HOTELyearbook2010
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HOTEL 2013
A special excerpt fromthe Hotel Yearbook 2013 :
The 2013 outlook for key geographic marketsExclusive situation reports from Horwath HTL
S c e n a r i o s f o r t h e y e a r a h e a d
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HOrWAtH HtL
Horwath Hotel, Tourism and Leisure consulting are the world’s number one hospitality consulting
organisation, operating since 1915. Horwath HTL are the industry choice ; a global network offering
complete solutions in markets both local and international. Through involvement in thousands of projects
over many years, Horwath HTL have amassed extensive, in-depth knowledge and understanding of the
needs of hotel & real estate companies and financial institutions.
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offices in 39 countries. They are recognised as the pre-eminent specialist in Hotels, Tourism and Leisure,
providing solutions through a combination of international experience and expert local knowledge.
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provides electronic news publication, syndication and distribution on behalf of some 750 organizations
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This excerpt from the Hotel Yearbook 2013 is brought to you by :
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Thirteen tales of hopeaCCording to HORWATH HTL, 2013 will be a year when moSt european hotel marketS finally emerge from
the doldrumS they have been in for the paSt 4 yearS. that’S not to Say the Situation will be roSy – far
from it. but the indiCatorS are looking better than they have for quite Some time. to get an idea of the
outlook in the key marketS aCroSS the Continent, the hotel yearbook aSked 13 different offiCeS of
horwath’S international network to Contribute their profeSSional aSSeSSment of where we are and
where we are going.
r e g i o n a l o u t l o o k : e u r o p e
HOTELyearbook2013
THE NETHERLANDSsituAtiON rEPOrt
The lodging supply in The Netherlands, consisting of hotels,
pensions and hostels, is clearly dominated by hotels. Here
lodging accommodations are only allowed to carry the label
“hotel” if they have been classified according to the Dutch
Hotel Classification System. Within the hotel market, the 4-star
segment has without a doubt the largest market share.
During the last five years, however, the market share of hotels
within the supply of all Dutch lodging accommodations
decreased, as the supply of non-hotels increased more quickly
than that of hotels. This development is indicative of two supply-
related trends in the Dutch hotel industry. Modern hotel concepts
such as Qbic and citizenM, both “made in Holland”, do not fit
the traditional classification system, mainly because of the room
sizes. This leads to the decreasing use of the classification
system, and a corresponding negative effect on the market share
of hotels. At the same time, the relatively low prices, personal
hospitality and increasing level of professionalism among B&Bs
in the Netherlands are leading to both an increase in the number
of B&Bs as well as the number of B&B registrations, with – again
– a negative effect on the market share of hotels.
Another supply-related trend in the Dutch hotel industry is the
increasing chain affiliation. At the end of 2011, only 39 % of
Dutch hotel rooms was still independent of hotel chains, which
was a reversal from ten years earlier when only 35 % of Dutch
hotel rooms were chain affiliated. At the end of 2011, 50 hotel
chains were active in The Netherlands, with 63 brands. In 2012,
this increased due to the addition of chains such as Meininger
Hotel Gruppe and brands such as DoubleTree by Hilton, Hilton
Garden Inn and Best Western Plus.
Facts & figures: Dutch hotel supply 2012
No. of lodging accommodations 3,151
No. of rooms in lodging accommodations 110,332
No. of hotels 2,215
No. of hotel rooms 91,108
Market share of hotels 83 %
Chain affiliation 61 %
Growth, rooms in lodging accommodations 2008-2012 + 11 %
Growth, hotel rooms 2008-2012 + 4 %
Growth, market share of hotels 2008-2012 - 6 %
In 2011, guests spent almost 35 million nights in Dutch hotels,
of which 52 % were Dutch as opposed to international guests,
and 56 % were traveling as tourists rather than business guests.
With respect to both national and international overnight stays in
hotels, 2011 was a record year in the period 2007-2011. However,
the number of overnight stays by business guests, in particular
individual business guests, still had not recovered from the effects
of the 2008-2009 international economic crisis. Hoteliers tried to
make up for this lack of business demand with a rather aggressive
sales strategy, targeting mostly Dutch, German and Belgian tourists
traveling individually, with an increased use of pricey online booking
intermediaries, online auctions, and discounts up to 50 %. Because
both Internet transparency and the competitive supply continued to
increase simultaneously, the RevPAR of Dutch hotels in 2011 was
still well below the record level in 2007, as were the margins.
At the end of 2011, 50 hotel chains were active in the Netherlands, with 63 brands
3 %
7 %
34 %
52 %
5 %
5*1*
2*
3*4*
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The first quarter of 2012 showed a revenue increase of 2 % in
relation to the same period in 2011. At 3 %, the increase in the
second quarter was even a little higher. However, more than half
of the hoteliers interviewed to determine the sentiment in the
hotel market indicated that their revenue in the first half of 2012
was lower than expected, mostly due to disappointing average
room rates. Also, in the course of the year, many hoteliers felt
increasing pressure on revenue and margins, leading to the
belief that the initial growth in 2012 will be moderated to a zero
growth at the utmost for the whole year. Many hoteliers are even
taking another revenue decrease into consideration.
Facts & figures: Dutch hotel demand 2007 2008 2009 2010 2011 Growth
Overnight stays in hotels(in M) 34.1 32.6 31.4 33.7 34.6 + 1 %
National overnight stays in hotels (in M) 17.8 17.7 17.1 17.5 17.9 + 1 %
International overnight stays in hotels (in M) 16.3 15.0 14.4 16.2 16.7 + 2 %
Business overnight stays in hotels (in M) 16.8 15.8 14.1 14.6 15.2 - 10 %
Occupancy 3-, 4- and 5* hotels (in %) 72.5 68.1 62.1 65.1 67.2 - 7 %
Average room rate 3-, 4- and 5* hotels (in €) 110 105 93 93 98 - 11 %
Revenue per available room 3-, 4- and 5* hotels (in €) 80 72 58 60 66 - 18 %
OutLOOk fOr 2013
As recent history proved once again, results in the Dutch
hotel industry are strongly related to international and national
economic developments. For 2013, slow economic growth at
best seems to be realistic, as it is expected to be held back not
only by the challenges and uncertainties of the European debt
crisis, but also by political uncertainties, as new government
policies are slowly taking shape.
At the same time, from the supply side, the competitive
pressure is expected to continue. For various urban locations,
the real estate world sees hotels as “convenient” alternatives to
empty offices. Also, the expansion drive of international hotel
chains is leading to even more chains and brands entering the
Dutch hotel market. Hyatt Hotels and Resorts aims to follow
up on its 2012 entry in the Dutch hotel market (Andaz Hotel
Amsterdam) with the opening of the first Dutch Hyatt Place
Hotel near Amsterdam’s Schiphol Airport in 2013. Other chains
expected to enter the Dutch hotel market in 2013 with new
brands are the Spanish chain and brand Room Mate and Hilton
Worldwide with the brand Waldorf Astoria.
These chains prefer a location in or near the capital Amsterdam
because of its strong position in the Dutch hotel market. This
position is expected to be even stronger in 2013 and onwards
due to the many festivities planned for this year, among which
are the 400th anniversary of the canals, the 125th anniversary of
the city’s concert hall, and the reopening of some of the largest
museums. It is no wonder then, that Lonely Planet designated
Amsterdam as the second best city worldwide to visit in 2013.
Rachèl Lardenoye
2006 2007 2008 2009 20100
10
20
30
40
50
Business group segment
Business individual segment Tourism group segment
Tourism individual segment
% o
f to
tal d
eman
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Other Segments
Thirteen tales of hoper e g i o n a l o u t l o o k : e u r o p e
HOTELyearbook2013
RuSSiAsituAtiON rEPOrt
Another tough year globally, but Russia is still performing from
a strong economic base which is reflected in comparably
good hotel trading performances in cities like Moscow and
St. Petersburg.
At the annual Russian Hotel Investment Conference held
in October 2012, opening presentations by two leading
economists painted a mixed picture and some uncertainty
where the global economy, and in particular the Euro crisis,
were going. But nonetheless they felt that Russia will remain
economically strong relative to Europe, buoyed by continuing
strong oil prices representing the core of its economic success.
So what has been happening in Russia during the last year as
far as hotel development is concerned ?
New properties form luxury to budget continued to open
throughout Russia, but many more projects remain in the
pipeline awaiting finance. There seems to have been renewed
interest in hotel real estate from domestic banks in 2012, but
again with interest rates very high and term of loans short
and continued lack of interest from foreign banks, the result
remains that the rate of hotel development in the country is
slowed down when compared with emerging markets such as
Turkey and China.
Nonetheless, hotel development teams are being bolstered in
order to sign up potential investors, as the market becomes
increasingly competitive in terms of hotel operators offering a
wider array of brand segmentation.
The level of interest in resort type properties has notably
increased over the last 18 months, as the market becomes
Thirteen tales of hope cont.
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more leisure-oriented, with anticipated competitive air fares and
a more lenient visa regime for international visitors.
OutLOOk fOr 2013
Thirteen may be an unlucky number for some. But the next
five years will provide increased growth of hotel supply and
profile exposure of Russia through the forthcoming Sochi
Winter Olympics 2014 and FIFA World Cup 2018. Significant
infrastructural projects have been undertaken in the Sochi area,
while interest in the 11 cities selected for the FIFA World Cup are
attracting investors already. These events are Russia’s chance
to sell itself to the world’s media.
So, will 2013 prove to be the year when major deals are signed
allowing the development of several significant portfolios of
hotel brands, not only in Moscow but regionally ? Will we finally
see budget hotel properties entering smaller cities as the
leading product, at least until the level of supply grows ? Will
everything be complete on time, that is, by the end of 2013 in
readiness for the Winter Olympics ? Will Russian banks start
to offer more realistic levels of interest on loans to expedite the
number of international properties entering the supply chain ?
Will franchising start to be the most popular form of agreement
between owners and operators ?
These are the key questions that will define Russia’s progress
in terms of successful hotel development in 2013 and beyond.
If these issues are properly addressed, then the signs suggest
that 2013 will be lucky for Russia.
Michael O’Hare
FRANcEsituAtiON rEPOrt
After the strong recovery in 2011, the slowdown of the French
economy over the past 10 months combined with the uncertain
outcomes of budgetary pressure call for cautious forecasts.
Indeed, France saw zero growth in GDP during the first half
of 2012. So far, the French economy is likely to remain at a
standstill, as growth is anticipated to stagnate at the same level
for the full year.
The graph hereunder shows the evolution of the GDP at current
values and the corresponding evolution of RevPAR, based on
growth ratios.
frANCE : GDP AND rEVPAr GrOWtH
Source : INSEE/Horwath HTL
As shown above, the hospitality industry’s performance has
proven to be directly linked to the changes in current GDP.
Therefore, it has to be noticed that since the peak reached in
2008, and despite the post-rebound crisis of 2010, growth in
current GDP never regained its pre-2008 level, oscillating from
3 to 5 %.
Current GDP forecast for 2013 indicates 0.8 % growth in volume
which seems ambitious in the current context. At the same time,
inflation should remain in the range of 2 %.
-12
-8
-4
0
4
8
12
16
RevPAR Current GDP
1996
1998
2000
2002
2004
2006
2008
2012
2010
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Cha
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DP
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As a consequence, growth in RevPAR in 2012 is anticipated to
be moderate and price driven only at around + 3 % versus 2011.
Occupancy is stable in most categories, while prices are pulled
up by the upscale segment.
Undoubtebly, the French hotel industry remains driven by
Paris which benefited from a favorable combination of high
occupancy and continuing increase of ADRs. In this favorable
context, Paris has achieved or planned upgrades of many hotel
facilities in the 4 and 5 star segments. This, combined with the
scarcity of land plots available for development, translates into
ever higher rates.
Hotel investment in France, although affected by the crisis, was
still solid in 2012, thanks to transactions of trophy assets in
Paris. But if France remains globally one of the most dynamic
markets in terms of hotel transactions, the increased uncertainty
in financial markets has caused banks to be more selective and
debt to become more difficult to source for new built projects.
OutLOOk fOr 2013
The perspective for 2013 is rather stable. However, we
anticipate a slower growth in RevPAR than in 2012, in relation
to the poor performance in GDP anticipated by economists. In
addition, we anticipate that the context will be less favorable to
increase ADRs well above the expected inflation rate of 2 %.
Development remains driven by two factors :
• A significant part of the stock of existing branded hotels
continues to age (> 20 years on average), featuring too-small
average size and often unattractive suburban locations. As a
result, the city center is attractive again to hotel developers.
• The new star rating system, implemented gradually since
2010, should contribute to improve the overall quality of
supply, but the weakest properties will exit the market. This
will offer opportunities for renewal.
In total, this results in a two-gear hotel market :
• On the one hand, the Paris region, driven by international
business and leisure dynamics, has proven to be a solid
market. Interest from investors remains strong and demand is
expected to remain solid, supported by sustained rates.
• On the other hand, regional markets are more volatile. They
perform at a lower level, as they are often impacted by
seasonality. However, regional markets could be looked at
opportunistically if well located in a city center and/or in a
perspective of market renewal.
Philippe Doizelet
Thirteen tales of hope cont.
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Trianon palace, versailles
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SpAiNsituAtiON rEPOrt
After many seasons of being battered by the global economic
downturn, Spain is living up to its name as one of the top tourist
destinations in the world, as the country has received, up to
September 2012, 47 million tourist arrivals, an increase of 3.8 %
from the previous year, with the Islas Baleares and Cataluña
leading the results.
Tourist spend up to September 2012 sees a 7.2 % increase from
2011, with a total of € 45,106 million. September itself saw a 13 %
increase from 2011, with € 6,242 million spent, and an increase in
spend per tourist and daily spend of 7.8 % and 7.6 % respectively,
thanks to a 5.1 % increase in tourist arrivals for this month.
Overall numbers see Cataluña as the main receptor of tourist
arrivals with a total of 11.9 million tourists, an 11.6 % increase,
although the summer months see the Islas Baleares as the
leader in tourist arrivals.
Neighboring countries Germany and the United Kingdom
are the main markets, preferring the Islas Baleares (Mallorca
especially) for their holidays, with an important increase in
the French, Scandinavian and especially Russian markets.
In Cataluña, the Russian market, for the first time, has taken
the lead from the traditional French market in this area, and
although their numbers have only just reached 1 million, that
actually represents a 40 % increase from 2011. The US market
is proving also to be a reliable market for Spain, with an
increase of 25.2 % in September.
Andalucía and the Islas Canarias have also seen important
increases in their tourist arrivals and spend, and Valencia
saw the most important growth, 28 %. On the other hand,
Madrid has seen a decrease in both tourist arrival and spend
in September, although the YTD is a 3.7 % increase from 2011,
with a total of 3.4 million foreign arrivals.
Leisure is still the top reason for travel to Spain, with a slight
decrease in the results for business travel in many communities.
The preferred accommodations remain the hotels, with a 5.9 %
increase from 2011, and an important increase of 19 % in
apartment rental is also an significant trend.
OutLOOk fOr 2013
The forecast for 2013 is tricky : the ailing Spanish economy has
a direct impact on touristic income. Government budget cuts
and VAT increases negatively affect the competitiveness of
Spain as a destination.
As many typical “sun & beach” communities depend between
50 and 70 % on tour operators, package agreements for 2013
are difficult to close. The uncertainty of the tax factor in pricing
has meant many hotel businesses have prepared blindly for
2013, and certain tour operators have made it very clear that
they are not willing to accommodate tax increases within their
contract clauses. The result is hotels having to cover the cost of
the tax increase that they cannot charge to the client.
Business travel from the Spanish market (Spanish business
travelers within Spain) is set to follow the same negative trend
in 2013, with expected falls of total spend of 4.1 % down to
€ 14,700 million, due to the lower rates of economic growth
and the austerity measures adopted by Spanish companies.
2008 saw a total business spend of € 16,620 million, while 2011
reached only € 15,350 million. Spanish hotel companies look to
the European market for increases in business travel results.
However, Spain is expected to enjoy an increase in tourist
arrivals in 2013, second only to the USA, thanks also in measure
to the impulse created by the increase in travel of the BRIC
countries to Spain, especially Russia, direct flights from these
Thirteen tales of hoper e g i o n a l o u t l o o k : e u r o p e
HOTELyearbook2013
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countries being the main factor affecting growth. Also affecting
growth are the persistent uncertainties in the European
economy, with the continued debt crisis, added to the increase
in energy and food costs.
