Demand picks up for hotels

People will fight for this demand and you do so not by slashing rates, says STR Global's Jonas Ogren

Good news for hoteliers across Asia Pacific - demand is picking up, numbers are looking up and while we may not be out of the woods yet, the region is making a quicker comeback than the rest of the world.

Sharing the happy news with WORLDHOTELS members gathered for their annual Asia Pacific conference in Bali last weekend was Jonas Ogren, area director-Asia of STR Global.

Even better news for hotel operators, he said, supply was also flattening out in most Asia Pacific markets after a few years of crazy growth. It's still growing at 3% a year, he said, but it's slowing down.

RevPAR is coming back across the region. As of November 2009, STR Global figures showed a year-on-year drop of 21.1% across Asia Pacific - that's compared to the 28.4% drop recorded in October.

Based on November 2009 figures, only Seoul and Bali showed growth in RevPAR - by 8.6% and 3.4% respectively. Beijing suffered the steepest drop - 45.7%. New Delhi came in at 36.6% decline, with Shanghai not far behind at 31.6%.

Seoul, Bali, Tokyo, Sydney, Hong Kong and Singapore were showing growth in both occupancies and average rates. "Hopefully we would have learnt from mistakes. There is a tendency for hoteliers to focus on occupancies and to fill the rooms, they drop rates."

According to the figures he showed, Bali showed a drop in occupancy yet grew in average rate and so its RevPAR stayed in positive territory.

"Discounting across the board does not help anyone. This is a good opportunity to take a look at what happened the last 12 months and learn from it," said Ogren. "This is a good time to do revenue management."

With demand coming back, he said, "People will fight for this demand and you do this not by slashing rates but by deciding what rate, what channel and what time period you want."

As expected, the high tier hotels were more affected but in cities like Singapore, Ogren said the higher end was coming back faster than the mid-tier.

In terms of occupancy, Seoul topped the rankings, followed by Sydney, Singapore, Hong Kong and Bali. In terms of average rate, Tokyo was number one, followed by New Delhi, Singapore, Hong Kong and Seoul.

In terms of RevPAR, Tokyo ruled the charts, followed by Singapore, Hong Kong, New Delhi, Seoul and Sydney.

Putting things in perspective, Ogren said that if China was taken out of the basket of countries STR Global measured in Asia, RevPAR across the region dropped only by 13.6% as compared to the 21.1% with China included.