Asian Hotel Valuation Index 2001 - HVS International

Every year, HVS International Singapore estimates the hotel values of five-star hotels located in capital cities and resort destinations across Asia using its sophisticated benchmark study, the Hotel Valuation Index (HVI).

Operating data for each hotel within a representative sample of hotels selected for each market is aggregated to produce an average performance for the city as a whole. This is used to derive a representative forecast of income and expense for each market, which reflects demand and supply conditions prevailing over the year. A unique discounted cashflow valuation technique developed by HVS International is then applied, using the prevailing market rates of return for each city. In order to make a direct comparison from year to year possible, the sample for each city has remained the same.

Despite high expectations and promising results during the first half of 2001, the 11 September terrorist attacks in the United States and the subsequent softening of economies around the world affected the outlook of five-star hotel markets throughout Asia.

The HVI 2001 shows that on average, hotel values across Asia declined by approximately 5% compared to an increase of 7% in 2000 and 4% in 1999. Generally, markets depending largely on American and European demand, both commercial and leisure, are likely to be affected more severely than markets that rely more on regional demand.