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Hotel Views

2014
Asia Pacific
A Cushman & Wakefield Research and Hospitality Publication

Foreword

Welcome to our third edition of Hotel Views! Over the years we have not only worked hard to improve the quality of
information on the core markets, but have also added coverage of new destinations that we believe would present new and
interesting opportunities. Hotel Views 2014 features three new cities: Thimphu, Manila and Kathmandu, making the total
count of 23 markets our most comprehensive coverage yet of Asian hotel markets.
The region appears to be facing clouds of economic uncertainty as liquidity tightens particularly in the emerging markets.
China is facing a slowdown in its commodity demand growth, amid the austerity measures imposed by the new Communist
leadership. India saw its Rupee fall to a record low recently, while Indonesia and Malaysia experienced widening current account deficits. Yet, despite the turbulent financial markets and reduced growth forecasts, many believe, and so do we, that
Asias long-term growth story remains sound.
So far in 2013, hotel performances in the region have been mixed. With the dramatic influx of new hotel rooms in the
past few years, there has been some price relief observed in some markets, such as Singapore and Shanghai. On the other
hand, some emerging markets with limited high-end hotel stock amid strong tourism demand are enjoying strong revenue
growth. Yet across the region, hoteliers are also facing similar operational challenges: rising wage and development costs,
shortage of skilled workers and growing financing costs.
All these have not curbed investors acquisition appetite for hospitality assets. 2013 looks to set new heights in the hospitality investment market, with a record turnover year-to-date. Many large and small hotel deals were sealed, as well
as portfolios transacted and operating companies sold. There are healthy levels of transactional activity in core markets
such as Singapore, Hong Kong and Tier 1 Chinese cities, resulting in compressed cap rates and appreciated capital values.
Increasingly, we are witnessing more assets in the less developed markets changing hands.
Looking ahead to 2014, signs are pointing to a broad-based recovery in China, which will have significant positive spillovers
for the region. We expect next years hotel RevPAR growth to make a positive turn as some of the recent excess supply
gets absorbed in several markets. Chinese outbound tourism would continue to drive the regions growth. In the investment market, we expect more consolidation and M&A activities to materialize. Cautious optimism I believe will prevail on
the investors minds.
From our perspective, the establishment of our Singapore hospitality team is a significant milestone for us at Cushman &
Wakefield. We remain as committed as ever to forging partnerships and servicing our clients with our enhanced capabilities, from valuation, transaction and advisory services.
We hope you will find Hotel Views 2014 to be interesting and useful. We welcome your views on how we have delivered
and how we can constantly improve. Please contact me or any member of the Cushman & Wakefield team if you would like
further information or wish to join our research mailing list.
We thank you and look forward to your continued support!
Akshay Kulkarni
Regional Director - Hospitality, South & South-east Asia
Cushman & Wakefield
Akshay.Kulkarni@ap.cushwake.com

Hotel Views
2014

Table Of Contents
4

EXECUTIVE SUMMARY

HOTEL FORECASTS

ASIA PACIFIC HOSPITALITY MARKET: AT A GLANCE

HOTEL VIEWS

BEIJING, CHINA

11

SHANGHAI, CHINA

14

TOKYO, JAPAN

17

MUMBAI, INDIA

20

NCR, INDIA

23

JAKARTA, INDONESIA

26

HONG KONG, SAR

29

SINGAPORE

32

COLOMBO, SRI LANKA

35

SEOUL, SOUTH KOREA

38

BANGKOK, THAILAND

41

HO CHI MINH CITY,VIETNAM

45

REGIONAL HOTSPOTS

46

DHAKA, BANGLADESH

49

THIMPHU, BHUTAN

52

BALI, INDONESIA

55

KUALA LUMPUR, MALAYSIA

58

MALE, MALDIVES

61

YANGON, MYANMAR

64

KATHMANDU, NEPAL

67

MANILA, PHILIPPINES

70

MACAU, SAR

73

PHUKET, THAILAND

76

HANOI,VIETNAM

79

TRANSACTION UPDATE

81

CONCLUDING REMARKS

82

CONTACTS

83

PHOTO CREDITS

CUSHMAN & WAKEFIELD

Glossary
ADB Asian Development Bank
ADR Average Daily Rate
AOR Average Occupancy Rate
APAC Asia Pacific
ASEAN Association of South-east Asian Nations
bn Billion
BOOT Build-Own-Operate-Transfer
CAGR Compound Annual Growth Rate
CBD Central Business District
CPI Consumer Price Index
ETP Economic Transformation Program
FDI Foreign Direct Investment
FY Fiscal Year
GDP Gross Domestic Product
H Half
HCMC Ho Chi Minh City

IT/ITeS Information Technology/Information


Technology Enabled Services
KL Kuala Lumpur
KPI Key Performance Indicator
MICE Meetings, Incentives, Conferences and
Events
mn Million
NCR National Capital Region
PPP Public-Private Partnership
Q Quarter
RevPAR Revenue per Available Room
REIT Real Estate Investment Trust
USD US Dollars
WTTC World Travel and Tourism Council
YOY Year-on-Year
YTD Year to Date (1H2013)

HNWI High Net Worth Individual


Note unless otherwise stated, all figures are reported in
Calendar Years (January to December)

