HORWATH HTL NEWSLETTER CHINA
               EDITION 1, 2010
                   浩华中国资讯
                   2010 年第 1 期
CHINA MARKET OVERVIEW

Bring on 2010!                                                                      By Damien Littl...
CHINA MARKET OVERVIEW

Bring on 2010!
Looking forward to 2010, it will be the continuing impact of      Even in markets su...
HHTL ARTICLE
THE DAWN OF ASSET MANAGEMENT IN ASIA
                                                                        ...
HHTL ARTICLE
THE DAWN OF ASSET MANAGEMENT IN ASIA


Today’s asset manager not only provides insight into a hotel’s        ...
HHTL ARTICLE
THE DAWN OF ASSET MANAGEMENT IN ASIA


ASSET MANAGEMENT, STEP-BY-STEP                                        ...
HHTL ARTICLE
THE DAWN OF ASSET MANAGEMENT IN ASIA


Finally, if the owner is ready to dispose of the asset and (ideally)
h...
KEY MARKETS UPDATE

CHINA                                                                       By Julie Dai, Director, Ho...
KEY MARKETS UPDATE

CHINA
BEIJING                                                            SHENZHEN
Following the strong...
KEY MARKETS UPDATE

CHINA
DALIAN                                                           XI’AN
Similar to many other mar...
KEY MARKETS UPDATE

CHINA
CHONGQING
For Q4 2009, the Chongqing market has achived growth in
both occupancy and ADR in comp...
GLOBAL
HOTEL MARKET SENTIMENT REPORT



INTRODUCTION                                                      After a deterior...
GLOBAL
HOTEL MARKET SENTIMENT REPORT



The global sentiment outlook was again positive, with a
global sentiment average s...
HHTL

UPDATE NEWS
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UPDATE NEWS     ...
Horwath China Hotel Market Newsletter Q1-2010
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Horwath China Hotel Market Newsletter Q1-2010

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Horwath China Hotel Market Newsletter Q1-2010