Perspectives for 2013 tourist arrivals are cautiously optimistic,
although the first quarter of the year will set the tone for the
rest. But results are expected to be as positive as 2012, or even
slightly better.
Mariá Rosa Barcia
iRELANDsituAtiON rEPOrt
After three years of negative sentiment, the Irish hotel industry
is gaining confidence with a stronger performance in 2012 and
a general optimism for the year ahead. RevPAR is forecast to
grow for the third year in a row in 2012, with improvements
predicted in both occupancy and average rate. Dublin has
experienced 22 months of consecutive rate growth and is
ranked among the top 10 European cities in occupancy terms.
Hotel performance is improving in city-based hotels, while rural
properties continue to face challenges with an over-reliance on
the price-sensitive domestic market.
HOtEL trENDs – rEPubLiC Of irELAND
Source : Horwath HTL Ireland and Northern Ireland Hotel Industry Survey
and Forecast
tOurisM NuMbErs
A total of 6.5 million trips were made to Ireland in 2011, up from
6.0 million in 2010. This boost in tourism numbers was helped
by events such as President Obama’s and the Royal Visit to
Ireland in May 2011. There has been an estimated 4.5 million
overseas visitors to Ireland in the first 8 months of 2012, 1.4 %
fewer than the same period last year. The forecast to year-end
is ca. 6.4 million visitors, a modest reduction on 2011.
The UK, which accounts for ca. 44 % of total visitor numbers,
has experienced a decline in visitor numbers during 2012.
Promoting Irish tourism in the UK is a key priority for
Tourism Ireland.
02 03 04 05 06 07 08 09 10 11 12(F)
ADR (€) Occupancy (%)
0
20
40
60
80
100
120
54
58
56
60
62
64
66
68
70
72€ %
Dublin has experienced22 months of consecutive rate growth andis ranked amongthe top 10 European cities in occupancy terms
Thirteen tales of hope cont.
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OVErsEAs VisitOr NuMbErs
Source : Central Statistics Office and Horwath HTL Forecast
Tourism accounts for an estimated 196,000 jobs, equating
to ca. 11 % of Ireland’s total employment. Tourism continues
to make a valuable input to the national economy, generating
substantial export revenues and tax contributions, contributing
ca. € 5.3 billion in spending to the Irish tourist economy and
generating ca. € 1.3 billion in tax revenues.
Domestic tourism continues to account for a high share of total
tourism demand. While the Irish economy has shown signs of
a recovery and growth, the outlook remains vulnerable. While
consumer confidence has risen during 2012, it has seen a
decline in the third quarter, driven by concerns in relation to the
outlook for household finances over the next 12 months. Budget
2013 is expected to result in a contraction of the public spending
deficit by € 3.5 billion through a mix of extra tax charges and
spending cuts. These measures will weigh on consumer
spending and will have an impact for the tourism sector.
bANk fiNANCE
The Irish hotel industry is suffering from a significant debt
overhang problem which is curbing recovery in the sector. The
hotel sector is overleveraged and overweighed by debt as a
result of high investment during the Celtic Tiger years.
There is an estimated € 6.7 billion of debt in the sector.
Indebtedness in the hotel sector has more than doubled from
ca. € 50k per room in 2001 to ca. € 120k per room in 2011. This
rapid increase in hotel indebtedness was driven by a significant
investment in new supply, the refurbishment and upgrading of
existing hotels, and a buoyant transaction market in the years to
2008 before the economic collapse.
While hotel profits increased in 2011 to € 5,220 per room, these
levels are insufficient to repay the debt facing the sector. We
expect the debt overhang to be resolved over the coming years
through a mixture of asset sales or refinancing and through
formal debt restructuring. Banks are continuing to assess their
hotel portfolio to decide which loans to restructure and to
establish an appropriate sustainable debt level.
Domestic based banks, in particular, have expressed
and demonstrated appetite for providing funding for new
acquisitions and capital expenditure projects. This is a positive
step towards Ireland retaining a high quality hotel stock.
MArkEt
After 3 years of almost no transactional activity, 2012 has
witnessed a surge of hotel properties being brought to the
market by lenders. A number of banks have signalled their
exit from the market and are committed to winding down their
operations and are now aggressively selling assets. This activity
will present exciting opportunities for new entrants to the market
to acquire quality hotel assets at attractive prices. Hotels in
prime urban locations have seen strong international demand
with transactions over the past 12 months including the Four
Seasons, The Marker and The Morrison.
International purchasers have successfully acquired a number
of hotel assets and opportunities are certainly evident for
consolidation in the market.
02 03 04 05 06 07 08 09 10 11 12(F)0
2 M
4 M
6 M
8 M
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OutLOOk fOr 2013
We are optimistic that 2013 should deliver improved results for
the Irish hotel industry. Occupancy levels should continue to
grow on a national basis. Rate recovery will continue to be led
by the key cities, but it will be a slow process and may take
several years to recover to pre-recession levels.
A number of government incentives have been introduced to
support the Irish tourism industry. These include a reduction in
air tax, maintenance of the current 9 % VAT rate and increased
funding for tourism marketing.
The government’s flagship tourism program, “The Gathering”
has also been launched for 2013. The Gathering is a year-long
calendar of events hosted by local communities throughout the
country to showcase and share the very best of Irish culture and
tradition. Statistics show that over 70 million people worldwide
claim Irish ancestry and it is hoped that The Gathering will
entice an additional 300,000 visitors to Ireland next year.
The Tourism Recovery Taskforce has been established as an
industry initiative, which identifies the market segments which
offer the best potential for growth, and sets out a plan for future
marketing and development in Great Britain. The Taskforce is
confident that the implementation of all elements of this strategy
will restore growth from the GB holiday market to the island of
Ireland, yielding increases of close to 5 % per annum over the
next 4 years, or 200,000 additional visitors annually by 2016.
From January until June 2013 Ireland will host the Presidency of
the Council of the European Union. For those six months, it will
be at the center of decision making in Europe, helping to shape
policies and drive forward legislation that will impact on the
futures of over 500 million EU citizens. Hosting the Presidency
is an important position, as the host nation must undertake a
number of functions that are essential for the smooth operation
of the European Union as a whole. This will encourage many
representatives worldwide to visit Ireland, having a positive
impact on overseas visitor numbers.
The current economic conditions will continue to create a
difficult operating environment for the Irish hotel industry. The
reliance of the industry on the domestic market will impact
the level of recovery during 2013. There was evidence of a
turnaround for the industry in 2011 / 2012, and through the
recently introduced initiatives and uplift in overseas visitor
numbers, we are confident that the Irish hotel industry will
continue to grow in 2013.
Naoise Cosgrove
BALkANSCrOAtiAN tourism volumes continue to grow in 2012, reaching
more than 60 million annual overnights and growing around
4 % compared to 2011. EU accession in July 2013 now seems
definite – driving hotel performance as well, both on the side
of occupancy and especially ADR. Important administrative
adjustment is going to take place as of January 1st, 2013, when
the VAT rate is set to decrease to 10 %. Croatia is in the final
stage of adjusting its tourism and hotel-related legislation to EU
standards, a process that is expected to be finished in a year’s
time. There have been few hotel openings (notably the Zagreb
Hilton DoubleTree), but several state-owned brownfield objects
have been initiated, meaning that the period from 2013 to 2015
will probably see further growth in supply of new capacities
and a revitalization of destinations that so far have remained
underdeveloped.
Thirteen tales of hope cont.
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Although the crisis fully hit buLGAriA three year ago, the
hotel market is still feeling the impact in terms of ADR, while
arrivals continued their weak recovery. According to estimates,
occupancy growth in Bulgaria should show a slight recovery,
but not yet one that provides a profitable framework for the
majority of non-branded hotels. Taxation and the gray economy
will still remain among the top issues in Bulgaria in 2013.
rOMANiAN tourism is still mostly business-related, with
Bucharest as the most important city destination. Followed
by a room oversupply resulting in hotels struggling to maintain
profitable performances, the year 2012 brought a recovery in
ADR of over 6 %, on account of a slight further decrease of
occupancy by 2 %. In 2013, slight performance improvements
can be expected, mainly in terms of occupancy – also an
impact of the new branding of 2010. The investment cycle in
Romanian tourism is still in a downturn following the recession
in the EU and key markets.
MONtENEGrO in 2012 continued the growth begun in 2010
following the global crisis recovery. In 2012, the estimated
growth in terms of overnights will be around 2 %. Tourism
receipts amounted € 680 million in the first nine months of the
year, while on a yearly basis, receipts are estimated to grow by
3 %. In 2012, Montenegro continued to attract hotel investors.
There have been public tenders on several seaside locations
Thirteen tales of hope cont.
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HOTELyearbook2013
which attracted a set of interested parties. There are still
pending issues for the Lustica development project and the
Sveti Marko island project, so the expected projects are still in
preparation phase. According to the WTTC, Montenegro is the
top country in the world regarding long-term growth prospects.
In MOLDOVA, the hotel market is still predominantly
concentrated in the capital Chisinau, which generates 80 % of
all the hotel overnights recorded in the country. After years of
crisis, the market has started a strong recovery in 2011 which is
expected to accelerate further with the announced opening of
the Radisson Blu in Chisinau in spring 2013.
The tourism sector in sErbiA is still focused on business
travel to the capital, while the main focus of development is
in the Danube region, Kopaonik, Stara Planina and Zlatibor
mountains, predominantly through public sector initiatives in
competitiveness building and destination management. Both
tourism and hotel performance were stagnating in 2012 on rather
unfavorable levels of business performance. However, there are
several projects that have been launched recently or are awaiting
their launch in December 2012 – Metropol in Belgrade and
two Falkensteiner objects (Stara Planina and Belgrade). These
developments, together with expected results of the public
sector development initiatives in several regions mentioned
above, provide arguments for expected growth in 2013.
Miroslav Dragicevic
ScANDiNAViAsituAtiON rEPOrt
Nordic Choice Hotels retains its position as the largest hotel
operator in Scandinavia, and recently surpassed Scandic in the
number of hotels, also in Sweden. Hilton has withdrawn from
both Oslo and Malmö, leaving Rezidor and Best Western as the
only chains with a presence in all the Nordic countries.
Total Avg. hotel size
(rooms)Per September 2012 Hotels Rooms
Nordic Choice Hotels 161 25,096 156
Scandic Hotels 120 22,890 191
Rezidor Hotel Group 48 11,771 245
Best Western 136 11,161 82
Rica Hotels 73 10,498 144
Local property owners and banks are reluctant to sign
management agreements, and hotel operators prefer fixed
and variable lease contracts. As such, the meager presence of
international operators in the region is not likely to change any
time soon.
Four of the five cities with the highest RevPAR in Scandinavia
are located in Norway :
Stavanger € 89
Stockholm € 87
Bergen € 84
Oslo € 80
Trondheim € 71
2011 figures from STR Global, based on average Euro exchange rate for 2011
Gothenburg is trailing right behind, with a RevPAR at € 70 for 2011.
Economic development in Scandinavia is mixed, and so is
hotel performance. As visitor demand is fairly stable, hotel
performance is most significantly influenced by additional supply.
DENMArk
Denmark is significantly affected by the troubles of the Euro-
zone and is on the verge of recession. Despite overall economic
development, overnight stays increased 3.4 % compared to
YTD September 2011. Fifty-five percent of all guest nights in
Denmark are in the Copenhagen area. The Copenhagen hotel
market is performing quite well, with an increase in rates having
generated 6 % RevPAR growth as of September.
Thirteen tales of hope cont.
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NOrWAY
During 2012, guest nights are up by 2.7 % from a year earlier.
RevPAR has increased by 1.7 %, negatively affected by large
capacity increases in some of the bigger cities. Especially hotels
in Oslo have experienced pressure on prices (slightly down this
year) with an occupancy decline of 3.3 %, despite an increase in
guest nights of 1.4 %.
sWEDEN
Sweden rebounded quickly after the economic crisis in 2009,
and its economy has been stable since then. The country as
a whole posted a small increase in sold room nights of 1.5 %
as of September, but due to an increase in supply, occupancy
is down 1.7 %, and RevPAR is down 1.5 %. Stockholm is in a
negative trend with a RevPAR decline of 4 % in 2012 (-11 %
in Q3). This is in large part due to capacity increases, and to
make things worse, several new hotels are being built to be
introduced in late 2012 and 2013.
OutLOOk fOr 2013
Scandinavia benefits from significant intra-regional travel,
both in the business and leisure segments. Interest rates in
Scandinavia are being kept low for the foreseeable future to
counteract the effect of local currencies growing too strong.
The economic outlook varies, but the Norwegian oil industry
continues to put Norway ahead of the rest.
Hotel capacity is set to grow by 5 % in Norway in 2012 and
2013. Further growth is expected in 2014-2016. Several of the
major cities in Norway could experience a decline in occupancy
and ARR, though some areas will be hit harder than others.
The Swedish economy was surprisingly strong during first half
of 2012, but the outlook is more clouded. Foreign investment
interest in Stockholm, along with domestic investors, has led to
several new projects being developed in and around the capital.
Both ADR and occupancy should be influenced, leading to a
flat RevPAR development, at best, for next year. A recent study
of confidence among Swedish hoteliers shows negative values,
indicating a more difficult hotel market in 2013.
Forecasts for the Danish economy project slow growth in 2013.
In Copenhagen, capacity growth is expected to be moderate,
which should lead to an optimistic outlook for 2013.
Bjørn Kjølstad
GERmANysituAtiON rEPOrt
During the first eight months of 2012, the German hotel
market benefited from a general economic upturn which
is also proven by recent tourist statistics. According to the
German Federal Bureau of Statistics, the accumulated number
of overnight stays from January to August 2012 increased
by 3.9 % compared to last year’s period, to 278.9 million.
During the same period, the accumulated arrivals in German
lodging establishments increased as well, by 4.6 % to roughly
102.4 million. As already mentioned in the Hotel Yearbook
2012, in particular the decrease of the Value-Added Tax
has significantly contributed to improving the German hotel
market’s international competitiveness, resulting in an increase
of foreign arrivals and overnight stays by respectively 7.7 % and
8.4 % in 2012.
The positive development of overnight stays and arrivals is also
reflected in the performance measurements of the first half-year
of 2012. The average occupancy rate increased by roughly
2.2 % to 63.8 %, whereas the average net room rate rose as
well by 3.2 % to € 95. As a result, the German hotel market
positioned in the luxury segment, “The Thief”will open at Tjuvholmen (Thief island) in Osloin 2013. All 120 rooms will have a private balcony.
HOTELyearbook2013
HOTELyearbook2013
profited from RevPAR growth to € 61, an increase of 5.4 %
compared to the first six months of 2011. Thanks to the overall
positive development, German hoteliers recorded an increase in
inflation-adjusted revenues of 1.1 %.
OutLOOk fOr 2013
increase in international tourists
Based on the positive developments in the year 2012, we can
expect that the German hotel market will register an ongoing
upswing in 2013. According to the German National Tourist
Board (DZT), the German hotel market will especially benefit
from an increase in international tourists, since in the long run
it is capable of accommodating roughly 80 million overnight
stays of foreign guests, which would connote an increase of
roughly 70 %. In the near future, a great percentage of foreign
arrivals and overnight stays will be generated from European
source markets, particularly Spain and Italy as well as Eastern
European countries, such as Poland and the Czech Republic.
Thirteen tales of hope cont.
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China and India constitute further significant source markets
for Germany.
Predicted economic slowdown due to European debt crisis
The German Hotel and Restaurant Association (DEHOGA),
though, preaches caution due to the European debt crisis and
the slowdown of the global economy which might both lead
to an economic slowdown in Germany as well. Whereas those
lodging establishments situated in primary locations, as well
as business and convention hotels, are facing a promising
2013, hotels that are located away from the classical tourist
centers and in secondary locations, by contrast, are slightly
less optimistic. About 37 % of German hoteliers are expecting a
decrease in revenues for 2013 and even 44 % are preparing for
lower profits. These negative expectations are primarily based
on increasing cost pressure, in particular with regard to rising
food prices and energy costs.
trends and developments
In 2013, budget hotels as well as hostels will still constitute
a significant trend. Especially hybrid forms, such as design
budget hotels, will become increasingly popular for both leisure
and business travelers. This implies also that hostels and
budget hotels will be converging more and more so that a clear
distinction will be almost impossible.
