China’s hotels see declining RevPAR in first half


China’s hotel industry has seen a drop in room yield or RevPAR over the first half of 2008, according to a study.
STR Global’s monthly survey of 528 internationally branded Chinese hotel properties showed that several major markets experienced occupancy declines as new hotel openings have stretched demand. But following the 2008 Olympic Games in August, expectations are high for second-half performance.
Chinese national occupancy fell 6.9 per cent in the first half of 2008 to 60.8 per cent. Average room rate (ARR) increased 2.3 per cent to $137, or a 4.8 per cent decline in revenue per available room.
“The Chinese hotel industry has thus far faced a year of significant challenges ranging from natural disaster to an uncertain global economy,” said James Chappell, managing director of STR Global. “The Chinese hotel industry will be looking to the Olympics to provide the profits in 2008.”
Locally, Chinese market performance is also down.  In Beijing, new hotel openings and lighter than expected pre-Olympic demand have caused occupancy to drop 10.7 per cent to 61.8 per cent. But a 7.6 per cent boost in rates has helped offset this. Year-to-date ARR is $141 and RevPAR is down 3.9 per cent.
In Shanghai, occupancy fell 8.5 per cent to 59.1 per cent. To compound this, rates also fell slightly, by 1.6 per cent. Year-to-date ARR in Shanghai is $150.
“Many of the new hotels in Northern China were developed specifically to meet the needs of the Olympics,” Chappell added. “It will be interesting to see if Chinese markets can adapt to the new supply levels when the Games move on.”
By Clark Kelly