  1. 1. HORWATH HTL NEWSLETTER CHINA EDITION 1, 2010 浩华中国资讯 2010 年第 1 期
  2. 2. CHINA MARKET OVERVIEW Bring on 2010! By Damien Little, Director, Horwath HTL 2009 HAS BEEN A BAD YEAR FOR CHINA`S Those unfamiliar with China’s hotel industry may assume the HOTELIERS. 2010 CAN ONLY GET BETTER. great success of the 2008 Olympic Games resulted in a golden year for the industry and the strong economic growth in 2009 TRENDS FOR 2010: at least allowed the hotel market to remain stable. 1. Occupancy will return to a positive growth trend in 2010. For most markets underlying demand growth should Unfortunately, that could not be further from the truth. hold true and the impact of recent supply entrants should subside. While China blitzed the field in the gold medal count in 2008, the year was largely a disaster for the hotel industry and not 2. Despite an upside to occupancy, average room rates despite of the Olympics, but largely because of them. Add a should continue to decline. Some key markets may good dose of global economic crisis with a traditional potentially experience double digit declines. The push for any slowdown in demand at year end and a supply hangover and significant improvement in occupancy will need to be achieved you get every general manager’s worst nightmare for 2009. through discounting. China’s major hotel markets include Shanghai, Beijing, 3. There should be a return to positive growth for Guangzhou, Shenzhen, Hangzhou, Sanya, Tianjin and Xiamen. international demand sources in key gateway cities. Data sourced from STR Global would indicate that the leading However, the importance of a strong domestic demand base hotels in these markets have by year-to-date September 2009, will not be lost on hoteliers and the focus on building domestic recorded RevPAR declines of 34%; 53%; 7%; 19%; 5%; 22%; 41% demand sources will continue. and 17% respectively. Aggregated STR Global results for China show a RevPAR decline of 32% for the same period. 4. The extent of the benefit brought by World Expo 2010 in Shanghai will benefit mid to lower-tier hotels Clearly the stimulus package did not have an impact on this primarily. While this is still being debated by hoteliers, I sense data set. this will occur. However, perhaps it would be more beneficial to analyse the Looking back on 2009, many around the world are thankful a data from a different angle. Looking at the same hotel defiant Chinese economy recorded a relatively strong growth markets as listed above, daily room night demand levels have rate. recorded the following trends: Shanghai -6%; Beijing +3%; Guangzhou +18%; Shenzhen +2%; Hangzhou +7%; Sanya +5%; The Central Government’s massive RMB4 trillion stimulus Tianjin -5% and Xiamen +5%. Not all positive, but those brought liquidity to the market. This largely found its way into numbers seem far more encouraging—perhaps hoteliers in large scale infrastructure developments, other fixed asset China should kowtow to the central government after all. investments and resulted in continued strong demand for resources. Other measures also boosted domestic consumer Jest aside, the average daily demand growth numbers do at least demand, particularly for the automobile industry which will identify that declines in 2009 have largely been a factor of over likely see China overtake the United States in the volume of supply. Unfortunately, in many instances, the over-supply will car sales for the first time. continue to have an impact in 2010. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  3. 3. CHINA MARKET OVERVIEW Bring on 2010! Looking forward to 2010, it will be the continuing impact of Even in markets such as Guangzhou and Hangzhou that new supply that will be causing most headaches for general experienced relatively strong underlying demand growth in managers across the country. However, as we can see from 2009, average room rates have declined (11% and 2% the numbers above, with demand continuing to grow in most respectively). Seemingly, much of the demand growth has markets, occupancy levels should begin to rise and the impact been built on a room rate cut as well as increasing domestic of recent supply additions should subside as the year demand, which tends to be more price sensitive than progresses. international demand sources. Beijing, which suffered a substantial post-Olympic supply Shanghai continues to see new supply enter the market in hangover in 2009, will require at least another year before preparation for the 2010 World Expo. The benefit of the occupancy levels threaten to push the 60% mark. However, Expo is still being debated by the city’s hoteliers, particularly with Beijing struggling to crack 50% in 2009, anything higher those placed at the top end of the market, and the last minute than 55% in 2010 will be cause for celebration. booking pattern of the domestic traveller means that we won’t find out anytime soon. I believe the Expo will predominantly As occupancies