Especially domestic tourism and health tourism – or a
combination of both – will constitute profitable market segments
in the next year. German hoteliers will increasingly catch the
trend of medical wellness and even cooperate with physicians
and health insurance companies. This trend will not be limited
to tourist regions any longer, but also expand to city hotels.
Rüdiger Knospe
pOLANDsituAtiON rEPOrt
The year 2012, when Poland together with Ukraine undertook
the organization of the European Football Championship UEFA
EURO 2012®, was a very interesting period, not only for the
Polish hotel industry. The decision on where the championship
would be held was made on April 18th, 2007 in Cardiff, which
gave Poland five years to make all the necessary investments
to prepare for the event. The preparations had an impact on
most of the sectors of the economy, including the hotel industry,
which was expected to benefit greatly not only from an inflow of
tourists during the event, but also from intense development of
the infrastructure and promotion of our country.
Six months after this event, it can safely be said that the Polish
hotel market in 2012 recorded a steady growth, both in terms
of an increase of the hotel base, as well as hotel results. We
estimate that during this year, over 100 new hotel projects
entered the market, which represents ca. 5 % of the hotel
market. The table below presents the results of the Polish hotel
industry in 2012 compared to 2011.
POLisH HOtEL rEsuLts iN 2011 AND 2012
Occupancy ADR in PLN RevPAR in PLN
2011 58.7% 271.09 159.21
2012* 60.1% 282.95 170.03
Source : STR Global *Data for 11 months of 2012
2012 was marked by the development of hotel chains. No new
international hotel chain emerged in Poland ; however, chains
already present opened new properties. In total, 13 hotels under
international hotel brands were opened, mainly by Orbis/Accor
(4 hotels), Louvre Hotels Group (3 hotels) and Best Western
(3 hotels).
Another significant trend on the hotel market in 2012 is the
increasing importance and interest of investors in economy and
budget hotels. In today’s uncertain times, investing in economy
hotels was regarded by both Polish and international investors
as the most reasonable option. What’s more, these investors
were more likely to choose less promising destinations, such as
regional cities. Locations such as these have great potential for
the hospitality industry.
Thirteen tales of hope cont.
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HOTELyearbook2013
HOTELyearbook2013
OutLOOk fOr 2013
In terms of new hotel openings, we assume that the year 2013
will be slightly worse than 2012. This is mainly due to the many
new openings that took place in 2012, which were partly related
to UEFA EURO 2012. Due to the fact that nowadays, many
hotel chains are planning their investments, and new chains
are showing an interest in the Polish market, we anticipate a
growing importance of hotel chains in the country.
Janusz Mitulski
HuNGARysituAtiON rEPOrt
Circumstances could not be more difficult and challenging,
as economic conditions experienced in Hungary in 2012 have
not been favorable, to say the least. While endless lists of
complaints could be compiled, luckily the moaning has been
replaced by action, as hotel industry stakeholders have rolled
up their sleeves.
Owners have no reason to cheer yet, as in part at least, they
need to blame themselves. While banks have shown patience
in sorting issues with non-performing loans, management and
owners have panicked and figured that a filled bed at any price
is better than an empty one. This self-destructive price policy
has hurt the market overall, and the already bargain-basement
price level of Hungary became even more affordable. There
was no need for such price dumping, as senselessly priced
bookings largely through web-based distribution channels have
resulted in more volume, but often less revenues or profits. The
long-lasting pain is still healing, as only now, after three years of
significant occupancy increases, have we begun to see some
across-the-board increases in ADR levels (Budapest registered
a 21.7 % RevPAR increase in October, according to STR,
posting the second highest gain in Europe).
Demand profiles have also shifted heavily towards an
extraordinarily value-conscious segment, as with the collapse
of the national carrier, low cost airlines have descended on
Budapest to grab as much of the 36 % of the cake MALÉV left
behind when it shut down overnight. Business passenger seats
and the airline’s alliance partners from overseas have been lost,
which really hurt the hotels.
It is clear that hotel financing, as other corporate loans, will
not get the backing of the government, forcing banks to apply
a fixed exchange rate to ease the blow on outstanding loan
balances, as was the case with mortgages on residential
housing. The depreciation of the national currency against the
fast-appreciating Swiss Franc and Euro-dominated debt sent
debt obligations through the roof in 2010 and 2011. The resulting
financial obligations of borrowers have clearly put properties
into technical defaults, as asset values were quickly eclipsed by
outstanding debts. As such coverage imbalance has emerged
practically for the entire real estate industry, exceptional
patience has been demonstrated by lenders, who have had their
hands full with a number of issues, including bank taxes, losses,
reorganizations and write-offs of unprecedented proportions
(similarly to other parts of Central/Eastern Europe).
The banks’ slow actions have been attributed to a number of
factors. The banks need sufficient reserves to write off bad
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debt. Taking possession in Hungary is a real legal challenge,
and some owners can sit in their properties without paying the
bank with relative comfort. Clearly, most banks are not set up to
deal with becoming the owners of these assets – understanding
that no apparent real buyers are around – and taking on the
burden of employees, providing working capital and dealing
with operating companies. Accordingly, banks have little choice
but to wait for better times and for the owners/operators to
sort out these issues themselves. Such lack of real pressure
on some owners to maximize revenues has also hurt efforts to
increase prices.
While hotel prices suffered, the national Tourist Board has
had notable, albeit long-awaited, successes in numerous
markets. While the work is in no way complete (as it never can
be), the dedication and hard work has also become a source
of motivation for struggling hoteliers. More needs to be done,
however, to finally get a proper convention center for Budapest,
and the Tourist Board must be the lightning rod in fighting for it.
The challenges of Budapest hotels, the key tourist destination
in the country, have been very different from the hotels in the
countryside, which depend largely on domestic leisure and
MICE business, both of which are clearly witnessing shrinking,
or entirely disappearing, travel budgets. The thermal wellness
and spa segments, with escalating increase in demand from
Russia (finally hoteliers woke up to the obvious after a two-
decade hiatus) have saved the day. The domestic market has
also got tired of the constant negative news and decided to
relax and enjoy spa weekends and packages at the country’s
overwhelming supply, given the size of the population, of
relatively new wellness resorts. The health of this segment
has proven resilient ; hopefully, banks will start noticing as
the development of spa hotels remains a clear niche in the
Hungarian hotel industry already in the short term, to help
attract a larger share of the constantly growing international spa
and wellness travel markets.
While the asset mix of hotels is quite amazing, so is the cross
section of brands in Budapest. Room for niche products and
brands still exists as much in the capital as elsewhere in Hungary.
Banks ; financing ; hotels ; three words in one sentence, which
have yet to regain their meaning in Hungary. Although the
sentiment is understandable, the bank’s attitude should not
be black and white when it comes to hotel lending. We see
the evidence of some projects clearly deserving attention,
particularly if the developers have proven track records, good
credit standings and successful hotels under ownership.
OutLOOk fOr 2013
Bargains are great, and it is time to visit Hungary. Who knows
how long such rates will last, as 2013 is expected to bring, by
all international accounts, positive GDP growth. Hence the hotel
industry is due to see some encouraging changes in the much-
awaited recovery of the corporate and MICE travel sectors to
complement the already strong, but still budget-conscious
leisure markets.
Marius Gomola
Buddha-Bar Hotel Budapest, opened in 2012
Thirteen tales of hope cont.
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HOTELyearbook2013
HOTELyearbook2013
uNiTED kiNGDOmsituAtiON rEPOrt
The UK entered 2012 with great expectations for the year
ahead, as the year was peppered with numerous one-off events,
including the Diamond Jubilee, The London Olympics and the
Paralympics, providing worldwide exposure to the country.
The UK economy, however, continued its bumpy ride with on-
going uncertainty in the Eurozone as a result of the sovereign
debt crisis playing its part, resulting in the country returning to
a technical recession at the beginning of the year. Nonetheless,
the UK experienced growth of 1 % in Q3 boosted by the Olympic
Games and has subsequently exited the recession, although the
economy overall is expected to shrink by 0.1 % in 2012.
International arrivals to the UK (foreigners staying at least one
night) fared well this year and are expected to rise by 1.9 %
to 29.7 million by the close of 2012 according to Tourism
Economics. Despite the good growth this year, this figure
remains somewhat short of the 2007 peak which recorded 30.9
million arrivals.
According to STR Global (the source of all performance data
here), London has recorded another strong year, influenced by
the Olympic Games, and – in spite of an occupancy reduction of
2 % to 81.1 % in the year-to-date (to October 2012) – ADR grew
by 5.4 % over the same period last year resulting in an ADR of
£140.67, posting record year-to-date in ADR terms.
As anticipated, some regular leisure and business tourists were
displaced by the Olympic effect, preferring to avoid the capital
altogether during the Games for fear that venues would be
crowded and prices high. In fact, many tour operators removed
London entirely from their 2012 itineraries as a result of the
Olympics and the anticipated associated price hikes.
However, what was not foreseen was the pre-games decline
in London arrivals which was recorded in June and July with
a lot of tourist attractions experiencing diminished levels of
visitation. The reasons were many : poor weather ; logjams at
Heathrow ; media coverage of the transport problems ; reporting
of high prices ; Ramadan which fell early this year, resulting in
a reduced number of Middle Eastern guests or a shortening in
the length of their stay ; a strong June and July 2011 ; and on
the corporate side a number of big corporations asking staff
to avoid London during the summer, impacting expectations.
Furthermore, big events such as Farnborough and Wimbledon,
which typically create significant additional demand, did not
have much of an impact this year. The Diamond Jubilee didn’t
generate much demand, either, as fewer people than expected
travelled to London than the capital experienced with the Royal
Wedding last year.
In August, however, London ADR increased by an incredible
43.7 % while occupancy rose marginally, illustrating the Olympic
effect and local hoteliers’ focus on rates during this period. The
luxury end of the market seemed to benefit most, and in the
early stages of the Games (27 July – 1 August) occupancy was
up 16.6 % to 89.3 % and ADR spiked by an incredible 95.9 %
to £461. Budget hotels, however, fared less well in terms of
volume during this period and recorded a 15.6 % reduction in
occupancy to 79 % although experienced ADR growth of 62.6 %
to £110.66.
While the Paralympic Games were largely successful with sold
out events, they proved to be the Londoners’ games with more
limited inbound demand.
Hotel performance in the provinces remains closely connected
to the strength of the national economy and as a result,
there is an intimate connection between RevPAR and GDP.
Furthermore, provincial hotels are dependent upon corporate
demand (which has historically been government-led in some
markets) and as the meetings and events market has been
badly affected by the recession, this has had a particular
effect on regional hotels. As a result of the sluggish recovery,
performance in the regions remains challenging with a 1.7 %
reduction in occupancy to 70.9 % year-to-date (to October
2012) and a 0.9 % growth in ADR to £59.55 over the same
period. However, there is apparently some light at the end of
Thirteen tales of hope cont.
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the tunnel with some return of the corporate sector, although
this remains restricted to day meeting events as opposed to
residential events. In addition, there are reports of profit growth,
illustrating that provincial hoteliers are now starting to effectively
control costs.
The picture has, however, been quite mixed with some cities
such as Aberdeen, which continues to reap the benefits of the
local oil market, and Belfast, the birthplace of the Titanic which
marked the 100-year anniversary of its sinking and opened
a commemorative museum, recording strong occupancy
increases and good rate growth. Other cities which have also
posted positive results include Brighton, Cambridge, Gatwick,
Southampton and York, some of which are the result of the
Olympic halo effect. Other markets fared less well such as
Newcastle and Heathrow which have opened a number of
new hotels recently so the market is trying to stabilize, and
Edinburgh and Bradford, all experiencing reduced performance.
This relates to performance year-to-date (to September 2012).
Room supply in the UK in 2012 increased by the highest
rate in the last 10 years, with the London Olympics sparking
significant new hotel development in addition to some regional
cities trying to establish themselves in the short-break market.
Branded budget supply has dominated the regional pipeline,
and the shortage of finance for new developments has
shaped development in the provinces with new supply led by
conversions which are then rebranded and refurbished.
Thirteen tales of hope cont.
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HOTELyearbook2013
The investment market remains well below peak levels with deal
activity mostly down across the country with £1.3 billion year-to-
date in November 2011, compared to approximately £2.4 billion
over the same period last year, including the contested £700
million Maybourne Group transaction. The transaction of the 42
Marriott hotels could change this figure significantly, although
this deal has been in the market for over a year and is taking its
time to complete. The limited availability of finance continues
to present challenges and shape the market (it is only available
for the right deal, in the right location, often with existing
customers only and with an appropriate brand proposed). This
remains a major issue outside London. We have, however, seen
a number of alternative funding sources entering the market,
including private equity and insurance companies which are
stepping in to fill the void left by the banks, although the current
market is clearly favoring cash-rich buyers – of which there are
a good number – who are currently examining opportunities.
Nonetheless, the pricing mismatch continues between buyer
and seller expectations.
London remains a prime location for investment, with foreign
investors seeing the capital as a safe haven given its balanced
leisure and business demand profile from a number of
international markets. This has become of particular importance
given the current uncertainty within the Eurozone and the wider
global economic fragility that exists at present. The upscale and
luxury end of the market continues to drive transactions, with
yields for trophy assets back to pre-recession levels.
In the provinces, there is interest in well-positioned hotel
assets, although a dearth of obtainable quality product remains
an issue.
Despite reporting a 20 % increase in profits last year to £55
million in 2011, the UK’s second biggest budget hotel chain
Travelodge caused a stir earlier in the year when Goldman
Sachs and two New York hedge funds took control from the
heavily debt-laden Dubai International Capital. Travelodge’s
new owners have now put the budget hotel company into a
company voluntary arrangement (CVA) to deal with its crippling
debt pile. It is expected to offload 49 hotels, while the landlords
of a further 109 will take a 25 % cut in rent. The remaining
347 will be unaffected, but this sent shockwaves around the
investment community given Travelodge’s solid reputation and
strong historic performance.
In the last few years, we have seen some banks disposing of
the “easy wins” where they were able to sell hotel assets quickly
and with limited exposure. However, now we are starting to see
Lloyds offloading its hospitality loans where they have already
taken a write-off rumored to include Menzies Hotels.
OutLOOk fOr 2013
The Bank of England’s GDP growth forecast for 2013 is around
1 % (cut from nearer 2 % earlier in the year), with recovery
expected to be “slow and protracted.” Lower growth is
attributed to reduced growth internationally and the expectation
of further austerity measures. Osborne recently indicated that
austerity measures will remain in place until 2018. GDP growth
next year is likely to rely more on household consumption.
However, positive indications from lower unemployment and
falling inflation rates could spark a resumption of confidence
from consumers and businesses.
It is clear that the UK experienced unprecedented levels of
international media exposure in 2012 thanks to the Diamond
Jubilee, the Olympics and Paralympics. The hope now is that
this will translate into a surge in international visitors in 2013 and
thereafter. London and Partners anticipates a further one million
tourists between now and 2017 thanks to the Olympic legacy.
Despite this, Tourism Economics forecasts that UK international
arrivals will soften in 2013, falling by 0.9 %, largely driven by a
decline in arrivals from Eurozone markets, which account for the
vast majority of international arrivals to the UK (over 21 million)
which illustrates the country’s intrinsic links and dependence
upon this market. Furthermore, while it is common for hosts
to see a drop in arrivals post-Olympics, this reduction is much
smaller than witnessed in other host cities. The weakening
is the result of the tough on-going economic climate in the
Eurozone, and looks set to continue until the economic situation
Thirteen tales of hope cont.
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improves. While there is strong growth in emerging markets –
and thanks to the Olympics, this is likely to have been further
increased – these markets remain in their relative infancy and
will not be enough to offset the fall in arrivals from Europe.
As a consequence, London occupancy is expected to fall
marginally in 2013 as the fallout of the Eurozone crisis is felt
and further new room supply enters the market, even though
dissuaded travellers are likely to return. Nonetheless, tour
operators which avoided the capital in 2012 are expected
to return to London in 2013 – which is encouraging. While
London has witnessed strong ADR growth in the recent past,
the question is, how long can it last ? Given the positive impact
on ADR during the Games, which is likely to help lift London
to another record year, it is not estimated that this can be
replicated in 2013, and ADR is expected to drop marginally. We
anticipate that it will move back to growth in 2014. As a result,
RevPAR is forecast to drop by 1.6 % in 2012.
