Jinan, Taiyuan and Ningbo. All except Taiyuan have a leading international 5-star hotel present in the market, but competition generally remains limited - although in Ningbo, competition has already heated up, and from YTD data it would seem that Wuxi may not be able to realize it's potential anytime soon.
- Australia :
Despite suffering major floods and cyclones in part of the country and a softening in consumer confidence and spending levels, the Australian hotel industry has continued to progress well in 2011. Driven by 20 consecutive years of GDP growth and a burgeoning mining sector, the outlook for room demand remains strong. Having been one of the few countries to avoid negative GDP growth during the GFC, Australia's real GDP is expected to continue to grow by about 2.5 % in 2011 and by 4 % in 2012. Unemployment remains below 5 % and is falling, while corporate profits have held up. Both of these factors have supported hotel demand.
- Japan :
After the nightmare of the worst ever earthquake on March 11, the Japanese hotel industry had to face another shaking. The shaking was not actually a physical one - although in fact we have had many physical aftershocks - but it was a big shake in the market environment. According to STR Global, as shown in Hotels in the Tokyo area became major victims of the problem with the Fukushima Nuclear Power Plant (rather than of the East Japan Earthquake followed by the recordbreaking tsunami). From our past experience of co-called « Lehman shock, » we believe that the current market turmoil is completely different from what we experienced during the previous recessionary period in 2009.
- India :
2011 is turning out to be a sweet-sour year. It began with strong promise from the viewpoint of operations and development activity. However, economic challenges and lack of policy initiatives have impacted hotel development. While operations have maintained momentum for the most part, development activity has clearly slowed down as money has become expensive.
In 2011, demand revival has occurred across most markets leading to a steady improvement in occupancies ; rates have also improved, particularly in the last quarter. On a city-wise basis, these must be seen in the context of increased supply absorption, with about 9,000 new rooms being added in 2011 (about 15 % addition to the supply of branded hotel rooms).
- Thailand :
2011 continues to be a very eventful year for Thailand. After a relatively peaceful first half of the year, all eyes were on the Land of Smiles in July as the country held its first general elections since 2007. The populist Pheu Thai Party won the majority of seats, and Thailand's first female Prime Minister, Yingluck Shinawatra, sister of ousted ex-Prime Minister Thaksin Shinawatra, was appointed. After almost five years of political unrest and economic instability, the Thais, and the region, were eager to witness reconciliation amongst the various political stakeholders in the nation.
- Singapore :
Following on the extremely well timed opening of two multibillion dollar integrated resort (IR) complexes (Marina Bay Sands and Resorts World Sentosa) in the first half of 2010, visitor arrivals to Singapore have been scaling new heights. As of YTD August 2011, arrivals were up 15.5 % year-on-year, putting arrivals for the year on track to reaching 13 million (vs. 11.6 million in 2010). The induced visitor growth comes primarily from regional source markets such as China (+39 %), Hong Kong (+27 %), Japan (+21 %), ASEAN (+17 %), Korea (+14 %) and Australia/NZ (+12 %).
- Malaysia :
In 2010, Malaysia recorded a modest 3.9 % increase in foreign arrivals, the lowest increase since 2004, to 24.6 million. Despite the recovery from the slight economy downturn of 2009, hotel occupancy levels across the country declined slightly to 59 % from 61 % in 2009. While most states and territories registered declines, hotels in Kuala Lumpur and Selangor chalked up increases in occupancy levels of 4.2 and 2.4 % points, respectively.
- Indonesia :
The Jakarta hotel market is continuing its upward trend, especially in ADR, after a long hiatus with rates coming back up to a more respectable level when compared regionally. Market occupancy has somewhat stabilized since 2009-10 ; not many hotels came on line in the past five years. As a result, RevPAR for Jakarta hotels is probably at its highest level in a long time.
- Maldives :
Due to the global financial crisis and a large influx of new supply, the Maldives suffered a significant blow in 2009 and 2010. Between 2004 and 2008, the upscale segment, for instance, welcomed an average of about one new resort per year. Starting in 2009, however, several new resorts opened their doors, such as the Shangri-la Villigili, the Beach House by Waldorf Astoria, Constance Halaveli and the Alila Villas Hadahaa (now Park Hyatt). Coupled with an overall drop in tourist arrivals (with a more significant impact on the upscale segment), the upscale resorts reported a low occupancy of only 56 %, with an 18 % year-on-year drop in ADR and a corresponding 32 % drop in RevPAR. ADR continued to slide in 2010 as demand numbers continued to drop and the market struggled to absorb the new supply.
- United Arab Emirates :
The political and social unrest which started early in the year 2011 has heavily shaken the hotel and tourism markets in the Middle East and North Africa (MENA). Amid the chaos of the Arab Spring, which resulted in political upheaval in several countries, the United Arab Emirates (UAE) has proven to be a safe oasis in the region.
The UAE has not seen any of the violence that has reverberated through the MENA region, and as a result, regional as well as international tourists have diverted their travel plans to their safer destinations. Particularly the Emirates of Dubai and Abu Dhabi, which offer a comprehensively developed tourism infrastructure like high-quality hotels, shopping facilities and other attractions, have been the focus of travelers.
- Vietnam :
2011 will be remembered as the year in which Vietnam experienced the highest inflation rate amongst Asian countries. In September, the inflation rate reached 22 % year-on-year. As such, the inflation rate for the year is expected to average 18.7 %, much higher than the 15 % previously forecasted by the government. Soaring prices hurt business investors in various ways, such as through increased labor costs and double-digit interest rates, while increasing overall uncertainty - which investors don't like in general.
- Philippines :
After a lackluster performance in 2009, the hotel and tourism industry in the Philippines ended on a high note in 2010. Despite the bus hostage taking situation and travel warnings from countries such as USA, Australia, Hong Kong and England, the country welcomed a record 3.52 million international visitors, exceeding the previous high of 3.14 million set in 2008. According to STR Global, market occupancy surged by 5 percentage points to 67 % in 2010, while countrywide ADR averaged PHP 4,760, inching up by less than one percent from 2009. Hotels in greater Manila, a key hotel market, registered better performances, with average occupancy improving by 5 percentage points and ADR growing by 2 %.