China's Hotels Show Dramatic 26.2% Revenue Declines in 2009, Contrast Strongly with Asian Economy

Vacation News » Vacation & Leisure Real Estate Edition | By Michael Gerrity | February 12, 2010 10:00 AM ET

(LONDON, UK) -- Dramatic declines in China's hotel performance during 2009--underscored by revenue per available room (RevPAR) falling 26.2 percent compared with a year ago--contrast strongly with the continuing good performance of the Chinese economy. An 8.7 percent year-on-year increase in GDP (Source: National Bureau of Statistics of China) for 2009 has experts predicting China's economy will overtake Japan's in 2010 and become the world's second-biggest economy after the United States. 

A new report and data from STR Global shows the decline in RevPAR was largely due to falling average daily rate (ADR) of 21 percent with further impetus from declines in occupancy of 6.5 percent. The fall off in occupancy came amid significant increases in hotel supply during the last few years. STR Global's Census database shows a 5-percent increase in available rooms across the country for 2009 compared to the prior year.

Percentage Change 2009 to 2008 (local currency)

The nationwide downturn in hotel performance nevertheless reflects the impact of the global financial crisis of late 2008 and 2009. The dramatic fall in RevPAR for Beijing of 43.2 percent also reflects the impact of the 2008 Olympics, whilst Hong Kong and Shanghai also suffered but not to the same extent. Hong Kong was the only Chinese destination to see an increase in arrivals in 2009, albeit only 0.5 percent, whilst arrivals for the country as whole were down 6 percent year-on-year (Source: Domestic travel is expected to remain strong in the coming year, undoubtedly making a significant contribution towards the 70 million visitors expected at Expo 2010 Shanghai between May and October. The 16th Asian Games hosted by Guangzhou in November also will boost performance in what is already a relatively strong market.

"We are delighted with the continued growth of our sample size across China, making us the 'go to' resource when it comes to understanding the country's hotel market," said Elizabeth Randall, managing director of STR Global. STR Global's office in Beijing collates data from more than 220,000 guestrooms across China. In Beijing, the sample of 149 hotels comprises almost 33 percent of the available guest rooms in the capital, whilst in Shanghai, 105 hotels account for 41 percent, and 47 hotels in Hong Kong account for 43 percent. All the major international brands and local chains (Jin Jiang Hotels, Grand Metropark and Metropark Hotels, New World Hotels) are well represented in the sample.

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