In the provinces, future performance is expected to be flat
and while a small reduction in occupancy is expected to 69 %,
ADR is forecast to grow, resulting in a 0.9 % growth in RevPAR.
As a result, provincial hoteliers are likely to continue to face
challenges, with costs continuing to escalate above rate growth.
Across the regions particularly, the speed of economic recovery
will be the biggest influencer for business travel going forward,
and given the UK’s sluggish and patchy recovery, companies
are likely to remain prudent and cost conscious. The south east
(excluding London) is expected to recover more quickly than the
rest of the UK, and those hotels which have international brand
affiliation are likely to outperform the unbranded offerings.
Concerns remain regarding post-Olympic oversupply in the
Capital, with a further 5,000 keys anticipated in 2013 according
to AM:PM Hotel Database. The average supply increase has
historically been circa 1,500 bedrooms annually. While there
may be some readjustment, and occupancy could be impacted
in the short-term, London has experienced unprecedented
global showcasing in 2012 and this is very likely to have a
positive impact on arrivals going forward. We anticipate that
the market will absorb the rooms over the next few years.
Furthermore, the city continues to evolve and diversify its
demand markets, thereby positioning itself as a key global hub
and insulating it further. As a result, we do not anticipate that
this will create a big shock in the market as experienced by a
number of other Olympic hosts in their post-games period.
In the coming years, we expect continued rebranding in the
regional mid-market is expected. This would provide the
opportunity for new owners to clean up the portfolios, disposing
of non-core or poorly performing assets, refreshing others and
restructuring them into groups or brands.
London is likely to maintain its position as a highly sought-after
investment market with high barriers to entry, as long as there
are no worldwide market shocks. In the regions, we anticipate
that more portfolio transactions are likely to enter the market
in 2013, particularly in the form of small UK branded hotel
groups, and coming out of the bank portfolios, offering investors
the opportunity to dispose of non-core assets, refurbish and
rebrand with a view to a short- to medium-term hold accelerating
regional consolidation. While we are waiting for the return of
bank finance, we also expect other institutional investors to move
into the lending market, replacing parts of the bank financing.
We expect the gap between buyer and seller price expectations
to continue. Equity-rich buyers, or those that are not subject to
bank financing, will continue to be the frontrunners in any deals.
We also expect that more banks will start to off-load their debt in
2013 now that the “easy wins” are behind them.
Alexandra van Pelt
Equity-rich buyers, or those that are not subject to bank financing, will continue to be the frontrunners in any deals
Thirteen tales of hope cont.
r e g i o n a l o u t l o o k : e u r o p e
HOTELyearbook2013
HOTELyearbook2013
iTALysituAtiON rEPOrt
2012 was a hard year for Italy in terms of political and
economical issues, impacting considerably the tourism market,
as well as the hotel market, mainly driven by domestic travelers,
forcing hoteliers to attract travelers from outside the country.
Indeed, according to STR Global data, occupancy fell from
62.0 % year-to-date October 2011 to 60.4 % year-to-date
October 2012 (a drop of 2.6 %), whereas ADR slightly increased
from € 128.98 year-to-date October 2011 to € 130.82 year-to-
date October 2012 (an increase of 1,4 %). Combined, these
factors led to stabilization of the RevPAR, which experienced a
decrease of only -1.1 %.
itALY HOtEL MArkEt HistOriCAL PErfOrMANCE
2009 tO YtD OCt 2012
Elaborated by Horwath HTL from STR Global Data
Both primary and secondary destinations were impacted by the
crisis, with all indicators in decline. The market is still driven,
both in terms of occupancy and rates, by the leaders Venice,
Florence, Milan and Rome, which were able to compensate for,
or at least reduce, the impact of the drop in occupancy with
an improved ADR, leading to a balanced or slightly negative
RevPAR compared to the same period (January to August) last
year (source : AICA - Associazione Italiana Compagnie Alberghiere /
Italian Association for Hotel Companies).
OccuPANcy
40-49 % 50-59 % 60-70 %
RomeVenice
Milan
Florence
Turin
BolognaBrescia
BergamoGenoaPadova
CataniaNaplesVerona
Elaborated by Horwath HTL from AICA Data for branded hotels located
in the Pronvinces
The four leading cities Florence, Milan, Rome and Venice all
experienced a drop in occupancy, from -0.4 % in Milan to
-5.9 % in Rome. However, they all benefited from an increase of
ADR from +0.2 % in Milan to an impressive +6.9 % in Florence,
reducing the effects on the RevPAR with a drop of -1.0 % in
Milan and -2.9 % in Venice, and a stabilization at +0.0 % of the
RevPAR in Rome. Florence is the only one of these markets that
saw its RevPAR growing, by +6.9 %, driven by the significant
increase in rates.
Thirteen tales of hope cont.
r e g i o n a l o u t l o o k : e u r o p e
ADR (€) RevPAR (€)Occupancy (%)
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OutLOOk fOr 2013
2013 is expected to be a challenging year for the Italian hotel
market. The general confidence of Italian hoteliers is at half-
mast, and they expect performance to remain stable next year.
As the political situation of the country remains uncertain, they
do not anticipate a recovery of domestic travel. However, they
believe that an increase in occupancy is possible, especially
thanks to a likely increase ion the number of international
travelers, driven by the Americas and Europe as well as
BRIC countries, whose share of the Italian tourism market is
increasing each year.
Regarding the market leading cities, the hotel pipeline is strong
in Milan, in anticipation of the Milan 2015 World Exposition,
as well as in Venice, where 15 new hotels are planned or
in renovation, including the iconic Gritti Palace, which is
worrying hoteliers, as they doubt that the demand will be able
to sustain the significant increase in supply, especially in the
current market situation. However, there are doubts that all the
projects will go through, and we assume that there will be fewer
additional rooms than anticipated.
Zoran Bacic
BELGiumsituAtiON rEPOrt
Belgium is characterized as a country divided – linguistically,
politically and economically. Geographically, the nation is
divided in three regions : the Dutch-speaking northern region
of Flanders, the French-speaking southern region of Wallonia
and the officially bilingual, central Brussels-Capital Region.
Due in part to this division, Belgium holds the European record
for the most costly political system, with 57 ministers and
state secretaries spread across six different governments,
seven parliaments and twelve provincial governments. The
complexities were also evident in the latest federal election,
which was held in June 2010 but was followed by 541 days
before a government was actually formed in December 2011.
The division of the country has also resulted in three separate
hotel markets. Flanders, which consists of approximately 45 %
of the land area, offers more than twice the number of hotel
rooms than the larger area of Wallonia. Flanders also has a
relatively higher classified hotel supply, with 33 % four- and five-
star hotel rooms, against 25 % in Wallonia. Both, however, pale
in comparison to the Brussels-Capital region, which covers only
0.5 % of Belgium’s area but accounts for 28 % of the total hotel
supply – and 92 % of the five-star hotel supply. Brussels also
features the highest occupancies and average room rates in the
country, resulting in a RevPAR that is 39 % higher than that in
Flanders, and 50 % higher than in Wallonia.
Facts & figures Belgium hospitality supply 2011
No. of lodging accommodations 3,635
No. of rooms/places in lodging accommodations 106,652
No. of hotels 1,776
No. of hotel rooms 57,514
Market share of hotels 54%
Growth, No. of rooms in lodging accommodations 2006-2011 +3 %
Growth, No. of hotel rooms 2006-2011 +11 %
Growth, market share of hotels 2008-2012 +4 %
Thirteen tales of hope cont.
r e g i o n a l o u t l o o k : e u r o p e
HOTELyearbook2013
Like most western European countries, Belgium experienced
a decline in hotel occupancies and room rates as a result
of the economic crisis, reaching a low point in 2009. After a
modest recovery in 2010, the results in 2011 remained relatively
stable, with only a slight increase in both occupancies and
average room rates. However, there was a clear shift in the
market segmentation. In 2006, before the crisis, the business
individual segment supplied 48 % of all room nights in Belgium.
In 2011, this was down to 38 %. The tourist individual segment,
meanwhile, increased from 24 % to 33 %. This shift helps
explain why the average room rates have not recovered, as
the tourist rates are traditionally lower than those paid by
business travellers.
At the start of 2012, most hoteliers forecasted a continued
modest increase in occupancies and average room rates.
However, at the end of the first half year of 2012, more than half
of the hoteliers indicated that the actual results were worse, or
much worse, than expected. By October, year-to-date figures
indicate a decrease in occupancies of 0.7 percentage points,
while the average room rates remained stable.
In Brussels, however, both occupancies and average room rates
have decreased compared to last year, resulting in a 3 % drop
in RevPAR.
Facts & figures: Belgium hospitality demand 2008 2009 2010 2011 Growth
Overnight stays (in M) 30.0 29.3 30.3 31.4 +5 %
Overnight stays in hotels(in M) 15.2 14.8 15.9 17.2 +13 %
International overnight stays(in M) 16.4 15.5 16.2 16.7 +2 %
Business overnight stays in hotels (in M) 7.3 6.7 7.3 7.8 +7 %
Occupancy 3-, 4- and 5*hotels (in %) 70.0 63.1 68.1 69.3 -1 %
Average room rate 3-, 4- and 5* hotels (in €) 95 84 90 91 -4 %
Revenue per available room 3-, 4- and 5* hotels (in €) 67 53 61 63 -6 %
OutLOOk fOr 2013
The outlook for 2013 remains clouded in Belgium. The Belgian
economy appears to have stalled after the summer of 2012. The
Thirteen tales of hope cont.
r e g i o n a l o u t l o o k : e u r o p e
7 %
13 %
39 %
33 %
7 %
A full recovery is not expected before 2015, and may be as far off as 2017 or 2018
5* 1*
2*
3*
4*
2007 2008 2009 2010 20110
10
20
30
40
50
Business group segment
Business individual segment Tourism group segment
Tourism individual segment Other Segments
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Economist Intelligence Unit projects that, following a negative
economic growth of -0.2 % in 2012, the Belgian economy
will experience 0 % growth in 2013. As such, it is expected
to do slightly better than the average of the European Union.
However, the economic stability will depend on the stability of
the new government and in fact of the nation itself, as calls for a
separatist Flanders continue to increase.
The outlook for the hotel market is even less optimistic. 55 % of
Belgium hoteliers expect a decrease in revenues in the second
half of 2012, and this trend seems likely to continue in 2013.
Only the leisure segment appears to give reason for optimism,
as decreases are expected in both the business individual
and MICE segments. Negative impact is expected from the
developments in the stock market as well as the local and
global economy. Another negative impact is expected from the
increase in the hotel supply, which will continue in 2013. As a
result, negative RevPAR growth of -2 % has been forecasted for
2013. A full recovery is not expected before 2015, and may be
as far off as 2017 or 2018.
Marco van Bruggen
Thirteen tales of hope cont.
r e g i o n a l o u t l o o k : e u r o p e
promising !that’S the general prognoSiS for aSian hotel marketS, judging from the ten Country reportS we
reCeived from our friendS at HORWATH HTL‘S offiCeS around the region.
r e g i o n a l o u t l o o k : a S i a
HOTELyearbook2013
cHiNAChina’s hotel industry faces the following issues in the next
several years :
HuGE suPPLY… sOME EAsiNG, sOME NOt
The huge amount of new supply entering many markets in
China is well known. There are several markets where the
pipeline of new properties shows no signs of stopping, and
these are going to experience distress and most likely increased
disputes between owners and operators ! However, for a
number of cities, the supply onslaught is reaching its peak and
as it gradually recedes, the substantial demand growth that
China’s hotel sector exhibits should lead to quite quick market
recoveries over a 2 to 5 year period.
tiME fOr ADr iNCrEAsEs
A historic challenge for China’s hotel industry has been its
low average daily room rates relative to other international
markets and the quality of the product being sold. However,
the government is now trying to shift the economy to a more
consumption-led model, and this encompasses efforts to
increase wages. At the same time, vast sections of China’s
middle class are reaching a point where they have acquired
apartments, electronics, cars and other tangible goods – so
spending is likely to move to more intangible items such as
travel and leisure. Over time, these transformations can
support average rate increases that could dramatically boost
the profitability of the sector.
HiGHEr WAGEs but fEWEr stAff
Of course, many operators are also concerned about the
impact of wage increases on profitability levels, but in our view
these worries are exaggerated. Staffing levels in China are well
above more developed markets, and there is huge scope for
reductions. As a whole, we expect fewer, but better-paid staff
to actually benefit hotels’ bottoms lines – as well as the
customer experience.
NOt just rOOMs
The hotel business in China is not just rooms. Several
international and domestic operators are strategically focusing
on the food & beverage side of the business and managing to
generate very significant revenue levels, which often exceed
rooms, as well as healthy operating margins. Other groups
are increasingly focusing very successfully on hot spring and
spa revenues, while another just emerging trend is to put
considerable resources behind recreational and entertainment
facilities targeted towards local residents.
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CrAViNG fOr trAVEL but “GOLDEN WEEk” HiNDrANCE
The Chinese traveller continues to show an insatiable appetite,
and this will continue to present compelling opportunities in the
resort sector. However, the biggest obstacle so far has been the
“golden weeks” policy that forces almost the entire population
to vacation during the exact same weeks of the year. This is
increasingly causing chaos and strain on hotels and travel
infrastructure (not to mention the poor travelers themselves),
so it is not unreasonable to expect that there will ultimately
be a change to allow people to holiday whenever they choose
throughout the year. When this occurs, the boost in demand for
resort hotels will be staggering.
tHE CitiEs Of ONE MiLLiON PEOPLE
While many first tier, second tier and even third tier cities are
becoming saturated with hotels, there are still many lower tier
cities that offer development opportunities. These markets,
however, are not suitable for luxury products, despite the
wishes of local governments !
tiME fOr CHiNA brANDs
International brands have to a large degree dominated the third
party management space for around two decades but various
domestic groups are now making a competent push to gain
ground, especially private companies. New China brands will
become much more visible in the next couple of years.
Damien Little
SiNGApOREsituAtiON rEPOrt
2012 continues to be a fruitful year for Singapore in terms of
tourism. As of YTD May 2012, visitor arrivals were up 12 % YoY,
on track to smash the record of 13 million arrivals set in 2011.
Sources of visitor growth were mostly from regional countries
such as China (+ 31 %), Taiwan (+ 33 %), ASEAN (+ 10 %) and
interestingly, Europe (+ 15 %). The Euro crisis has so far had
limited impact on the industry, suggesting Singapore can
potentially weather a downturn given its wide spectrum of
tourism offerings allowing it to target diverse business segments.
Even after operating for more than 2 years, the two integrated
resorts are still generating incremental arrivals from their
casinos, MICE facilities, retail malls, theatres and the Universal
Studios theme park. Events such as the Singapore Air Show
and Formula 1 Night Race have also been pivotal in boosting
arrivals. In addition, as a regional financial hub, Singapore
continues to benefit from the improving economies of its ASEAN
neighbors, encouraging corporate and MICE related travel to
the country.
Source : Singapore Tourism Board
0
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12
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2005 20072003-30
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promising !r e g i o n a l o u t l o o k : a S i a
HOTELyearbook2013
HOTELyearbook2013
The hotel market also benefitted from the strong output from
visitor arrivals. As of YTD August 2012, market occupancy
improved to 87 %, up by 1percentage point YoY, while ADR rose
by 8 % to SGD 259. As a result, RevPAR grew by 9 % YoY.
With the exception of economy hotels, all hotel product
categories showed good RevPAR growth as of YTD August
2012, albeit at a slower rate compared to 2010-2011. However,
RevPAR growth was driven more by ADR with occupancy
already at close to maximum given seasonality constraints.
Source : Singapore Tourism Board
OutLOOk fOr 2013
With so many macro level uncertainties such as the Eurozone
crisis, the slowdown in China’s economy and the still weak US
economy, a cautious outlook for 2013 is necessary. However,
given the upbeat performances to date and the absence of any
immediate indications of downturn, prospects for a solid market
performance in 2013 remain intact.
The following are additional considerations supporting a positive
outlook :
• The integrated resorts will continue to induce demand with the
opening of new attractions including the Maritime Experential
Museum and the Marine Life Park.
• The opening of the new $500 million Marina Bay Cruise
Center cruise terminal and attractions such as Gardens by the
Bay and the River Safari (at the Singapore Zoo) should further
induce visitors.
• Further strengthening of Singapore’s status as a regional hub
for finance, research and development, medical tourism and
MNC operations.
• Continued hosting of the Singapore F1 night race (a five
year extension to 2017 was announced at the outset of the
2012 race).