should generally improve in 2010, I believe that benefit the mid and lower-tier hotels and favour less the higher the main concern for the coming year will be a continued positioned international branded properties. decrease in average room rates. Year to date September 2009, average room rates have declined by 24% in China, based on Finally, the global financial crisis’ impact on international STR Global data. Beijing and Shanghai, the country’s two demand sources for China’s major hotel markets has resulted primary markets, have experienced average rate declines of in a shift of focus to domestic demand sources for many roughly 25% each in 2009 (after removing the impact of the top-tier international branded hotels. Despite an expectation Olympics in August 2008 for Beijing). These two markets set of a return to growth for many international demand sources the rate benchmark in China and there is the potential to again in 2010, it is expected that these hotels will continue to place a see double digit declines in 2010 as general managers work greater priority on securing a more stable base of domestic hard to shore up occupancy in a competitive market at the demand. The changing guest segmentation should have an expense of rate. impact on product and service offerings for many years to come and will present new challenges to the international groups. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  4. 4. HHTL ARTICLE THE DAWN OF ASSET MANAGEMENT IN ASIA By Howard Ho, Senior Consultant, Horwath HTL The asset management Once the asset manager has gained a thorough understanding The asset manager is profession has been established of the operations as well as inherent problems, a short-term or the champion of a for many years in markets like long-term engagement can be forged to rectify the issues. hotel owner’s the United States. However, it investment has only just begun to develop in WHAT DOES AN ASSET MANAGER DO? objectives and goals Asia with the advent of a new This is a complicated role that requires both operational generation of professional and performance-oriented hotel oversight as well as investment management: owners who work with specialist advisors to optimize results. Over the years, the need for asset management has arisen from OPERATIONAL OVERSIGHT the evolving operating structure of a hotel, characterized by the separation of ownership and management—two entities whose Continually observe competitive market trends and the interests do not always align. property’s financial performance. Monitor the physical asset, ensuring that the physical This created the need for an intermediary who would act on asset is maintained at a desired level and that all major behalf of the owner to maximize the profits and capital value of systems (PMS, phone, HVAC, etc) are in good working the hotel. order and compliant with regulations. Support and review the budgeting process, reviewing Short-Term (Operational Review) budgets and marketing/operating plans to ensure compliance with owner expectations. A one-time assessment of a hotel’s operational performance, Review operational performance to ensure that identifying any areas for improvement and strategies that can be revenues and expenses are in line with industry benchmarks. implemented to enhance profitability and capital value. INVESTMENT MANAGEMENT Long-Term (Comprehensive Asset Management) Select and oversee hotel operator, brand affiliations, and consultants. A long-term role designed to provide continuous monitoring of the Optimize investment strategies through annual strategic asset’s physical standards, operational performance, and capital reviews and determine market value of properties. Keep track of investment community (prices of structure. comparable transactions, capitalization rates, available financing terms). When a hotel underperforms, the asset manager’s first task is Approve and monitor capital expenditures (CapEx). to identify the key problems. Is the average rate compromised due to poor maintenance habits and, subsequently, substandard hardware quality? Is the hotel inadequately positioned given current and future market supply? Are there flaws in the hotel’s accounting policy? Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  5. 