Soaring Average Room Rates Drive Performance in China

China has seen strong growth during the first eight months of 2006 as revPAR increased 8.7%, accordi

• 
  SAVE
• 
  SHARE
• 
  TEXT SIZE
• 
  PRINT
• 
  COMMENT
• 
  PDF

. October 14, 2008

OCTOBER 10, 2006. Average room rates have been the driving force behind this growth and are now US$10 higher than the same period in 2005, at US$111.

All cities tracked across China saw increases in average room rates over the period, with Hong Kong experiencing the highest growth at 17.5% to US$163. Following the opening of Hong Kong Disneyland last year, the city has benefited from a surge in international tourist arrivals, up 10.4% during the first eight months of 2006. Occupancy levels in the city have also seen improvements reaching 83.2% - the highest in Asia Pacific. Overall, this performance led to an outstanding 22.2% increase in revPAR for Hong Kong.

Frantically preparing for the Olympic Games in 2008, Beijing took the silver medal as average room rates rose 13.6% to US$108. Although Beijing Capital International Airport reported increases of 20% in passenger arrivals during the first eight months of the year, hotel occupancy levels did not mirror this trend and fell by 4.2% to settle at 71.2%. However, we can expect this blip to be a distant memory when visitors pour in for the Olympic Games.

Taking the bronze medal in terms of average room rate growth was Shenzhen, seeing a 12.9% increase to US$90. The city continues to benefit from its world-class convention and exhibition centre, which has developed quickly over the last two years. In September 2006, the International Federation of PGA Tours announced that the 2007-2008 World Golf Championships will be held at the Mission Hills Golf Club. Up to 28 nations will participate in the event, boosting hotel performance in the city as well as launching it into the global tourism arena.

These impressive results are not surprising as China currently boasts the title of the fastest growing economy in Asia Pacific, achieving a staggering 9.9% increase in Gross Domestic Product during 2005. According to the Economist Intelligence Unit, 2006 promises to be another successful year, as China already achieved its fastest increases in the past decade during the second quarter of 2006 at 11.3%.

For the second consecutive year, China remained in the World Tourism Organisation's Top Destinations list in terms of international tourist arrivals. With 46.8m arrivals during 2005, China ranks in fourth position behind France, Spain and the US.

Commenting on the results, Lorna Clarke, Executive Director of HotelBenchmark(TM) said: '2006 promises to be another good year for hotel performance in China. Although revPAR growth for the first eight months of 2006 has been slower than the 14.3% achieved in 2005, it is still impressive. The recent launch of Oasis Hong Kong Airlines, offering low-cost long-haul flights to London is an exciting development which will make travel to the country more accessible and affordable. Going forward China will continue to challenge other destinations, last year the country ousted Germany from the number six spot in terms of tourism receipts and it needs just 2.6m more visitors before its level pegging with the US'.

Note: All analysis in US$