Although bullish about the Singapore Hotel industry outlook for
2013, we expect growth to moderate given the limited catalysts
for significant incremental growth such as what occurred
with the opening of the integrated resorts. As well, although
expected to be relatively quickly absorbed, the addition of
new hotel supply in 2013 will still put competitive pressure
suppressing rate growth.
Overall, Singapore is still considered one of Asia’s hottest
destinations and remains one of the most sought-after markets
for hotel developers and investors.
Jerome Siy
JApANsituAtiON rEPOrt
Japanese hotel performance has recovered to pre-crisis level.
As summarized in the table below, the average RevPAR for 12
months to August 2012 has increased by 9.4 % compared to
the same period to August 2011 and just below 0.9 % compared
to the same period to August 2010, which well represents
performance under the pre-crisis market conditions.
100
150
200
250
2005 2006 200820070
60
80
20
40
100
2009 2010 2011F
ADR RevPAROccupancy
AD
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Rev
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Occ
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)
promising ! cont.
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MAjOr rEVENuE kPi's fOr jAPANEsE HOtEL MArkEt
Sep.2009to aug. 2010
Sep.2009to aug. 2010
latest 12mths to aug.2012
Occ 75.9 % 73.5 % 79.1 %
ADR JPY 12,099 JPY 11,272 JPY 11,506
RevPAR JPY 8,201 JPY 8,333 JPY 9,117
Source : STR Global
The graph above shows a recent trend of major revenue key
performance indicators, namely occupancy, ADR, and RevPAR,
for the Japanese hotel market for the past two years. It is
clear that the occupancy rate was on an increasing trend until
March 2012, and then suffered from low performance after the
East Japan Earthquake, bouncing back in spring 2012. ADR
performance has also started to pick up in spring 2012. At the
moment, both Occupancy and ADR are on an increasing trend,
which has led to steady RevPAR growth since February 2012.
jAPANEsE HOtEL MArkEt PErfOrMANCE
(12-MONtH MOViNG AVErAGE, AuG. 2010-AuG. 2012)
Source : STR Global
The main driving force for the great recovery was the recovery
of the occupancy rate in the Tokyo market. Accommodation
demand in Tokyo was generated by continuous business
activities in the capital city, combined with the recovery in the
number of international arrivals, which had dropped 27.8 % in
2011 from the year before and quickly bounced back to almost
the pre-crisis level of 2010, in August 2012 year-to-date. An
increase in the number of domestic leisure tourists, driven by
new attractive destinations in Tokyo such as the new opening
of “Tokyo Skytree” and several large scale shopping malls, also
increased the accommodation demand.
In 2011, the total number of accommodation guests (both
domestic and international) in the capital was approximately
41 million, representing about 10 % of the total number
of accommodation guests in Japan, 417.2 million people.
Therefore, market performance in Tokyo has a large impact on
the nation-wide performance results.
Aug
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Oct
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Dec
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Feb-
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Apr
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Jun-
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Aug
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Oct
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Dec
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Feb-
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Apr
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Jun-
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Aug
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The Gate Hotel, Asakusa (Tokyo)
promising ! cont.
r e g i o n a l o u t l o o k : a S i a
HOTELyearbook2013
HOTELyearbook2013
OutLOOk fOr 2013
A quick recovery after the earthquake has proved that
the Japanese market is resilient to a challenging macro
environment. At the time of writing, it is safe to say that the
market has returned to normal levels, with occupancy and ADR
showing positive signs of growth. In 2013, it is reasonable to
anticipate the RevPAR growth to continue.
By market segment, an increase in the inbound visitor arrivals
is expected in the mid- to long-term future. In 2010, the
Japanese government launched “Visit Japan Project” to
promote Japan as a tourist destination and set a goal of
15 million visitors by 2013 and 30 million visitors in the long
term. This project includes several government initiatives
such as proactive promotional activities outside of Japan and
deregulation of visa requirements.
Another supporting factor for the Japanese hotel market is
the establishment of low cost carriers (LCCs) in Japan. Having
LCCs means a wider choice of transportation for travelers,
which will potentially increase the volume of leisure tourism for
both domestic and international segments.
Looking into the hotel investment market, it has been rather
active since the second half of 2011, despite the low market
performance. We confirmed 31 transactions in August 2012
year to date, which is a 20 % increase from the year before. We
project at least 50 hotel transactions in total this year and even
more deals in 2013.
All in all, the 2013 outlook for the Japanese hotel market is
optimistic. The increased level of transactional activity indicates
rising investor confidence, and we believe the RevPAR growth
which has currently been centered in Tokyo will spread out to
other major cities within six to twelve months, based on our
past market experience.
Koji Takabayashi and Sachiko Matsuda
mALAySiAsituAtiON rEPOrt
Malaysia’s gross domestic product (GDP) for the third quarter
ended Sept. 30 expanded 5.2 % year-on-year, supported
by strong domestic demand and investment activities. The
expansion in GDP beat economists’ expectations of 4.8 %.
For the second quarter of 2012, GDP growth was revised
upwards to 5.6 % from 5.4 %. Moving forward, the central bank
maintained the GDP growth trend in the fourth quarter of 2012,
and it would likely continue very much like the third quarter,
but there uncertainties exisit in the export sector on the back
of uneven economic growth in the USA and recession looming
in Europe – the fallout of the prevailing debt crisis. The central
bank is confident that GDP growth for 2012 will come at the
projected 5 % or better. In 2011, GDP growth was 5.1 %.
In 2011, Malaysia recorded the lowest increase in foreign
arrivals at 0.6 % (3.9 % in 2010) to 24.7 million (24.6 million in
2010). For the first 5 months of 2012, total arrivals increased
by almost 2 % to 9.4 million from 9.3 for the same period in
2011. The low increase suggests strong competition from
neighboring countries such as Singapore, Indonesia and
Thailand. Decreasing air access to Malaysia is due to cutbacks
by Malaysia Airlines and Air Asia on routes from Europe, Middle
East and the Indian subcontinent in 2011 and early 2012,
when both airlines restructured their routes on the back of
falling yields.
OutLOOk fOr 2013
The outlook for 2013 for the country’s airline industry looks
promising as Malaysia Airlines joins the One World alliance
in February 2013 and will also seek closer cooperation with
Qantas Airways. In addition, Qantas and British Airways, as well
as Air France, are resuming flights to KL by mid-2013. A new
KL-based low-cost carrier, Malindo Air, will take to the skies by
the second quarter of 2013.
The opening of the 455-room Grand Hyatt in August 2012 and
the 300-room Majestic Hotel, a YTL hotel, in December 2012
is not expected to impact the occupancy level of the Kuala
promising ! cont.
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Lumpur hotel market in 2012. The average occupancy level
of the hotel market in Kuala Lumpur for 2012 is expected to
improve slightly by 1 percentage point to 73 %. Based on 8
months’ performance to date, the ADR of the hotel market is
projected to register an increase of not more than 3 % to RM
275 (US$ 90). Looking to 2013, the permanent closure of the
565-room Crowne Plaza on January 2, 2013 and the opening of
the 482-room Aloft in KL Sentral in March 2013 is not expected
to impact significantly the average market occupancy where we
expect the Kuala Lumpur hotel market occupancy at between
73 % and 75 % for 2013. However, with their ADR positioning of
the Grand Hyatt and the Majestic Hotel at the higher end of the
market, the market ADR is projected to increase between 4 %
and 5 % for 2013.
The outlook for the islands of Penang and Langkawi are mixed,
with the former continuing to enjoy increasing tourist arrivals
and strong hotel performance, while the latter’s hotel market
performance is experiencing a decline. While the supply of new
hotels in Penang is increasing over the next 3 years to cope with
increasing demand, the supply of hotels on the premier tourist
island of Langkawi over the last 5 years has stagnated. The
outlook for the next 2 years for Langkawi is expected to remain
unchanged. With the hotel market having the highest ADR in
the country (US$ 235 in 2012), the lack of new supply to add to
the present mix of hotels, thereby increasing product offering
(unlike those in Phuket, Bali and Ko Samui), is not expected to
generate any increase in ADR in 2013 for the premier island.
Since its launch in Nov 2006, Iskandar Malaysia in the state
of Johor has recorded a total cumulative investment of RM
100 billion (US$ 33 billion) as at Sept 2012. The state capital,
Johor Bahru, is experiencing a spurt of new hotel development
over the last two years in anticipation of increasing corporate
and leisure demand. New supply, such as the DoubleTree,
Renaissance, Traders, and the Somerset, is expected to
commence business by 2014. While the market ADR is still
below RM 200 with occupancy levels in the high 60 %, the
outlook for 2013 is expected to be optimistic on volume
especially, as demand generated by the theme parks of
Legoland and the soon-to-be-opened family indoor theme park
in Nusajaya, as well as spill-over demand from the integrated
resorts in Singapore, is projected to contribute to healthy
growth in market occupancy levels in Johor Bahru. With the
Iskandar and the ongoing re-development of Desaru on the
eastern coast of Johor into a destination resort (a Sheraton,
Datai and an Amanresort property are being planned) the state
of Johor is primed to be positioned as a new hotspot for hotel
development in Malaysia over the next decade.
Over in East Malaysia, in the state of Sabah, the healthy growth
of visitor arrivals to the state of close to 14 % in 2011 over 2010,
HOTELyearbook2013
HOTELyearbook2013
underlines the popularity of the state as a destination. With the
re-instatement of air access between Kota Kinabalu and the
main gateway cities of northeast Asia (which was rescinded
in 2011), the tourism outlook for Sabah is positive. The mix of
hotel products on offer in Kota Kinabalu was given a boost in
2012 with the opening of the luxurious 120-villa Gaya Island
Resort (a YTL property) and the potential Marriott at the city’s
waterfront mixed-use project, targeted to open by 2014. The
pending opening of another luxury YTL all-villa property on
Pulau Tiga off the coast of Kota Kinabalu in 2013, is expected to
enhance Malaysia’s position as one of the most popular tourist
destinations in Asia.
Sen Soon-Mun
iNDONESiAsituAtiON rEPOrt
Jakarta
Jakarta2010 yTD Dec.
Occ ADR RevPAR
2011 yTD Dec.
Occ ADR RevPAR
2012 yTD Sep.
Occ ADR RevPAR
Top Tier 66% $86 $56 68% $93 $63 67% $108 $73
Mid Tier 75% $56 $42 74% $61 $45 71% $65 $46
Combined 70% $72 $50 71% $78 $55 69% $89 $61
Source : JIHA, Horwath HTL
2011 represents another great year for the Jakarta hotel market,
with a continuing upward trend that started in 2010 after the
GFC, with particularly strong growth shown in ADR. Some say
it is the best ADR the city has seen in 15 years. Combined top-
tier & mid-tier hotels recorded 8+ % growth in 2011 compared
to 2010, led by the mid-tier market, which recorded a 9+ %
growth. Occupancy growth is not nearly as strong as ADR
growth, only about 2 %, with the mid-tier segment registering
a decline compared to last year’s performance. 2012 up to
September is showing flattening occupancy and continued
strong increases in ADR.
On the socio-political front, residents of Jakarta are more
optimistic after the election for governor concluded smoothly
recently, resulting in a landslide victory of the popular
candidates replacing the unpopular incumbent who has just
completed only one term in office. Most believe that the new
governor has got what Jakarta needs to take care of its chronic
problems, like the traffic and flooding.
After a long period of hotel development hiatus in Jakarta,
especially for high end products, new hotels began to be built
again beginning in 2011, with at least 10 hotels of various tiers
soon to be opened around Jakarta. Most of these, however, are
mid-tier and limited service hotels. High land costs, reasonable
construction costs and ease of access to supporting facilities
like restaurants and bars in nearby shopping malls, are some
of the many reasons why the developers are attracted to build
mid-tier and limited service hotels.
Accor has already opened four new properties recently in
Jakarta, while the home grown chain Santika also opened four
new Amaris, their limited service hotel brand. Aston also just
opened two more hotels using Aston as well as their limited
service Fave brand. InterContinental with their Holiday Inn and
Holiday Inn Express brands have a number of projects in the
pipeline in Jakarta as well, while Best Western is preparing their
second property in Jakarta, which should come on line in 2013.
Higher end hotels are also expected to come on line from this
year onward, including the Raffles and the W at the Ciputra
World, Keraton (the Luxury Collection), which just opened,
Pullman, Mercure, Novotel, and St Regis. Going forward,
the Jakarta hotel market promises to be more active with
development and should help refresh the landscape with new
hotels after a long period of stagnancy. Other brands rumored
to be on the lookout, or closing in on deals, include, Rosewood,
MGM Grand, Nikko, Hilton, Sofitel and Westin.
The following chart shows the recent increase in hotel room
supply in Jakarta.
promising ! cont.
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jAkArtA suPPLY
Source : JIHA, Horwath HTL
Bali
Bali2010 yTD Dec.
Occ ADR RevPAR
2011 yTD Dec.
Occ ADR RevPAR
2012 yTD Sep.
Occ ADR RevPAR
Upper Luxury
52% $494 $256 57% $528 $303 55% $544 $299
Luxury 74% $247 $182 75% $274 $205 78% $282 $220
Top Tier 75% $134 $100 78% $145 $113 72% $143 $103
Mid Tier 82% $77 $63 78% $91 $71 74% $82 $61
Combined 75% $127 $95 76% $140 $106 71% $146 $104
Source : BHA, Horwath HTL
Bali hotels seem to be holding on to their rate levels after the
market recovered in a big way in the past few years after the
GFC. This can be seen by the strong ADR, which continues to
climb in 2012, albeit at a slower rate than before. ADR growth
is recorded in almost every segment of the market. The mid-
tier market grew by a whopping 19 % compared to last year’s
performance, while the luxury market showed the smallest
growth compared to the others, with only a 7 % increase over
2010 performance. Combined market performance is showing a
growth rate of about 10 %. As for the occupancy performance,
the luxury segment led the way with 11 % growth while mid-tier
segment declined by about 6 % compared to the same period
last year. An example of hoteliers sacrificing occupancy to
maintain the hard earned rates. Even though it is not as strong
as the ADR growth, the occupancy performance still recorded a
marginal positive growth of about 1 % year on year.
The 2012 year-end outlook is predicted at about the same level
as 2011 for most segments. While there is upward pressure
continuing in 2012, all in all, the year will end as strong if not
slightly stronger than last year. ADR growth seems to be
continuing, although not nearly as phenomenally as in 2011.
Occupancy, on the other hand, has stabilized and is staying flat
when compared to last year.
Bali visitor arrivals continue to be strong, recording about 10 %
growth between 2010 and 2011, with 2.76 million arrivals at the
end of 2011. Australians still dominate the Bali hotel market with
about 29 % of total arrivals. However, this upward trend has
slowed down in 2012 when compared to 2011. The number of
foreign visitor arrivals increased only by about 5 % compared
to the same period last year. The domestic market keeps going
strong, with an average growth rate for the past 5 years (2007
– 2011) of about 23 %. The greatest increase was recorded in
2010 : 32 % compared to 2009. In 2011, the growth rate is 22 %,
with 5.68 million domestic arrivals to Bali.
Continued strong demand in Bali, both domestic and
international, is keeping the developers encouraged to build
more hotels in Bali, despite the infrastructure deficiencies
that have been highlighted in recent articles about the resort
island. While the airport is being renovated and new roads built,
the provincial government is also trying to put a brake on the
5 star 4 star
2011 2013
0
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12000
15000
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Ro
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promising ! cont.
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HOTELyearbook2013
promising ! cont.
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development in South Bali, where it is most densely populated
by resorts, and trying to encourage developers to look more
into the east, west and north of the island.
At the moment, limited service hotels seem to be the sweet spot
for everybody in Bali, as it is in most parts of Indonesia. Accor,
InterContinental, Aston, Santika and Tauzia are rushing to enter
this segment with their own brands. Less densely populated
areas on the east and west coasts, with lower land prices,
seem to be the recent targets for the higher end hotel products.
The sense of Bali becoming a bit overbuilt is becoming quite
apparent, especially in south Bali where traffic congestion is
much more common than before.
