Higher average occupancy and daily rates in Asia Pacific Hotels in H1 2012

Singapore is one of the top three cities with the highest average daily rates in the last six months

Singapore, 8 August 2012 - ​Hotels in the Asia Pacific region experienced slightly higher Average Occupancy and Average Daily Rates (ADR) in H1 2012 compared to the same period last year. Occupancy increased from 64.6 per cent to 65.9 per cent while ADR rose slightly by 1.1 per cent to US$143.7, putting the hotel sector back on par with its performance in 2008, just before the effects of the global financial crisis filtered through the market. Revenues from the region’s hotel rooms rose as the half-year Revenue Per Available Room (RevPAR) grew by 3.0 per cent from a year ago to US$94.60. These findings were published in CBRE Hotels’ latest report “Asia Hotels MarketView H1 2012. CBRE Hotels’ basket of hotels includes China, Hong Kong, Indonesia, Japan Malaysia, Singapore, South Korea, Taiwan, Thailand and Vietnam.

As at June 2012, the three cities with the highest ADR in US$ terms were Hong Kong (US$248 or HK$1,355), Singapore (US$230 or S$296) and Seoul (US$185 or ₩213,407). Notably, Seoul hotel ADR was higher than in Tokyo. However, performance metrics of Tokyo hotels are expected to improve on the back of a demand recovery and intensive marketing activity from its national tourism organisation.

Robert McIntosh, Executive Director, CBRE Hotels, Asia Pacific said “Visitor arrivals continue to be very strong into Singapore. The Eurozone Crisis, while casting some shadows on the short-medium term outlook, has not impacted demand for hotel rooms in Singapore significantly in the last six months. Earlier this year, we said that the hospitality sector may be weakened due to the Eurozone crisis but the sector is turning out to be performing stronger than expected. It points to Singapore’s success in restructuring the sector, improving tourist attractions and business events as well as medical and gaming facilities.”

Southeast Asia was the fastest growing submarket with a 9 per cent y-o-y rise in arrivals this April, bolstered by the recovery of arrivals in Thailand (+7 per cent) and buoyant travel demand within the region. Tourist arrivals to Singapore were up by 9 per cent while those to Cambodia (+24 per cent), Myanmar (+35 per cent) and the Philippines (+10 per cent) grew considerably more due to the smaller base. The Chinese and Koreans are still the largest Asian source markets while the Russian Federation is emerging as a key source of visitors from Europe as is the UK.

Between January and June, all major Asian cities reported positive increases in ADRs except for Taipei (-11.2 per cent), Shanghai (-3.2 per cent) and Kuala Lumpur (-0.1 per cent). The three markets with the largest percentage growth in ADRs were Jakarta (+16.1 per cent), Seoul (+11.6 per cent) and Bali (+9.5 per cent). Operators were able to take advantage of the current rising occupancies to drive up rates even more aggressively.

After Tokyo and Jakarta, the three markets with the largest growth in RevPAR over the last 6 months were Seoul (+14.9 per cent to KRW170,446), Beijing (+12.8 per cent to CNY480) and Bali (+9.7 per cent to IDR902,697). These destinations not only benefitted from growing international arrivals but also from their large base of domestic tourists.

Three markets experienced smallest percentage rise in RevPAR: Singapore (+1.6 per cent to S$249); Hong Kong (+3.5 per cent to HK$1,576) and Taipei (+4.2 per cent to TW$3,166).

Both Singapore and Hong Kong are open economies and are exposed to fluctuations in global demand including tourism demand. Nonetheless, our projected RevPARs still indicate a very busy year for these two hospitality markets.

With the exception of Bali and Shanghai, all the markets reported increases in occupancy in June from a year ago. Led by the recovery of inbound tourism, Tokyo hotel occupancy rose by 10.2 percentage points to 79.7 per cent in June. Other markets that saw larger occupancy improvements were Taipei (66.4 per cent to 71.8 per cent), Beijing (64.9 per cent to 69.7 per cent) and Bangkok (60.6 per cent to 65.0 per cent).

“Competition is growing considerably across the region. Every hotel company is not only competing with major hotel chains in national and international venues but also with home-grown hotels in regional markets. Heightened competition and potential addition of new supply will restrict market share.” Mr McIntosh added.

Singapore expects a 17 per cent increase in its stock of total hotel rooms between 2011 and 2014. Against a very strong visitor arrival growth of 20 per cent in the same period between 2011 and 2014, CBRE expects strong demand for the new hotel rooms.

Investor sentiments in global markets remained subdued, putting the brakes on the region’s hotel investment market. Hotel transaction volumes recorded in the first half of 2012 was about US$2.3 billion across Asia, a decrease of 20 per cent compared to H1 2011. Although volumes are lower compared to H1 2011, the full year target is likely to be around $4-$5 billion which will surpass the annual volumes in 2009 and 2010. Investment volumes are likely to pick up in the second half of the year as several deals are currently in the final stages of negotiation.

The Singapore hospitality market may also see more buying activity by the hospitality REITs as they grow in size and from those waiting to be listed. Ascendas Hospitality Trust (A-HTrust), a stapled security, has recently raised over S$700 million to fund its portfolio of 10 hotels across Asia. It has been reported that Far East REIT could raise some S$700 million in a public listing in August. Sponsored by Far East Organization, the REIT’s initial portfolio will include seven hotels and four serviced residences, all of which are in Singapore.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.sg.

About CBRE Hotels

CBRE Hotels is the world’s leading, full-service, real estate advisory group focused exclusively on the hospitality industry. CBRE Hotels provides consultancy services for the sale, valuation, financing, development and asset management of hotels. Please visit our website at www.cbrehotels.com.