5. HHTL ARTICLE THE DAWN OF ASSET MANAGEMENT IN ASIA Today’s asset manager not only provides insight into a hotel’s It is not uncommon for stakeholder interests to conflict. For strategic value, but also acts as a “gatekeeper” for the owner. instance, the hotel operator often strives to maintain the The asset manager will thoroughly review a hotel’s income highest brand standards and yet this may contradict with the statement to make sure that the operator is performing at a owner’s capital budget constraints. Or, the owner’s desire to desired level, and that expenses are controlled within a influence management decisions may be seen as intrusive to reasonable range. The intricacies involved in the management hotel operators. The success of a hotel largely results from of a hotel demand careful analysis of all revenues and expenses, the skillful balancing of the various stakeholder interests. from operational items such as food and beverage to While asset managers cannot promise that satisfaction among ownership items such as property taxes. all parties on all decisions, they can certainly play a crucial role by ensuring that ownership interests are properly A HOTEL IS A COMPLEX ASSET communicated and executed. The physical complexity within a hotel is evident: no other real estate asset combines lodging, food and beverage, recreation, and meetings facilities to form what many refer to as a “mini-city.” A hotel’s multi-faceted nature demands higher investments as well. In China, for instance, the cost of a 5-star hotel is generally double that of a luxury house. Such high investment costs amplify the need for professional advisory to ensure that the physical asset remains competitive and valuable. The structural complexity of a typical hotel partnership can be seen through the priorities of its various stakeholders: Owner Priorities Operator Priorities Lender Priorities • Annual operating • Market • Annual debt cash flow return presence/share service coverage • Capital • Quality hotel • Adequate overall appreciation • Management fees ROI • Competitive • Utmost • Quality, hotel management competitive hotel • Influence on discretion • Influence on and management and • Long-term protection of operation stability investment • Flexibility to sell • Owner’s ability to • Flexibility to or refinance fund foreclose or restructure in difficult times Adapted from Hotel Asset Management, Principles & Practice (Beals & Denton, 2004) Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  6. 6. HHTL ARTICLE THE DAWN OF ASSET MANAGEMENT IN ASIA ASSET MANAGEMENT, STEP-BY-STEP If a hotel is to be acquired, the asset manager can help An asset manager can Step 1 Step 2 Step 3 Step 4 determine whether or not also be engaged to Determine Acquire / Monitor Conclusion of the asset fits within the conduct a one-time Ownership’s Absorb the Performance / the owner’s strategic objectives. review of the hotel’s Objectives Asset Objectives Investment The asset’s physical qualities, operational performance historical/current/future and formulate strategies Review operating performance, to enhance profitability Ownership's outstanding contracts and and asset value. Objectives liabilities, and capital structure are among the information that Evaluate needs to be assessed. During this step, the asset manager can Miscellaneous Market paint a clear picture about the asset—whether it is worth Ad Hoc Analysis Conditions pursuing and how its value can be harvested by the owner. Monitor Benchmark Operating Operating For hotels already owned or newly-acquired, performance Performance Performance monitoring then represents the bulk of the asset manager’s Budget Review efforts. During this phase, the asset manager will consider / Approval numerous questions: Adapted from Hotel Asset Management, Principles & Practice (Beals & Denton, 2004) Does the asset continue to meet original investment objectives? (this involves a hold versus sell analysis) The first and foremost step is to establish the investment What is the market-wide supply and demand outlook? objectives of the hotel owner. What is the owner’s tolerance How does the property compare with its competitors in for risk? How long does the owner plan to hold the asset? terms of key benchmarks? What are the owner’s expected investment returns? The Do the budget and market/operating plan comply with answers to these questions must be established early in the ownership objectives? process in order to provide a solid platform for future asset What are other ways to enhance the profitability and management decisions. value of the hotel? What CapEx is required and reasonable? Should the hotel undergo renovation or repositioning? Throughout the cycle, the asset manager will also provide periodic updates on the hotel’s potential value. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  7. 7. HHTL ARTICLE THE DAWN OF ASSET MANAGEMENT IN ASIA Finally, if the owner is ready to dispose of the asset and (ideally) harvest additional value, the asset manager will position the property for sale. Here, the asset manager will oversee any CapEx needed for a sale positioning, engage a broker, and subsequently assist in the transition of ownership. Depending on the nature of the original management contract, the asset manager may also assist in the transition of management or brand affiliation. QUALITIES OF AN ASSET MANAGER To successfully negotiate the asset management process and maximize the value of the owner’s investment, the asset manager must possess several important qualities and resources: • A thorough understanding of hotel market dynamics. • An expansive database of operational and investment benchmarks (ADR, occupancy, industry standard operational revenues and expenses, historical transaction prices, etc). • A strong background in transaction due diligence and a keen awareness of all the value-drivers for a hotel property. The hotel asset management process can be long and convoluted. As hotels are becoming more and more physically elaborate, and as the dynamics among ownership, management, and financiers become more pronounced, the need for professional asset management in Asia has never been greater. Armed with the qualities listed above, the asset manager is a formidable ally: protecting ownership interests and maximizing asset value, every step of the way. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  8. 8. KEY MARKETS UPDATE CHINA By Julie Dai, Director, Horwath HTL KEY MARKETS PERFORMANCE UPDATE YOY GROWTH, Q4 2009 VERSUS Q4 2008 -40% -20% 0% 20% 40% Hainan KEY MARKETS PERFORMANCE UPDATE Chengdu YOY GROWTH, 2009 VERSUS 2008 Chongqing -50% -40% -30% -20% -10% 0% 10% Guangzhou Chengdu Hangzhou Chongqing Shenzhen Guangzhou Xian Hangzhou Beijing Hainan Dalian Xian Qingdao Shenzhen Suzhou Dalian Shanghai Suzhou Tianjin Qingdao RevPAR OCC ADR Shanghai Source: STR Global Tianjin Based on the above performance data of the key markets in Beijing China provided by STR Global, Horwath HTL further provides RevPAR OCC ADR brief comments for each market. Source: STR Global Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  9. 9. KEY MARKETS UPDATE CHINA BEIJING SHENZHEN Following the strong recovery of demand in Q3, the market has The Shenzhen market, for the first time, achieved occupancy seen a positive growth of 15.8% in occupancy for Q4 versus performance of over 64 percent in Q4 2009, with a strong the last quarter of 2008. In particular for the last two months growth of 10% over Q4 2008. In the meanwhile, market wide of 2009, market wide occupancy has increased by around 24% ADR has showed smaller decreasing pace with only a 3.7% comparing to the same period of 2008 when the market drop for Q4 2009 versus Q4 2008. Accordingly, market wide slumped because of the global financial crisis. However, the RevPAR increased by 6%. For year end 2009, the overall market’s ADR was still 18.4% lower on a monthly comparison market recorded marginally negative growth of 5.2%, 8.5% and for the last quarter. For the whole year of 2009, the overall 13.2% respectively for occupancy, ADR and RevPAR over year market recorded drops of 6.9%, 39% and 43% respectively for end 2008. Looking forward, the additions of new 5-atar hotels occupancy, ADR and RevPAR. According to our recent might to some extent impact the overall market’s occupancy interviews with some hoteliers, the outlook for demand performance in 2010. Rate performance should be improved growth is positive, however, such growth will result in a once market demand growth improves. conservative outlook for ADR performance. SHANGHAI HANGZHOU The Shanghai market also recorded a positive growth of 5.8% For the last quarter of 2009, the market saw positive growth in for Q4 2009 versus Q4 2008. Market wide occupancy both occupancy and ADR performance for the first time, which continued to increase from 53% for Q3 to 56% for Q4. Rate resulted in 6.2% growth in RevPAR. In comparison with the performance had a negative growth of 19.5% for Q4, but other secondary cities, the Hangzhou hotel market seemed to showed much positive improvement in comparison with have been less impacted in performance for the whole year of negative growth of over 20% for the first three quarters for 2009 with occupancy just slightly dropping by 1.6%, ADR YoY comparison. Accordingly, RevPAR growth was also growing by 1.9% and RevPAR by 0.3% growth in comparison improved, though still negative. The overall market managed to with 2008. We expect the market benefit from the World Expo achieve 50% of occupancy for the whole year of 2009, 6.7% in Shanghai and the booming domestic leisure travel with the drop over 2008 and 23% decrease for ADR performance, development of the Hangzhou Bay Bridge and the upcoming resulting in 28.4% drop for RevPAR. Recently, more optimism high-speed trains between Shanghai and Hangzhou, and has emerged about the World Expo, which should positively Hangzhou and Yellow Mountain. influence demand growth for Shanghai in 2010. However, we are not sure if high-end hotels will benefit as much as lower-end hotels, in particular in attracting domestic leisure travelers. Further additions to new supply in the market with around 3,500 rooms in 2010, mostly in upper-tier positions, will continue to dampen occupancy performance. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  10. 