The following chart illustrates the hotel room supply trend in the
past three years.
bALi suPPLY
Source : BHA, Horwath HTL
OutLOOk fOr 2013
Continuing economic uncertainties in Europe and the US, which
is now seen to affect China and Japan, are starting to affect
Indonesia in 2012 in terms of its export growth. However, the
buoyant domestic market, with a population of 237 million, and
the rapidly growing middle class at about 134 million now, are
still holding Indonesia’s economic growth at a very respectable
level, especially compared to the rest of the world. Recently,
the World Bank reported that the middle class in Indonesia is
growing by about 8 to 9 million per year.
Indonesia’s economic growth in 2011 was about 6.5 %, which
was one of the strongest in Asia. Early in 2012, the Indonesian
government was very optimistic and believed that 7 % growth
for 2012 was reasonable and attainable. However, a myriad of
challenges, both domestic and international, have made the
government revise its target to about 6.3 % for year-end 2012,
which is still very respectable compared to the rest of the region
and the world.
The Minister of the newly formed Ministry of Tourism and
Creative Economy is endeavoring to spread the tourism related
development throughout the archipelago by encouraging
secondary cities in Indonesia to catch up with the more
developed destinations like Jakarta, Bali and Surabaya. It seems
to be her belief that the domestic market is the biggest potential
in the country for newly developed destinations, and has started
to campaign for domestic travel rather than travelling regionally
or internationally. One alternative to Bali, which has been
promoted by the government recently, is Lombok.
Domestic travels contributed a whopping US$ 17 billion in 2011,
nearly double compared to foreign travelers, who contributed
about US$ 9 billion. With about 236 million trips made all over
the country, thanks to LCC, the government believes that the
domestic market has the potential to drive Indonesian tourism
forward. The government set about a 4 % growth rate in 2012
for domestic travelers.
Rio Kondo
5 star 4 star 3 star
2011 2013
0
5000
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15000
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2012
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promising ! cont.
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HOTELyearbook2013
THAiLANDsituAtiON rEPOrt
Thailand experienced an upswing in 2012 in recovery from years
of struggle with the global economy crisis, internal political
and security strain and natural disasters. However, while 2012
was encouraging (GDP growth of 4.2 % for the 2nd quarter),
challenges still remain. The political situation, although currently
stable, is still highly factional and complicated, while unrest in
the south continues to be unresolved.
Nevertheless, tourist arrivals continue to grow, with 15 million
international arrivals as of YTD September 2012, a YoY increase
of 8 %. For full-year 2012, arrivals are expected to exceed the
government target of 20 million visitor arrivals, well above the
previous high of 19 million achieved in 2011. Based on August
YTD 2012 figures, the key countries contributing visitor growth
include China (+35 %), Japan (+10 %), Russia (+20 %), India
(+8 %), Australia (+15 %) and Singapore (+18 %).
Hotel occupancy and average daily rate (ADR) performance
has mirrored the country’s economic and tourist arrival growth.
As reported by STR Global, Thailand recorded YoY growth of
5.8 % in occupancy and 3 % in ADR as of YTD September 2012,
combining to a significant 9 % growth in RevPAR at THB 2,124.
Key destinations, Bangkok and Phuket, have increased similarly
in overall performance over the same period. While occupancy
levels have recovered to a level similar or higher to the 2008
pre-crisis period, ADRs are still struggling.
tHAiLAND – YtD sEP
bANGkOk – YtD sEP
promising ! cont.
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PHukEt – YtD sEP
Source : STR Global
OutLOOk fOr 2013
While 2012 was a relatively stable year, a cautious outlook
for 2013 is required, as the outlook for the global economy
and Thailand’s political situation remain unclear.
A potential meltdown in the European economy, a double-
dip US recession, economic slowdown in China and/or
intensification in Thailand’s political arena carry risks affecting
Thailand’s hotel market. However, as shown in the historical
performance levels, Thailand is always resilient as a leisure and
business destination.
A more pressing factor expected to impact Thailand’s 2013
performance outlook is the anticipated increase in new supply
across the country. According to STR Global’s Market Pipeline
Report for Thailand, the country is preparing to add about
49 new hotels between December 2012 to December 2013,
representing 5 % growth in hotel room capacity. About 67 %
of the new properties are of upper mid-scale positioning
and above and will be located in Bangkok. As demand is not
expected to increase in parallel with the supply immediately,
this will negatively impact occupancy levels and put downward
pressure on ADR as competitiveness intensifies.
However, with continual support from the government and
the strong fundamentals of Thailand’s tourism industry, the
outlook for the country is still positive. Comprising 16.3 %
of the country’s GDP in 2011, the Travel & Tourism industry
is a key contributor to the economy, expected to grow by
2.1 % in 2012 and 6.4 % per annum from 2013 to 2016. Such
growth expectations are supported by the Tourism Authority
of Thailand’s (TAT) strategies and programs designed to boost
the country’s reputation and profile. Accordingly, the TAT’s
target for visitor arrivals in 2013 has been set at 22 million, 10 %
annualized growth.
As part of the TAT’s efforts to promote Thailand’s tourism, a
2013 Tourism Action Plan has been constructed. Key highlights
for the 2013 Action Plan include an increase in charter and
low-cost flights from markets previously lacking direct access,
increased marketing efforts such as trade shows and celebrity
ambassadors, special focus on new digital media, and an
emphasis on tourism intelligence and crisis management.
On the whole, with Thailand established as one of Asia’s most
popular tourist destinations, its proven resilience from negative
shocks, and the government and commercial sector’s efforts
in enhancing the country’s appeal, confidence is high for
improving hotel industry performance in 2013.
Clare Fu
SRi LANkAsituAtiON rEPOrt
Sri Lanka’s eventful history has the world intrigued. Following
its independence in 1948 and up until the start of the civil war in
1983, the country attracted a steady increase in tourism arrivals.
Between 1960 and 1983, visitor arrivals grew at an average
annual rate of 21 %. Twenty-five years of constrained arrival
numbers followed, fluctuating with the intensity of hostilities
and terrorists events, including a prematurely hopeful ceasefire
period between 2003 and 2006, which saw arrivals exceed the
500,000 mark before falling back in 2007.
2008 2009 2010 2011 20121000
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ADR (THB) RevPAR (THB)
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HOTELyearbook2013
HOTELyearbook2013
With the civil war finally placated in 2009, pent up demand
quickly drove arrivals up by 46 % in 2010, a new high and a
welcome surprise to existing hotel owners used to half empty
properties. Further arrivals growth of some 30 % in 2011 helped
push market occupancy to 70 % for the year, with particularly
tight conditions existing during the peak European Winter
season. New hotel development is underway, but will still be a
few years away from addressing the short-term room demand
needs during peak seasons. As of YTD September 2012,
arrivals were up a further 16 % YoY, indicating the one million
arrivals mark could be reached by year-end.
Source : Sri Lanka Department of Tourism
As of 2011, India was the largest feeder market for Sri Lanka,
accounting for 20 % of total arrivals. The United Kingdom,
previously the largest arrivals source due to the historical
relationship between the two nations, is the second largest
source market. Of the top feeder markets, Russia has grown the
fastest with double-digit average annual growth over the past
decade. However, as of YTD September 2012, China entered
the ranks of the top 11, surpassing Russia. Nonetheless, as the
last quarter of the year tends to be a particularly peak period for
arrivals from Europe, including Russia, a reshuffle in the source
market rankings for the full year 2012 is expected.
Surprisingly, the strong growth in arrivals in 2012 did not
translate into strong occupancy growth for the Sri Lanka hotel
market. According to STR Global, September YTD occupancy
for the country recorded a decrease of about 2 % YoY, with
promising ! cont.
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the lowest YoY drop in July at 18 %. The sharp drop in July
corresponded with a sharp decrease in Indian arrivals due
to political tension stirred up during the year between the
two countries. Drops in occupancy were especially evident
in the upper-tier in Colombo, which can be linked to reduced
business travel associated with disruptions to the country’s
economic growth related to government mis-management
resulting in stock market values declining, high inflation and
increased cost of local debt. Compounding the situation in the
Colombo hotel market is a government mandate concerning
minimum rates to be charged by 5-star hotels. By comparison,
lower-tier hotels continued to do well over the same period as
minimum rate restrictions were not applied to hotels below the
5-star level.
Reflective of the market conditions and influencing government
mandate, market ADR grew to US$ 120 as of YTD September
2012, representing 7 % YoY growth. As a result, RevPar growth
was 5 % growth as of YTD September 2012.
Source : STR Global
Stemming from the closed economy and limited investment
opportunities for foreign companies during the Civil War
period, the hotel market is dominated by local players involved
in inbound tour operations as well as hotel ownership/
management. Such players include John Keells Hotels Group,
Aitken Spence Hotels and Jetwing Hotels. International
operators in the country to-date have been limited to Hilton,
Aman and Taj. However, since 2009, regional and international
hotel brands and operators have been entering the market with
new deals and greater pace including Anantara, Starwood,
Marriott, Shangri-La, Onyx, and Hyatt. While most of the
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interest still lies in the capital city, Colombo, and established
resort destination, Galle, the government is trying to develop
and promote other areas of the country by improving
transportation infrastructure and promoting investment
opportunities for external supporting facilities such as golf
courses, convention centers and shopping malls. Drawing
upon tax holiday schemes and other investment incentives, the
SLTDA aims to increase registered room capacity in the country
by a significant 230 % by 2016 to 49,800 rooms from the current
15,079 rooms (as of July 2012).
OutLOOk fOr 2013
Still in an early developing juncture, Sri Lanka is poised for
positive long-term tourism growth. Confidence in the market
is noted to be strong, indicated by the numerous mentions
received during the recent 23rd annual Hotel Investment
Conference Asia Pacific (HICAP) in October 2012, identifying
Sri Lanka as one of the top emerging hotel markets in Asia.
Other factors supporting the positive outlook include the
implementation of a new visa-on-arrival scheme for more than
80 countries, increasing flights and routes, airport expansion
and new development, improving roads and other critical
infrastructure, increasing foreign investment and the entry of
new international branded hotels inducing additional demand.
However, short-term growth is expected to be somewhat
constrained, as most of the abovementioned points will require
several years to come to fruition. As a result, some caution is
required relative to the generally positive outlook due to the
following factors :
• The existing infrastructure in the country is not sufficient
to support the short-term boom in visitor arrivals. While
improvements are currently being made, there will be a lag
in many areas such hotel room supply and transportation
infrastructure.
• The struggling economy indicated by a drop in exports,
increased debt and slowed GDP growth.
• The current shortage of local capital for investment, high
cost of debt and the related impacts on the realization of
foreign investment projects counted on for introducing new
generation hotel products to the market.
On balance, market growth will likely be constrained for the next
few years as the country adapts to its post Civil War political
environment and the sudden boom in arrivals and foreign
investment interest, which will require improved government
management of the economy.
Clare Fu
uNiTED ARAB EmiRATESsituAtiON rEPOrt
Despite the political and social unrest, which substantially
affected the hotel market in parts of the Middle East in 2011-12,
the United Arab Emirates (UAE) hospitality market rebounded,
clearly benefiting from the redirected demand from the Arab
Spring. The country is politically and social stable and as a
result, international and regional tourists diverted their travel
plans to the safer destinations of the UAE.
The tourism infrastructure in the UAE is very well developed,
particularly in the Emirates of Dubai and Abu Dhabi, and repeat
travelers continue to be attracted by the high quality hotels,
leisure and shopping facilities and the excellent airlift to both
of the destinations. Demand from GCC nationals was a major
factor in increased business levels, with Dubai experiencing a
large influx of regional tourists during the summer months and
traditional holiday periods.
Year to date in 2012, the hospitality market in the UAE is again
flourishing and showed continued growth, despite the typical drop in
demand during Ramadan and the summer season, which coincided
this year. In comparison to 2011, room occupancy grew by 3.2 %
to hit 71 % (as of August 2012), along with an upswing of 5.5 % in
average daily rates (ADR) to US$ 199, resulting in an increase of
8.9 % in revenue per available room (RevPAR) to US$ 141.
promising ! cont.
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However, a closer look at the key cities in the UAE reveals
significant differences in their market performance. Our situation
report this year evaluates the Emirates of Abu Dhabi and Dubai
separately, in order to get a clear picture of their respective
trading performance.
In Dubai, occupancy increased to 76.4 % for the last 8 months.
The Abu Dhabi Tourism and Culture Authority reported that in
September 2012 there was a 15 % increase in tourist arrivals,
but taking the data until August into account, an occupancy of
57.8 % was recorded, down 9.1 % compared to last year.
OCCuPANCY Abu DHAbi
OCCuPANCY DubAi
There was a also new record level of hotel nights in Abu Dhabi,
which grew by 10 % in the last 9 months in comparison to
last year, but the additional supply which came to the market
put severe pressure on the rates. This situation created stiff
competition between hotels and led to a price war among
them, severely impacting the ADR, which decreased by 8 %
to US$ 146.
This stands in stark contrast to the Emirate of Dubai, which
recorded a positive growth of 9.6 % in ADR to US$ 226.
ADr Abu DHAbi
ADr DubAi
Sep09
Dec09
Jun10
Sep10
Dec10
Mar11
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Aug12
50%
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80%
Sep09
Dec09
Jun10
Sep10
Dec10
Mar11
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Aug12
60%
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80%
90%
Sep09
USD
Dec09
Jun10
Sep10
Dec10
Mar11
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Aug12
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Dec09
Jun10
Sep10
Dec10
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Mar11
Jun11
Sep11
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Mar12
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Aug12
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HOTELyearbook2013
Due to the severe competition in the hospitality market in Abu
Dhabi, the profit margin was down by more than 16.3 % in
comparison to last year, resulting in a RevPAR for the 8 months
to August 2012 of only US$ 84.37, having dropped 16.3 % below
the same period last year.
The Dubai hotel market is the region’s success story, having
developed into an all-encompassing destination, attracting
demand in all segments, including leisure, corporate and MICE
travelers. The leisure market remains the dominant sector,
contributing over 40 % of the total room nights. However, business
demand is increasing due to the improvement in business
sentiment in the region. Dubai has also become the preferred
MICE destination in the region, hosting large international and
regional events, including Arab Health, World Economic Forum,
Cityscape and the Dubai Air Show. These events each attract
upwards of 80,000 attendees over a period of 2-3 days each.
This has resulted in an uplift of the RevPAR to US$ 172 for
the 8 months to August 2012, which represents a growth of
more than 15.5 % over the same period last year. The trading
performance of Dubai is currently among the highest in the
region, and benchmarks favorably with key cities around the
globe such as New York, London and Hong Kong.
rEVPAr Abu DHAbi
rEVPAr DubAi
In Dubai in 2012, growth in the supply of new hotel rooms
slowed mainly as an after-effect of the widespread construction
delays over the last two to three years following the credit
crisis. However, the recent recovery in Dubai’s tourism and
hotel demand, and renewed confidence in its real estate,
is encouraging developers to restart planned or stalled
developments, including some landmark tourism and hospitality
projects in Dubailand, Palm Jumeirah and Business Bay.
The influx of new room supply in Abu Dhabi over the last
three or four years has caused an oversupply in the market,
mainly in the five-star segment. Total rooms supply increased
substantially from +/- 13,000 in 2008 to about 22,000 in the
first half of 2012, according to government estimates. The
upscale hotels’ decision to cut rates in response to the growing
competition to shore up occupancies has caused a ripple effect
across the market as other segments followed suit to maintain
market share, affecting room rates across the market.
sENtiMENt Of tHE WOrLDWiDE HOtEL iNDustrY
The Horwath HTL Hotel Market Sentiment Survey has been
designed to provide a quick assessment of the future market
outlook for the worldwide hotel industry. This global initiative
promising ! cont.
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gathered responses from 1,557 respondents across
41 countries.
This report summarizes the result of selected hotels and
hotel management companies, including those in Dubai and
Abu Dhabi. By star classification, 62 % of the respondents
were 5-star hotels, 4 % were 4-star hotels, 13 % were 3-star
properties and 21 % hold a mixed portfolio or made no further
specification in this regard.
According to the Horwath HTL Global Hotel Market Sentiment
Survey, Africa & the Middle East recorded the highest sentiment
score on a global level, at a level of 41 points in February 2012
and 29 points in July 2012, being the highest worldwide and
well above the global average of 24 and 1 respectively. Despite
ongoing global economic and geo-political uncertainties in
certain countries, the sentiment in Africa & the Middle East
remains optimistic.
bY rEGiON
ScORe
Jan 2010
Jan 2010
Jan 2010
Jan 2010
Jan 2010
Jan 2010
Asia 48 46 52 22 37 10
Oceania 41 52 58 38 35 -12
Europe 4 15 34 16 14 -8
Americas 21 8 37 9 17 28
Africa / Middle East 43 7 9 -6 41 29
Global Average 27 29 42 16 24 1
In response to the outlook on market-wide occupancy
performance, a majority of 75 % of hoteliers replied that
occupancy was better or much better than expected, while only
12 % of hoteliers felt that occupancy performance was worse
than originally anticipated.
