World Tourism Shows Scope For Optimism

World Tourism Shows Scope For Optimism

Says International Study

Paris, 11 October 1995: The world's tourism industry is more buoyant than for some years, according to Horwath International's 1995 Worldwide Hotel Study, this year produced for the first time in association with the International Hotel Association (IHA) and US-based Smith Travel Research.

Not all regions are at the same stage of the economic cycle but the period to 1999 provides scope for considerable optimism, it concludes.

The Study, which looks at the world's five main tourism regions, says that growth in the next 25 years will almost certainly be as dramatic as that of the last quarter century, but it confirms the widely differing operating results of hotels throughout the world.

Average room rates for luxury hotels vary from US$150.90 in Europe to US$105.37 in North America. But, despite their high prices, European luxury hotels were among the least profitable, earning on average $598 pre-tax income per room.

The Study shows that first class hotels are more profitable than luxury properties and earn more pre-tax income per available room than hotels in any of the other three categories - luxury, mid-market, economy.

In the economy category European hotels were the most profitable, but due to the prolonged recession other hotel categories in Europe performed only averagely compared with hotels elsewhere.

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North American hotels, except in the economy range, generally turned in a strong performance and North America, Middle East/Africa and Asia-Pacific remain areas of continuing growth for the industry. Prospects in the Middle East are said to be "excellent".

"International hotel groups are expanding throughout the region and occupancies and room rates are high. The rebuilding of Beirut offers great scope for hotel development with at least 2,000 hotel rooms being built or planned."

While countries in north, west and east Africa are suffering from internal crises or the effect of the recession in their tourism-generating countries in Europe, South Africa shows 'outstanding' tourism potential providing peace and harmony prevail.

Asia and Australia

In Asia-Pacific, hotel bedstock is expected to increase significantly in all the main tourism destinations, including Singapore, Hong Kong, Bali, Bangkok, China, Manila and Australia - the latter aided by the Olympic Games in the year 2000. Not all the countries will be able to sustain high levels of occupancy in the face of such construction but the region as a whole is one of the most active in the world from the tourism point of view.

The development of India's tourism industry is being encouraged by government liberalisation measures, with great interest being shown by international hotel groups.

Europe

Europe is still suffering from the effects of the economic recession, with Switzerland, Germany, France and Austria also suffering from the high value of their currency and lower visitor numbers. The UK, however, is recovering from the recession more quickly and demand for accommodation in London in 1995 has been very strong.

"The expanding sector of the market in the UK - indeed, throughout Europe with the possible exception of France - is budget and mid-market hotels," says the Study. "This sector will continue to develop with little overall growth in other markets."

The Study notes that Spain and the Balearics are currently facing the problem of aging bedstock while the emerging democracies of Hungary, Poland, the Czech Republic, Slovenia, Romania, Bulgaria and Albania have much to offer the tourist but need heavy investment in tourism infrastructure before they can successfully attract the international visitor.

Latin America/Caribbean

Many central and South American countries see the potential of tourism as a revenue-generating industry but hotel development is still at an early stage. Brazil, Chile and Argentina, however, are experiencing considerable growth with interest being shown by many international hotel groups. The Caribbean, after enjoying extensive hotel construction in the 1970s/80s, is now suffering from poor occupancies on some islands.

North America

The Study says that North America is now enjoying consistent post-recession growth. "The highest profits in the history of the US lodging industry were recorded in 1994...and continued improvements in efficiency, increasing cash flow and stable fixed costs are expected."

With increasing occupancies and room rates, 1996 is forecast to see a similar strengthening of industry performance ratios.

This year's Study features a major innovation in that hotels are broken down into luxury, first class, mid-market and economy categories, as well as by region and

country. The new format provides more accurate and extensive statistical information, which it is hoped will be of significant help to hotel operators, owners and developers.

Because of the changing nature of the sample and the vastly expanded database, comparative figures for previous yeras are not used on this occasion but will appear in future studies.

n A presentation of the Worldwide Hotel Study will be given at the IHA Annual Congress, due to be held in Tel Aviv, Israel, 2-6 November 1995.

For further information:

Werner Rotach - Chief Executive Officer

Horwath International - (1) 212 838 5566

Eliberto J Gracia - Chairman, Travel and Tourism Group

Horwath International - (1) 305 477 9051

Jonathan Bodlender CBE - Deputy Chairman, Travel and Tourism Group

Horwath International and Chairman, Horwath Consulting Europe (44) 171 353 5380

Caroline Harvey, Press Officer, International Hotel Association (33 1) 47 00 84 57

Randall Smith, President, Smith Travel Research, (1) 615 824 8664