10. KEY MARKETS UPDATE CHINA DALIAN XI’AN Similar to many other markets, the Dalian market has seen The Xi’an hotel market finally achieved positive growth in positive recovery for the second half of 2009. For Q4 2009 RevPAR for the last quarter of 2009, driven by the growth of versus Q4 2008, the market recorded slight drop of 0.7% in occupancy and the recovery of average room rates. For Q4 occupancy but a decrease of 7% in ADR which resulted in 7.6% 2009, market wide occupancy grew by 6.4% and ADR drop in RevPAR. For the whole year of 2009, the market decreased by 5% in comparison with the same period of 2008 realized average occupancy of 48%, representing a drop of 9.2% which resulted in 1.1% growth for RevPAR. In general, the Xi’an versus 2008 and market wide ADR went down by 5.5%. In hotel market has been less impacted by the global financial combination, market wide RevPAR decreased by 14%. As most crisis in comparison with the other cities. For year-end 2009, new supply might enter into the market in 2011 and onwards, market wide occupancy increased by 2.3% while market wide the market should continue to improve its performance in ADR decreased by 6%, which resulted in a decrease of 3.8% for 2010 if the economic situation keeps improving. the year-end RevPAR performance. CHENGDU TIANJIN Following strong growth in occupancy performance in Q3 2009, In comparison with the previous quarters of 2009, the Tianjin the Chengdu hotel market continued to achieve a similar hotel market has more positive signs in regards to the key occupancy level of 66.4% in Q4 as that for Q3. Such occupancy performance indicators. Market wide occupancy decreased by level ranked the top among the 13 markets we covered for this 6.6% for Q4 compared to declines of over 20% for the analysis. Market wide ADR also increased slightly from Q3 to previous 3 quarters. Market wide ADR decreased by 12.5% for Q4, though representing a slight decrease of 2.2% comparing to Q4 compared to around 20% declines for the previous 3 Q4 2008. The strong growth of occupancy resulted in a positive quarters. However, the year end performance data is still growth of RevPAR for Q4 2009 versus Q4 2008. The year end disapointing, with occupancy, ADR and RevPAR respectively performance data are also positive with annualized occupancy declining by 20%, 19% and 35% for 2009 versus 2008. Among growing by 24% due to the strong recovery of demand from the identified 13 markets, this market has recorded the second the negative impact of the 2008 earthquake. However, market largest decline in RevPAR in 2009, slightly better than Beijing. wide ADR decreased by 9.7% for 2009 versus 2008. In combination, market wide RevPAR increased by 12%. Looking SUZHOU forward, the market might have to suffer the pressure from For Q4 2009, the Suzhou hotel market continued its strong new supply additions in 2010, which to some extent might slow growth in occupancy performance, recording 22% growth over down the growth of occupancy performance. However, the Q4 2008. However, market wide ADR declined further by rate performance should have positive growth especially 26.5% for quarter on quarter comparison, a higher decrease pushed by newly opened and high-quality hotels, with the that that recorded for the previous three quarters. As such, overall economic situation expected to continue to improve. market wide RevPAR declined by 10% for Q4 2009 versus Q4 2008. For year end 2009 versus 2008, market wide occupancy managed to achieve 5.4% growth while market wide ADR declined by 19%, which resulted in a decline of 14% in RevPAR. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  11. 11. KEY MARKETS UPDATE CHINA CHONGQING For Q4 2009, the Chongqing market has achived growth in both occupancy and ADR in comparison with Q4 2008. Market wide occupancy increased by 14% and ADR growth by 0.5%, which resulted in 14.5% growth for RevPAR for Q4 2009 versus Q4 2008. For year end 2009, market wide occupancy positively increased by 11% while market wide ADR marginally decreased by 1.3%. As such, market wide RevPAR realized positive growth of 9.2% in comparison with 2008. QINGDAO With the close of the peak business time in warm wheather, the Qingdao hotel market entered into a low season with market wide occupancy dropping significantly from above 70% in Q3 2009 to average of 51% in Q4. New supply impacted market wide occupancy for Q4. However, for the comparison of Q4 2009 and Q4 2008, market wide occupancy and ADR have managed to achieve similar performance respectively with declines of 2.4% and 6.1%. For year end 2009 versus 2008, the market recorded declines of 9.2%, 13.1% and 21.1% respectively for occupancy, ADR and RevPAR. HAINAN When people in north China feel the cold, Hainan hoteliers welcome the best season of the year. In Q4 2009 versus Q4 2008, the Hainan hotel market recorded the strongest growth of occupancy by 23% and moderate growth of ADR by 6.5%, which resulted in 31% growth in RevPAR. We understand that the announcement of the national level development strategy in positioning Hainan as an International Tourism Island has boosted visitor arrivals to the resort island in the last quarter. However, for year end 2009 versus 2008, market wide occupancy and ADR marginally decreased by 3% and 0.3% respectively, which resulted in a decline of 3.4% in RevPAR. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  12. 12. GLOBAL HOTEL MARKET SENTIMENT REPORT INTRODUCTION After a deterioration of the market sentiment in the July The Horwath HTL Global Hotel Market Sentiment Survey 2009 Global Survey, hoteliers have returned to a positive gives a quick assessment of the market outlook for the frame of mind in 2010. Naturally the positive outlook for global hotel industry, by the people on the ground, running 2010 is relative to the poor performances recorded across the hotels. The survey focuses on the current outlook for the globe in 2009 and should be viewed in that context. A occupancy, average room rates and total revenue and what positive sentiment, nonetheless, indicates that in most the operators feel is going to happen based on their markets across the world, we should expect to see a return experience. to growth, particularly in occupancy performance. This report summarizes the outcome of the survey, Asia and Australia Pacific had the biggest shift in sentiment, gathered from 55 countries. Of the 2,090 respondents, 42 with both regions previously among the least positive percent of them came from Europe, 31 percent from Asia, mid-2009. A positive economic outlook in these regions has 11 percent from the Americas, 10 from Australia Pacific, and led hoteliers to believe that the market reached bottom in 5 from Africa/Middle East. 2009 and things are on the way up in 2010. Positive thinking was most notable in Hong Kong (82), China (64) Having been through one of the worst years in recent and Australia (42). Indonesia (50), despite having a history, it is not surprising to find most markets across the relatively positive 2009, continues to record improved world have a vastly improved outlook for 2010, although this sentiment for 2010, perhaps a more impressive feat than the is not to say hoteliers expect strong performance levels. It strong turnaround just mentioned for other countries in the suggests rather that in most markets, hoteliers believe we region. have seen the bottom and are on the way up. We hope that the following analysis provides some useful insight as to 2010 MARKET OUTLOOK – WHAT IS YOUR ASSESSMENT the expectations for different hotel markets across the OF THE HOTEL MARKET FOR 2010 VS. 2009? world. Hoteliers were asked their expectation for performance levels in 2010 compared to that recorded in 2009, in This is the third global survey by Horwath HTL, and we have relation to hotel occupancy (Occ), average room rate (ARR) analyzed previous sentiment scores in order to provide and hotel revenues. Over 50 percent of respondents stated some context to the sentiment scores recorded. that they expected occupancy and total revenue to perform better or much better in 2010 in comparison to 2009, SENTIMENT RANKINGS however, this reduced to 35 percent in regards to average As a way to measure and compare the results across regions room rates, with 40 percent expecting room rates to and countries, we have created an index to formulate an remain the same and 23 percent expecting ARR to be overall average sentiment score from all survey questions. worse. Points are assigned to each corresponding response and compounded accordingly. The index utilizes a scale of HOTEL PERFORMANCE EXPECTATION – FOR YOUR negative 150 to positive 150 in which a score of negative HOTEL, WHAT IS YOUR EXPECTATION FOR 150 denotes a sentiment of absolute pessimism; a zero GROWTH/DECLINE FOR 2010 VS. 2009? score indicates unchanged expectations from the previous The second survey question asked hoteliers to give their year, and positive 150 signifies a very optimistic outlook. The expectation of how their respective hotels will fare in 2010 index also allows us to track changes in market sentiment in comparison to 2009, in percentage terms. over time. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  13. 13. GLOBAL HOTEL MARKET SENTIMENT REPORT The global sentiment outlook was again positive, with a global sentiment average score of positive 36 for question 2. The majority of the respondents had positive opinions Between 15 to 27 percent of hoteliers expect to see an about the future performance of the corporate, leisure FIT improvement in performance growth of at least 5 percent, and MICE demand segments, with at least 41 percent of with a further 40 percent or more of hoteliers around the respondents expecting a better performance for these globe expecting to see hotel performance increase of up to demand segments. For the leisure group segment, the 5 percent. A higher overall sentiment score for question 2 majority of respondents (44 percent) felt performance indicates that most hoteliers expect their respective hotels would be the same in 2010, however, at least a higher share to perform