Approximately 62 % of respondents stated that they expect
performance in all three metrics to perform better or much
better than in the second half of the year when compared to last
year’s market performance. Almost two thirds of hoteliers are
looking ahead with confidence and optimism.
Another indicator substantiates the positive sentiment of the
UAE market in general, by comparing the impact of the financial
crisis between the country and the rest of the world, and
reveals a significant difference. While the global average records
negative 8 points, the UAE registered a positive score of 59.
Despite ongoing global economic, the sentimentin Africa & the middle East remains optimistic
promising ! cont.
r e g i o n a l o u t l o o k : a S i a
HOTELyearbook2013
sCOrE
Asia 10
Oceania -12
Europe -8
Americas 28
United Arab Emirates 29
Global Average 1
When asked if the continued global economic uncertainty had
impacted hotel demand as much as they had expected, only
8 % of hoteliers responded that demand was still affected more
or much more than expected, as shown in the chart below :
The overall sentiment for total revenue reflects the optimism
registered for occupancy and rate growth, with 82 % of the
participating hoteliers indicating that continued global economic
uncertainty impacted demand less than expected, indicating
they expect a growth in revenue.
This can be seen as an indicator, which shows that the global
economic crisis has notably less direct impact on hotel markets
in the UAE than in other parts of the world.
OutLOOk fOr 2013
The hotel market performance in the United Arab Emirates in
2012 was mixed, with Dubai reporting a strong growth in all
three key performance indicators, while the hospitality market
in Abu Dhabi is suffering from hotel room oversupply.
Although the UAE government has taken some measures
to control new hotel developments, it will need a consensus
among the hotel operators to maintain an appropriate rate
structure.
Against this backdrop, the outlook for both Emirates in 2013 is
also different :
The hotel and tourism industry in Dubai has recovered very well,
recording strong leisure, MICE and business demand, which
stimulated developers to re-start projects that had previously
been stalled. Although there are still challenges to obtain
construction finance at suitable terms and conditions, the sky
is slowly clearing over the Emirate of Dubai. There is untapped
potential to diversify the hotel and tourism offerings, for example
by focusing on the budget/mid-market segment and through
providing special products which appeal to specific travelers,
such as boutique hotels or the all-inclusive hospitality concept.
Looking forward, in Dubai there are a number of hotel openings
expected in late 2012 into 2013, including high profile projects
such as JW Marriott Marquis, which will be the world’s tallest
dedicated hotel when opened, and the Palazzo Versace Hotel.
In summary, the outlook for hotels in Dubai into 2013 appears to
be buoyant, albeit with a relatively stable or marginally reduced
occupancy levels due to the anticipated increase in supply.
Given the positive market sentiment, double digit revenue
growth is expected in 2013 for the Emirate of Dubai.
The outlook for the Emirate of Abu Dhabi is however cast with
shadows as several challenges are shackling the hotel industry.
The high number of new hotels, which came to the market
recently, exacerbated an already existing oversupply and put
severe pressure on the performance of the existing hotels. In the
light of the announced new properties, to a level where the current
inventory of available rooms will almost double, there will be a
further decline and tightening of the future market environment.
Much More, 4 %
More, 4 %
Same, 13 %
Less, 66 %
Much Less, 13 %
HOTELyearbook2013
promising ! cont.
r e g i o n a l o u t l o o k : a S i a
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The new supply is coming faster than the demand and the
market cannot absorb it. The government needs to continuously
market the destination and continue with the development of
the infrastructure and tourist attractions to increase demand.
Although the Abu Dhabi Tourism & Culture Authority (ADTCA)
announced they are to freeze the issuance of new hotel
licenses, a fiercely contested market and a further decrease in
the main performance metrics in expected in 2013.
The Abu Dhabi Tourism Authority is implementing a demand
diversification plan for the tourism sector as part of the
larger Plan Abu Dhabi 2030, focusing on the development
of MICE and leisure-related infrastructure in the Emirate. Key
development projects on Yas and Saadiyat Islands, such as the
Yas Waterpark and the Louvre and Guggenheim Museums, are
seen as a positive step forward as they will increase leisure-
related demand. These attractions should develop Abu Dhabi
as an all-inclusive destination providing greater stability in
the future as it diversifies demand away from the traditional
markets such as corporate and government demand. However,
the consensus of hoteliers in the Emirate is that material
improvements in the key performance parameters are not likely
to occur until 2014/15.
In this context, it is important to highlight that the ongoing
uncertainties and a potential slowdown of the economies in a
number of the countries in the Euro-zone could pose a downside
risk on arrivals from Europe, which represents one of the most
important feeder markets for inbound tourists for the UAE.
However, the UAE has cemented its position as a safe oasis
within a turbulent region and continues to be considered one of
the preferred places in MENA for leisure and business.
Hannes Schied
ViETNAmsituAtiON rEPOrt
2012 was a tough year for Vietnam, albeit an improvement over
the sky-high inflation endured in 2011 (reaching 23 % at its peak
in August). GDP growth for the first three quarters of 2012 was
4.73 %, down by one percentage point YoY, due to slowdowns
in manufacturing, business transactions and consumption.
Such growth was below the government’s target of 5.5 % for
the year. However, success was achieved in slowing inflation by
almost half, though not quite reaching the goal of single digits.
The hotel and tourism sector was negatively affected by the
poor economic conditions. According to STR Global, for the
first nine months of 2012, the Vietnam hotel market recorded
decreases in both occupancy (by 0.7 %) and rate (by 4.7 %),
resulting in a RevPAR decrease of 5.4 % YoY.
The Ho Chi Minh City (HCMC) market followed the national trend
with negative growth in all aspects, mainly due to the opening
of 3 new hotels : StarCity, Nikko Saigon and the Novotel Saigon.
In contrast, the Hanoi market recorded a growth rate of 6.3 % in
occupancy, resulting in RevPAR growth of 4.4 % YoY.
tOP-tiEr VErsus uPPEr-tiEr HOtEL MArkEts iN HCMC
AND HANOi
Source : STR Global, 2012
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HCMC Upper-tierHanoi Top-tier
promising ! cont.
r e g i o n a l o u t l o o k : a S i a
HOTELyearbook2013
From 2006 to 2009, the gap in ADR between the top-tier hotel
market in HCMC and Hanoi ranged between US$ 15 and
US$ 41, mainly because the top-tier hotel market in HCMC
developed earlier than in Hanoi, while the opening of the
Park Hyatt Saigon contributed to the rate surge. From 2010
to September YTD 2012, with Vietnam’s economy on the
skids, the top-tier market in HCMC experienced a decrease in
business travellers, resulting in a decreasing rate gap of about
US$ 24-27.
In contrast, the Hanoi upper-tier hotel market prior to 2009
achieved higher ADR than in HCMC. However, since that time,
a large influx of new upper tier supply in Hanoi, such as the
Crowne Plaza West, Grand Plaza Hotel, Hotel De L’Opera, and
the Mercure La Gare, has negatively impacted room rates as a
result of competitive rate discounting.
OCCuPANCY (%)
Source : STR Global, 2012
HOTELyearbook2013
promising ! cont.
r e g i o n a l o u t l o o k : a S i a
20072006 2008 2009 2010 2011 Sep YTD2012
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HCMC Upper-tierHanoi Top-tier
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Occupancy rates across the top and upper tier markets
follow a similar trend from 2006 through 2012, with the peak
experienced in 2007, and the dip in 2009, in the immediate
aftermath of the GFC. Occupancy rates have generally improved
since 2009, except for Hanoi’s upper-tier market, due to the
influx of new supply. By September 2012, the top and upper tier
markets converged around the 62 % mark.
rEVPAr
Source : STR Global, 2012
NEW suPPLY
An emerging trend in 2012 was the expansion of local
investment in the top and upper tier segments of the market
with acquisitions of Victoria Hotels & Resorts and new
development by the Vin Group. At the time, the addition of new
and high quality hotels with international branded hotels, such
as the Pullman in HCMC, Hyatt Regency and InterContinental in
Da Nang and MGallery in Hanoi, is helping to enliven Vietnam’s
hotel product offerings and inducing new arrivals.
VisitOr ArriVALs
Source : General Statistics Office of Vietnam
Chinese tourists continued to dominate international arrivals in
2012, accounting for nearly 1 million arrivals, or 21 % of total arrivals
(as of September YTD 2012). South Korea and Japan were the
second and third top source markets comprising 11 % and 9 % of
total arrivals, respectively. In terms of YoY growth, however, China
remained unchanged, while Japan and South Korea recorded
increases of 26 % to 40 %, mostly associated with the continuous
growth in investment in Vietnam from these two countries.
OutLOOk fOr 2013
With the opening of Myanmar and the expansion of low cost
carrier routes around the region, including such additional
emerging markets as Cambodia and Laos, the attractiveness of
Vietnam as an authentic and cultural Southeast Asian country
has been affected. In addition, the repeat factor for Vietnam is
much lower compared to Thailand, Malaysia, and Singapore.
Without more incentives and promotion from the government
and tourism authorities, it will be challenging to increase the
number of leisure travellers over the near term. HO
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HCMC Upper-tierHanoi Top-tier
0
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6000
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1995
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HOTELyearbook2013
At the same time, increases in corporate travellers will largely
be contingent on improvement of the economy, especially lower
inflation, and regaining investor confidence. Curbing inflation and
stabilizing the economy are the government’s top priorities for
2013, with economic growth and inflation both targeted at 6 %.
With economic recovery far from guaranteed, the number of
new hotel openings in 2013 is expected to strain occupancy and
rate performance further. Such new hotels entering the market
in 2013 include the InterContinental Landmark (359 rooms),
JW Marriott (450 rooms), Hilton Garden Inn (86 rooms), Novotel
Ciputra (250 rooms), Mercure Hado (380 rooms) and Holiday Inn
Dong Da (300 rooms) in Hanoi ; and Le Meridien (350 rooms)
and Pullman Saigon Centre (300 rooms) in HCMC.
Overall, Vietnam is facing an arduous year ahead in 2013.
However, on the flip side, more international branded and high
quality hotel products are expected to help induce tourist arrival
growth, while providing important infrastructure for supporting
the country’s tourism growth going forward. If the rest of the
country’s infrastructure development (transport and utilities)
can keep pace, Vietnam will be well placed to utilize its tourism
resources as a driver for economic recovery.
Van Phan
pHiLippiNESsituAtiON rEPOrt
2011 turned out to be another milestone year for tourism in
Philippines. Visitor arrivals to the country totalled 3.9 million,
breaking the record 3.5 million set in 2010 and surpassing the
3.7 million target set by the Department of Tourism. Korea was
the largest source market (24 %), followed by the US (16 %).
Other major source markets include China (6 %), Taiwan (5 %)
and Australia (4 %).
The buoyant performance can be attributed in part to strong
corporate travel, driven by domestic and foreign investments
following the improved political and economic environment.
Much to the delight of investors, the government’s concerted
efforts to eliminate corruption and improve fiscal management
earned the country a credit rating upgrade from S&P from BB to
BB+ (one spot below investment grade). Remittances of Filipino
foreign workers were also pivotal in boosting consumption and
encouraging domestic travel.
Not surprisingly, the robust visitor arrivals performance
translated to a better hotel market. According to STR Global,
ADR grew by 4 % (PHP 5,715) while occupancy improved by
1 percentage point (to 71 %). As a result, RevPAR grew by a
reasonable 5 % (PHP 4,070) in 2011, while as of YTD September
2012, RevPAR is up a further 2.5 % YoY.
Other than the limited supply of international class hotel
products, tourism infrastructure remains a major hindrance to
growth. The international airport in Manila, the main gateway
to the country, is operating at full capacity. Although several
alternatives are being considered to ease congestion at
the airport, including transferring some flights to Diosdado
Macapagal International Airport in Clark and building a
new airport, there are no definite solutions in the works at
the moment.
OutLOOk fOr 2013
While caution on the outlook is warranted due to global
economic uncertainties and Metro Manila’s outdated tourism
infrastructure, no signs of an impending slowdown are currently
evident. As of YTD August 2012, visitor arrivals reached 2.9
million, eclipsing the previous year’s figures by almost 10 %,
with the majority of source markets posting positive growth.
Although market RevPAR growth YTD is moderate, RevPAR
HOTELyearbook2013
promising ! cont.
r e g i o n a l o u t l o o k : a S i a
There has been a drought in new big name hotel supply in metro manila for some time
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growth among the upper upscale and luxury hotel segments is
trending higher.
There has been a drought in new big name hotel supply in
Metro Manila for some time. The last time a major international
chain hotel entered the market was in 2009 (with the opening of
the Marriott). However, a number of strong players are expected
to enter the market, including Fairmont (2013), Holiday Inn
(2013), Shangri-La (2014) and Grand Hyatt (2015).
Additional considerations supporting a positive outlook include :
• The Pagcor Entertainment City, an ambitious integrated
casino project in Manila Bay consisting of numerous hotels,
casinos and entertainment facilities, is finally under way.
Solaire and Belle Grande Manila, two of the four companies
authorized to develop hotels and casinos may open their
casinos as early as 2013.
• The Department of Tourism has launched a new branding and
destination marketing campaign which is so far generating a
consistently positive response.
• The current administration’s continued efforts towards
eliminating corruption and creating a more attractive
environment for foreign direct investment.
Overall, the outlook for the market remains positive as the
Philippines, especially Metro Manila, appears to have the
fundamentals to propel the industry to another record year
despite all the uncertainties surrounding the global economy.
Jerome Siy HO
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HOTELyearbook2013
On the upswing ?our regional outlook ContinueS with a look at key marketS in the weStern hemiSphere. HORWATH HTL
haS provided an in-depth look at the proSpeCtS for 2013 in the uSa, brazil and the Caribbean.
r e g i o n a l o u t l o o k : t h e a m e r i C a S
HOTELyearbook2013
uSAsituAtiON rEPOrt
As the world’s largest economy, much of what happens in the
United States is felt worldwide. This is why there is great concern
both in the US and elsewhere over the expanding size of this
country’s national debt, which has now topped US$ 16 trillion and
is currently expected to climb higher. Given the recent election
results, it appears that much of the gridlock experienced in
Washington will continue. The looming “fiscal cliff”, so often
discussed these days, does not appear to be going away but
rather becoming a reality if Congress does not act before the
end of 2012 to avert a potential double-dip recession. Genuine
concerns remain on the part of most economists that action
needs to be taken quickly to cut the deficit spending and/or
increase revenues, or the country could indeed experience a
second recession, which may in fact be more severe than the last.
While the national debt situation appears to be dire, there does
appear to be some positives in the economy. Current annual
real GDP – the overall output of good and services produced by
labor and property in the USA – increased at an annual rate of
2 % as of the third quarter of 2012, according to the Commerce
Department’s Bureau of Economic Analysis. This represents an
increase over the annual estimate in the third quarter of 2011,
which was 1.6 %. Also the national unemployment rate which had
been hovering close to 9 % for much of the past 3 years is currently
just below 8 %. While a positive sign, it is still nowhere near the 4 to
5 % the country needs for a return to a healthy economy.
All in all, given the rather poor economic environment prevalent
throughout the USA, 2012 has not been all that bad of a year
for the lodging industry. Hotels may still end up outperforming
other forms of real estate investments including office, retail and
industrial sectors. Increases to the standard lodging metrics of
occupancy, ADR and RevPAR for the year can be attributed in
large part to increased business travel. Certain regions and/or
states have been enjoying better than average business due to
better than expected economic conditions experienced in these
areas. These include states like North Dakota, South Dakota
and Oklahoma, which are developing newly discovered energy
sources, and the Midwestern section of the country which has
seen a reemergence of its manufacturing sector.
Any growth in rooms demand registers as significant due to
the fact that there are minimal hospitality developments in the
supply pipeline. Regardless of demand growth, the relatively low
increases to supply will aid owners and operators in driving up
ADRs at their properties, which have been severely depressed
since the beginning of the economic downturn in 2009.
