Increased Tourism Arrivals And Rebounding Regional Economies Help Asia Pacific Hotels Achieve Double-Digit Yield Growth, Reports Arthur Andersen Survey

Of the four regions that Arthur Andersen monitors on a monthly basis, Asia Pacific was the best performing market with the strongest RevPAR growth of over nine percent. In many markets, increases in occupancy over 1999 levels were the main reason for the significant yield growth, as economic stability and confidence began returning to the region. Ten of the cities tracked in the survey recorded occupancies over 70 percent, with Hong Kong leading the region at 82 percent occupancy - an increase of six percentage points over 1999 levels.

One of the contributing factors to this impressive performance was the increase in international tourism arrivals to Asia Pacific. Preliminary results from the World Tourism Organisation (WTO) indicate world tourist arrivals grew by nearly 7.4 percent during 2000 to reach 698 million arrivals, spurred on by a strong global economy and special events held to commemorate the new millennium. Nearly 50 million more international trips were made in 2000 and the growth rate was the highest for nearly a decade.

Asia Pacific was the star performer in 2000 with the strongest growth in tourist arrivals. Almost 112 million tourists visited the region, representing an impressive 14.5 percent increase (over 14 million more arrivals than 1999). Events such as the Sydney Olympics combined with rebounding regional economies helped boost business and leisure travel through Asia markets. South East Asian markets benefited from strong demand, with Vietnam and Cambodia experiencing rapid-growth as emerging tourist destinations. Singapore, Malaysia, Thailand and Hong Kong all recorded double-digit increases in tourist arrivals for the second consecutive year.

In terms of RevPAR growth, the top two performing cities - Jakarta and Kuala Lumpur - rebounded from a low base by over 20 percent over 1999 levels. In terms of achieved RevPAR, Hong Kong ranked fourth highest at US$107. In Singapore, performance was strongest amongst Orchard Road hotels, where RevPAR increased US$15 over 1999 levels to US$90, equivalent to an increase of 20 percent. The dramatic improvement was driven primarily by an increase in occupancy of ten percentage points over 1999 levels.

Selected top performing cities ranked in terms of growth in RevPAR (in US$)

City          Occupancy  Average room    RevPAR    RevPAR
                  %        rate US$        US$	  % Growth
Jakarta          43           67           28        22
Kuala Lumpur     65           46           30        21
Bali             68           86           59        17
Hong Kong        82          130          107        17
Singapore        81           99           80        16

Once again Tokyo topped the tables as the most expensive destination in Asia, with hotels in the capital recording an average room rate of US$212. This equates to twice the average room rate on Orchard Road in Singapore (US$107), around three times the rate in Beijing (US$74) and over four and a half times the average rate in Ho Chi Minh (US$46). On Hong Kong Island and in Seoul, average rates shot up by almost US$16 and US$19 to US$154 and US$157 respectively as corporate demand soared. In Hong Kong, hotels on the island continued to earn a premium over Kowloon hotels, due to preference of high-spending corporate customers to stay in the major financial and commercial districts of Central and Admiralty. This rate premium over Kowloon hotels increased from US$28 in 1999 to US$36 in 2000.

Only two cities in our Asia Pacific survey reported a decrease in demand compared to last year - Seoul and Manila. In Seoul, new supply had the effect of diluting demand slightly, leading to a slip of less than two percentage points to 81 percent. Meanwhile, Manila continued to struggle against social and political instability. Impeachment of President Estrada, kidnappings in resort areas and lack of investor confidence impacted tourist flows to the country, directly affecting the performance of the hotel industry. Manila was the only city to record contraction across all measures throughout much of 2000.

Overall, the Asia Pacific hotel market recorded robust and encouraging performance in 2000. Corporate and leisure demand rebounded on the back of a renewed investor confidence in the region, increased consumer confidence and strong economic performance in key source markets such as Europe and the US in particular.

Commenting on the findings Andreas Flaig, Senior Associate Director, Hospitality and Leisure Services, Arthur Andersen said, "With the significant growth in intra-regional travel, occupancy levels in most markets rebounded back to almost pre-crisis levels. We believe a similar positive trend will see average room rates increase by more than 10 percent in all but a few commercial centres by the end of 2001. This will lead to significantly improved operating profits and shareholder returns."

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Launched in 1996 as the definitive source of hotel performance data outside North America, the Arthur Andersen Hotel Industry Benchmark Survey comprises information gathered from more than 4,000 hotels in 200 markets across 140 countries. The survey currently tracks hotel performance everywhere outside North America. Regional surveys are produced for Asia Pacific, Europe and the Middle East & North Africa. These are supported by in-depth country/city reports for Australia, Germany, South Africa, the UK and London. New surveys under development include New Zealand, Italy, Latin America, Caribbean and Scandinavia. For more information, or to join the survey, contact Lorna Clarke, London at 44 20 7438 2870, e-mail us at [email protected] or visit our web site at www.hotelbenchmark.com.