better than market in the coming year. (34 percent) felt the segment would improve, compared to 22 percent that felt it would get worse. FACTORS EFFECTING PERFORMANCE – HOW EACH OF THE FACTORS BELOW ARE EXPECTED TO INFLUENCE CONCLUSIONS HOTEL MARKET PERFORMANCE IN 2010? Hoteliers in all regions have recorded significant Each hotelier was also asked to gauge their attitude towards improvement in their sentiment towards the market eight factors and how these will impact their hotels’ outlook since the last survey in July 2009, with all regions performance in 2010. managing to record an overall sentiment score that was positive, albeit a marginal positive result for Europe. While Local tourism trends scored the highest sentiment score the context of the sentiment improvement in relation to the among the 8 factors at 31, with 56 percent expecting a poor results of 2009 needs to be considered, this survey at positive impact from local tourism. Most negative was the least highlights that most hoteliers across the world do H1N1 virus at a score of negative 28, although a vast believe that the various regional hotel markets have hit majority (61 percent) expected that H1N1 would have no bottom, and that can only be seen as a very positive impact on performance. 55 percent of respondents felt that outcome for the industry. global economic growth trends would have a positive impact on performance, compared to ’09 when 74 percent felt this There are still areas for concern that are universal. Most of would negatively impact performance. the recipients don’t think that corporate travel will be back to reasonable levels in 2010, which means that leisure Utilizing the index, the first four factors registered positive travellers will still be the most significant market segment results, while the last four were negative. It is worthwhile this year. Group and Conference business is still very weak, mentioning that among the eight factors, four (1, 6, 7 and 8) especially in the USA, and this challenge, together with the all had the majority of respondents feeling they would have aftershock of new hotel supply in many markets will present no impact on performance. the most significant issues hoteliers will have to deal with. MARKET SEGMENT PERFORMANCE – HOW ARE EACH OF Note: Please visit www.horwathHTL.com to download the THE MAJOR DEMAND SEGMENTS EXPECTED TO PERFORM full version of the Report. IN 2010 VS. 2009? The last question dealt with each participant’s opinion with regard to primary market demand segments which were Corporate, Leisure FIT, Leisure Group and MICE (Meetings, Incentive, Conference, and Exhibition) and how they are expected to perform in 2010. Horwath HTL Newsletter Mar 2010 浩华资讯 2010 年第 1 期
  14. 14. HHTL UPDATE NEWS ABOUT HORWATH HTL UPDATE NEWS OF THE 6 TH ANUUAL CHINA HOTEL Horwath HTL (Asia Pacific) is the regional arm of Horwath DEVELOPMENT & FINANCIAL CONFERENCE International’s Hotel, Tourism and Leisure Group. As a Horwath International member, we are part of a professional th The upcoming 6 annual China Hotel Devleopment & Financial association of accounting and management consulting firms Conference has successfully confirmed 4 patrons, 23 gold key originated in New York in 1915 and currently ranked among sponsors. The Crowne Plaza Sun Palace Beijing will host the the top ten international professional service groups with upcoming conference from WEDNESDAY MARCH 24 TO FRIDAY office in 387 cities in 82 countries and an annual combined MARCH 26 2010. If you are interested in attending the turnover in excess of US$1.5 billion. The major services conference, please visit the conference website provided by Horwath HTL include: www.chinahotelseminar.com.cn to get detailed information and Market & Financial Feasibility Studies download registration forms. Hotel Operator Selection & Contract Negotiation Destination and Large scale Project Masterplanning UPDATE NEWS ABOUT 2010 CHINA HOTEL INDUSTRY Asset Management STUDY SURVEY Strategic Management and Planning Due Diligence China Tourism & Hotels Association (CTHA) and Horwath HTL jointly launched the annualized 2010 China Hotel Industry Study Survey for the 8th time. The due date of the survey is 15th March, 2010. Hoteliers interested in participation of the annual survey CONTACT INFORMATION can download the survey from www.horwathhtl.com and Beijing www.ctha.com.cn or call Ms. Vicky Wu at 86-10-8518-1833. The Tel: (86 10) 8518 1833 2009 China Hotel Industry Study received more than 620 survey Email: Beijing@horwathhtl.com respondents covering 31 provinces, municipalities and autonomous regions. As usual, the 2010 China Hotel Industry Shanghai Study will be published by the end of May, 2010. Tel: (86 21) 6136 3248 Email: Shanghai@horwathhtl.com Hong Kong Tel: (852) 2524 6073 Email: Hongkong@horwathhtl.com Singapore Tel: (65) 6735 1886 Email: Singapore@horwathhtl.com www.HorwathHTL.com

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