While there have been some gains in hotel transactions, they
have not been substantial and are nowhere near pre-recession
levels. Buyers and sellers have come together somewhat, at
least to a point where there have been more sellers willing to
place their properties on the market. Investors continue to seek
upscale hotels as well as select service properties with major
brand affiliations located in primary markets. Financing for
these projects remains available at what could be considered
attractive terms by historical comparison. Loans can presently
be obtained with 10 year terms, amortized over 20-25 year
periods with interest rates in the 5 % range. Loan-to-value ratios
are in the 70 to 75 % range which requires a rather sizeable
equity investment. Smaller transactions of under $10 million are
still being financed by the Small Business Administration, also at
generally acceptable terms.
OutLOOk fOr 2013
Supply will remain a non-issue for 2013 as very few projects
have come to fruition in the past year and projects on the
“drawing board” are substantially less than a year ago.
Assuming another recession can be avoided, occupancy is
expected to improve, albeit at a slower pace than in 2012,
resulting in a projected increase of less than 0.5 %. Due to
the low growth of supply, ADRs are expected to strengthen in
2013 by less than 5 %, leading to an estimated RevPAR growth
of approximately 5 %. The majority of this RevPAR growth
is expected to occur in the primary cities, with only minimal
growth in secondary and tertiary markets.
Mark S. Beadle, CHA and Joel W. Hiser HO
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Boca raton resort & Beach club
Courtesy Richmond International
brAziL – fDi iN 2000/2011 (us$ biLLiONs)
Source : Brazil Central Bank
International tourism demand continued to grow steadily in
2011, and it is expected that Brazil will reach a total of 6.2
million international tourists by the end of 2012. Despite the fact
that international tourism demand shows a constant growth
over the last years (except for 2009), Brazil’s tourism and hotel
industry relies mainly on the domestic market. As for the cities,
BRAZiLsituAtiON rEPOrt
Macroeconomic projections for Brazil and other countries in the
Region seemed optimistic at the beginning of 2012. However,
these expectations were not reached throughout the first
semester. The national GDP growth was modest : 0.8 % for the
first and 0.5 % for the second semester.
However, the limited growth of the economy did not hit
investment in the hotel and tourism sector. The resources
arranged by the federal banks for the tourism industry
presented a 13.3 % increase during the first semester of 2012
in relation to 2011. Financial institutions spent a total of R$ 2.02
billion to fund retrofit, modernization and implantation of
tourism projects.
Moreover, Foreign Direct Investment in the country (FDI)
continues to grow significantly. In 2011, a total of US$ 75.95
billion was invested in Brazil by foreign companies, accounting
for 2.7 % of the country’s GDP.
USD billions% of GDP
10
0
20
30
40
50
60
70
80 6
5
4
3
2
1
02000 2002 2004 2006 2008 2010
% USD
HOTELyearbook2013
HOTELyearbook2013
Rio de Janeiro remains the top international tourism destination,
while São Paulo attracts more than 50 % of the international
tourists in the business and MICE segments.
iNtErNAtiONAL tOurist ArriVALs tO brAziL
iNtErNAtiONAL tOurisM
MAiN LEisurE DEstiNAtiONs 2011
iNtErNAtiONAL tOurisM
MAiN busiNEss AND MiCE DEstiNAtiONs 2011
Source : Brazil Ministry of Tourism / INFRAERO
0
1
2
3
4
5
6
7
200620042002
Mill
ions
of
tour
ists
* Forecast
2008 2010 2012*
Rio de Janeiro, 26 %
Foz do Iguaçu, 20 %
Florianópolis, 20 %
São Paulo, 11 %
Salvador, 7 %
Other destinations, 16 %
São Paulo, 52 %
Rio de Janeiro, 24 %
Curitiba, 5 %
Belo Horizonte, 4 %
Porto Alegre, 4 %
Other destinations, 11 %
On the upswing ? cont.
r e g i o n a l o u t l o o k : t h e a m e r i C a S
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The hotel sector is experiencing a good period, maintaining
an adequate level of occupancy rates (around 65 %) and an
escalating ADR, resulting in a firm growth of RevPAR over the
last years.
OCCuPANCY rAtE, ADr AND rEVPAr – MAiN sOutH
AMEriCAN MArkEts – YtD (YEAr tO DAtE – AuGust 2012)
Source: STR Reserach
Occupancy rates are showing a slight slowdown (-2.6 %)
compared to 2011, though the 2012 numbers could grow,
considering that the second half of the year tends to present
higher occupancy rates in most of the markets. However, the
significant increase of ADR during the first half of 2012 (over
12 % when compared with 2011, and 17.6 % when compared
to the first half of 2011 ) represents an increase of almost 7 %
in RevPAR compared to last year and 13.6 % in relation to the
same period (January-June) in 2011.
OCCuPANCY rAtE, ADr AND rEVPAr – brAziL – 2007-2012
YtD (YEAr tO DAtE – juNE 2012)
Source : STR Research / FOHB (Brazilian Hotel Operators Forum)
In general terms, the hotel market in Brazil is going through
a growing and consolidation phase that comprises diverse
processes including :
• the increasing participation of foreign capital/investors
in the hotel industry. Major players, mainly from the United
States and Europe, are starting to establish alliances and
business platforms with local partners (developers, hotel
chains, real estate companies, etc.) to enter into the hotel
industry through the development of portfolios oriented to
urban midscale and budget hotels.
• development of international hotel chains. Seeking
opportunities in major capital and primary cities to develop
upscale and luxury brands that are still not present in Brazil,
and in secondary and tertiary cities to develop their budget
and/or limited services brands. Secondary and tertiary
markets also might result in interesting options to develop the
Argentina Brazil Colombia Chile Peru
Average daily rate (US$) RevPAR (US$)
0
50
100
150
200
70%
0%
10%
20%
30%
40%
50%
60%
80%
90%
Room occupancy
AD
R/R
evP
AR
Occ
upan
cy
00
10
20
30
40
50
50
100
150
200
250
60
70
20092007 2008 2010 2011 2012*
RevPAR (R$ - local currency)ADR (R$ - local currency)
AD
R/R
evP
AR
Occ
up
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Occupancy (%)
On the upswing ? cont.
r e g i o n a l o u t l o o k : t h e a m e r i C a S
HOTELyearbook2013
HOTELyearbook2013
hotel chain portfolio of brands through franchise agreements.
• expansion of brazilian hotel chains. Considering the
relevance of the domestic market, local hotel chains have
achieved significant growth, understanding the needs of
Brazilian guests and being flexible and fast in developing long-
term and territorially-based partnerships with local developers
and real estate companies.
• management and commercialization professionalization.
Though there is a long way to go in this aspect, the
development of the international and national hotel chains is
“pushing” the market (including the independent hotels) to
standardize processes and establish professional parameters
to deal with sales, reservations, management and other
operational issues.
• real estate business as a funding option. Despite some
credit lines offered by federal banks and the incipient entrance
of capital funds in the market, many hotel properties in Brazil
are developed through the condo-hotel finance structuring.
This means that hotels compete with other real estate
products in the market, such as offices, residences or retail,
and become part of mixed use projects including two or more
real estate products.
OutLOOk fOr 2013
The Brazilian economy is expected to grow at higher rates over
the next year. Within this growth, investment and development of
the hotel sector will continue their consolidation process regarding
the arrival of new products and brands to the markets and an
increasing volume of international and domestic tourism demand.
Occupancy rates should maintain an adequate level, considering
the growth of the market and the projected addition of rooms
in most of the primary, secondary and even tertiary cities. As
for ADR and RevPAR, the market demand and the upcoming
major sports events (FIFA World Cup 2014 and Rio de Janeiro
Olympics in 2016) will keep pushing the rates. The incidence of
these events will be higher in primary and capital cities, whereas
the general growth of regional and local economies will have a
larger impact in secondary (500,000 to 2,000,000 inhabitants)
and tertiary cities (200,000 to 500,000 inhabitants).
Taking into consideration the main segments of the hotel
demand, we could expect the following :
• business. This will remain as the most important segment
for hotel demand in most of the primary (excluding Rio de
Janeiro) and secondary cities, considering Brazil’s economic
growth, infrastructure development and other general aspects
that will continue boosting lodging demand.
• miCe. This is expected to be the most dynamic segment of
the demand. Along with the increasing number of international
events hosted in the country, Brazil has a significant domestic
market that generates an important influx of guests in some
cities that have developed adequate infrastructure and
transport connectivity.
COuNtrY rANkiNG – HOstiNG Of iNtErNAtiONALCONVENtiONs AND EVENts – 2011
Ranking country No. of events Ranking country No. of
events
1 United States 759 11 Canada 255
2 Germany 577 12 Switzerland 240
3 Spain 463 13 Japan 233
4 United Kingdom 434 14 Portugal 228
5 France 428 15 Korean Republic 207
6 Italy 363 16 Australia 204
7 Brazil 304 17 Sweden 195
8 China 302 18 Argentina 186
9 Netherlands 291 19 Belgium 179
10 Austria 267 20 Mexico 175
Source : ICCA - International Congress & Convention Association
• leisure. Even though the increase of international tourists
could impact this segment, tourism demand linked to leisure
will remain mainly domestic. On the other hand, though the
local currency (the Brazilian Real) has experienced significant
depreciation over the last year, some destinations still remain
On the upswing ? cont.
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expensive both for the foreign and the domestic tourist,
resulting in other leisure destinations possibly looking
more attractive.
Mariano Carrizo
THE cARiBBEANsituAtiON rEPOrt
By the end of 2012, we estimate that tourist arrivals to the
Caribbean will be around 25 million, a growth rate of 5 % on
the previous year, as Caribbean tourist arrivals until the end of
September 2012 have increased by 5.11 % compared to the
same period last year. This is encouraging news for the region
as it approaches its high season of December-April, when the
majority of tourists come to the Caribbean to escape the cold
winters of North America and Europe.
For 2012, we estimate that the Caribbean will hold a tourist
arrivals market share of 2.3 % and annual tourism receipts
of US$ 24.2 billion, both higher than for other significantly
larger regions around the globe (i.e. Central America, North
Africa, Oceania and South Asia , as defined by the UNWTO),
demonstrating the strength of the Caribbean as a worldwide
tourist destination that has achieved consistent market shares
of between 2-3 % for the previous 30 years. This high market
share is important for the region as it holds the highest
tourism contribution to GDP than any other region around
the world, with an estimated total contribution to GDP of
13.9 % (US$ 47.1 billion) for 2012 and a total contribution to
employment of around 2 million jobs, representing 13 % of
the working population. Additionally, the Caribbean is currently
the 6th highest region in the world for receipts per tourist
arrival, which signifies a clear indication of the sustainability
of the tourism industry of the region and the spending power
of its visitors.
For 2012, the real GDP growth rate is expected to rise to
2.8 %, a slight increase on the previous year’s growth rate
of 2.7 % and a clear sign that the economy of the region is HO
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On the upswing ? cont.
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HOTELyearbook2013
performing better – while there are still some improvements to
be made, considering that the growth rate in 2010 was 3.4 %.
Estimated tourism arrivals for 2012, based on early indications,
show that the most visited tourist destinations in the Caribbean
will be the Dominican Republic (4.6 m visitors), Cuba (2.9 m
visitors), Jamaica (2.0m visitors), Puerto Rico (1.6 m visitors)
and Bahamas (1.4 m visitors). These five countries will represent
around 68 % of the tourist arrivals to a region of 33 countries
and four European languages.
For the main market sources of tourist arrivals to the Caribbean,
we estimate by the end of 2012, the USA will provide 44 % of
all stopover arrivals. Europe will be the next largest contributor
of Caribbean arrivals, providing 19 %, with Canada just behind
with 15 %. This demonstrates how much influence the North
American market has on the Caribbean tourism industry as it
consistently provides around 60 % of all arrivals to the region
each year.
PrOjECtED CAribbEAN MAiN MArkEt tOurist ArriVALs 2012
The major destinations participating in the hotel room supply
in the Caribbean include the Dominican Republic with over
64,000 rooms, Cuba 46,000, Jamaica 32,000, Bahamas 15,000
and Puerto Rico with 14,000 rooms. Based on our analysis, we
also estimate an average hotel occupancy of 66 % for 2012 for
the Caribbean, representing an average increase of 3 % on the
previous year. The main hotel average occupancies,
as of September 2012, were Puerto Rico (76 %), Dominican
Republic (73 %), Bahamas (73 %), Cuba (56 %) and US Virgin
Islands (53 %).
tHE OutLOOk fOr 2013
The outlook for the Caribbean for next year is a cautiously
promising one with continuing opportunities for new tourism
developments. One example of continued growth in the region
is the development of the Baha Mar Resort & Casino in the
Bahamas partnered by the Bank of China, which is constructing
the region’s largest casino and spa, as well as 2,250 rooms
spread over four internationally branded hotels to be opened in
late 2014. This Caribbean landmark is estimated to cost US$
3.5 billion and bring such a boost to the nation’s economy that
its GDP could increase by 10 %.
The majority of the new hotel developments in the Caribbean
are falling into the luxury, upper upscale category, indicating the
high investment levels of the Caribbean tourism industry and the
confidence of the developers and promoters in the region.
However, there are some warning signs for the year ahead, as
the whole Caribbean is vulnerable to the developing Eurozone
crisis, and Caribbean governments are tackling fiscal deficits
and mounting debt through further austerity measures. On the
positive side, Foreign Direct Investment (FDI) from regions that
suffered less from the economic crisis – such as China, Canada
and Latin America – is expected to increase, and as long as oil
prices remain relatively steady and the US economy continues
to recover, tourist arrivals from the main market of the US are
likely to improve into 2013.
The outlook for the Caribbean hotel and tourism industry shows
a picture of continuing strength and increasing investments and
opportunities for the near future.
Sotero Peralta
USA, 7,8 m, 44 %
Canada, 2,7 m, 15 %
Europe, 3,3 m, 19 %
Others, 3,7 m, 21 %
On the upswing ? cont.
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situAtiON rEPOrt
International tourist arrivals in South Africa are estimated to have
increased by approximately 10.5 % in the first seven months of
the year (Overseas : +16.4 % ; Africa : +8.5 %). Domestic tourism
is estimated to account for about 70 % of the total visitor
market and about 35 % of total tourism spend. Yet in spite of a
weaker domestic economic outlook and moderating domestic
visitor market, the South African hotel market has shown some
evidence of a recovery in 2012.
Year-to-date RevPAR has increased by an estimated 13 %, in
South African Rand terms, to approximately ZAR 497 according
to STR Global; this increase in RevPAR can be attributed to
growth in both room night demand (+5 %) and average room
rate (+4 %). While RevPAR is comparable with that registered
in respect of the same period in 2009, the South African hotel
market continues to operate below pre-recession RevPAR
performance levels registered in respect of the same period in
2008 (-7 %).
South African hoteliers find themselves operating in a high
inflation trading environment where input costs (in particular
food, labor, utilities, and fuel) continue to escalate at above
inflation rates (inflation is estimated at 5.5 % whereas GDP
growth is estimated at 3.2 %). As a result, hotel profitability
remains under pressure, in particular those new-builds which
entered the market in time for the 2010 FIFA World Cup who are
required to service the project’s debt funding.
Nevertheless, a pipeline comprised of approximately 13 hotel
developments exist which, if they all materialize, will result in
an estimated 1,787 additional guest rooms. Amid challenging
trading conditions in South Africa, many of the South African
hotel management companies are exploring opportunities
across the African continent where trading conditions and yields
appear more favorable.
OutLOOk fOr 2013
Looking ahead to 2013, we expect the South African hotel
market is likely to maintain the current status quo. Uncertainty in
many of the country’s key source markets is likely to continue to
influence international leisure travel demand. In light of the local
economic environment, we expect demand from the domestic
corporate and government demand segments to remain at
current levels. We believe that the return to growth is likely to
be slow, with hotel performance largely driven by the return of
the international leisure traveller coupled with an improved local
economic environment.
Michelè de Witt
rounding out our 2013 aSSeSSment of key geographiC marketS for the hotel induStry iS a look at
South afriCa. the Cape town offiCe of HORWATH HTL ContributeS a look at proSpeCtS in itS own
baCkyard, while the reSt of the Continent iS reviewed by W HOspiTALiTy in nigeria. (See p.86)
slow but steadyr e g i o n a l o u t l o o k : a f r i C a
uncertainty in many of the country’s key source markets is likely to continue to influence international leisure travel demand
2007 2008 20102009 2011 2012
ADR RevPAR
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HOTELyearbook2013
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