EXECUTIVE SUMMARY
In recent months, there has been some market turbulence in Asia
due to concerns that the US Fed could be tapering its stimulus
program. However, relative to the 1997 Asian financial crisis,
most economies in the region are in a firmer economic footing
and structurally stronger with less debt and more reserves than
before. Much of the short-term hot money leaving the Asian
markets might result in bouts of volatility, weakened currencies
and lower asset prices, but it should not affect the long-term
growth prospects.
The Asia Pacific market is on track for another record year of
international arrivals in 2013. Estimates showed that arrivals
expanded by over 8% over 1H 2013. Last year, South-east Asia
emerged as the fastest sub-region in Asia Pacific, with a 9.9%
increase in international arrivals over the previous year. Emerging
tourist destinations like Myanmar, Cambodia and Laos have also
seen significant gains in tourist arrivals in percentage terms. South
Asia continued to be the second fastest growing market in terms
of visitor volume in 2012. Japan, Thailand and the Maldives have
registered significant growth and rebound in terms of tourist
arrivals in 1H 2013.
International hotel groups are rapidly expanding into the region,
focusing their efforts particularly in China, India, Indonesia and
Hong Kong. This year, there have been notable Asian forays and
openings for Rosewood Hotels (Rosewood Beijing) and W Hotel

(W Guangzhou Hotel & Residences) in China, Mantra Group in


Bali (Mantra Nusa Dua) and ONYX Hospitality Group in Hong
Kong (OZO Wanchai).
Due to the large supply injections in several core markets over
the past two years, region-wide RevPAR this year might dip below
2012 levels, although hotel performances across individual cities
will vary widely. Singapores growth in ADR and RevPAR has been
under some pressure due to large inventory additions; Beijing and
Shanghais RevPARs have been dented slightly due to the broad
austerity measures imposed by the Xi leadership. Tokyos hotel
market is almost at pre-earthquake levels with limited growth this
year, while Mumbai and the Indian NCR region reported declining
growth in tourist arrivals.Yet, for emerging markets like Manila,
Yangon and Colombo, the surge in international arrivals coupled
with the limited high-end hotel stock, is lifting hotel performances
to new levels. Looking ahead, the region-wide RevPAR growth
could turn positive in 2014.
Across Asian cities such as Singapore, Mumbai, Beijing,
Colombo and Bangkok, authorities are expanding capacities
of transportation hubs such as airport, rail, ports and city
connectivity. The proliferation of low-cost- carriers and their
growing networks continue to support intra-regional tourism
growth. All these bode well for hotel developers and investors in
the worlds fastest growing region.

Hotel Views
2014

HOTEL FORECASTS

Market Summary

KPI

YTD June 2013 2013F

2014F

RevPAR 2014 (vs YTD 2013)

Bangkok ADR USD97 USD110 USD114


AOR 65% 67% 68%
RevPAR USD63 USD74 USD78
Beijing ADR USD85 USD88 USD90
AOR 55% 56% 57%
RevPAR USD47 USD49 USD51
Colombo ADR USD116 USD128 USD125
AOR 72% 75% 76%
RevPAR USD84 USD96 USD95
HCMC ADR USD120 USD128 USD132
AOR 61% 61% 63%
RevPAR USD73 USD78 USD83
Hong Kong ADR USD184 USD184 USD185
AOR 87% 87% 87%
RevPAR USD160 USD160 USD161
Jakarta ADR USD88 USD88 USD90
AOR 73% 73% 73%
RevPAR USD64 USD64 USD66
Mumbai ADR USD154 USD158 USD146
AOR 65% 66% 61%
RevPAR USD100 USD104 USD89
National Capital Region
ADR USD132 USD138 USD146
AOR 54% 58% 61%
RevPAR USD71 USD80 USD89
Seoul* ADR USD142 USD134 USD129
AOR 77% 75% 71%
RevPAR USD110 USD100 USD91
Shanghai ADR USD101 USD104 USD105
AOR 56% 54% 54%
RevPAR USD57 USD56 USD57
Singapore ADR USD205 USD208 USD202
AOR 86% 86% 86%
RevPAR USD176 USD179 USD173
Source: Various, Cushman & Wakefield Research
*Note: the 1H2013 figures for Seouls KPIs are projections as actual data was not available at the time of
this publication. The H1 2013 forecast is based on average exchange rates during the first half of 2013.

CUSHMAN & WAKEFIELD

ASIA PACIFIC HOSPITALITY MARKET: AT A GLANCE

According to Roubini Global Economics, the economy in the Asia


Pacific region is expected to grow by 5.3%, down from the 5.4%
growth achieved last year. While this is still by far higher than the
growth rates than can be achieved in the developed blocs,
expectations of the Fed tapering in September had exposed the
vulnerability of some of the regions economies. While the
deferment has since offered temporary reprieve, growth
prospects are still widely expected to decelerate in the latter half
of the year.
The region is likely to be weighed down by structural changes in
the Chinese economy, as the government shift focus towards
more consumption-driven growth; the recent tightening of credit
and property cooling measures are expected to weigh heavily.
India, as well, is also battling to stave off the crippling effects of
elevated inflation rates and a widening trade deficit. Similarly,
Indonesias once surging prospects are being undermined by a
trade deficit that has grown larger than the one during the Asian
Financial Crisis, while Thailand has slipped into technical recession.
Still, the diversity of the region means that a few bright spots will
emerge and driven by some unlikely candidates.
Will Japan finally be able to haul itself out of the shadows of its
lost decade? Since assuming the role of Prime Minister, Abe has
committed the authorities towards massive monetary stimulus to
lift the country out of a liquidity trap with a targeted 2% inflation
rate. So far the signs have been positive second quarter GDP
growth, on a quarter-on-quarter seasonally adjusted annualized
basis, was revised to 3.8%, up from the 2.6%.
In South-east Asia, the Philippines could finally be realizing its
economic potential. Driven by an economy that is riding a global
outsourcing boom, the countrys GDP sustained its momentum to
grow 7.4% in 2Q 2013 from a year ago.
While risks exist on the horizon, the prospect of another 1997
Asian crisis is unlikely to be triggered, as overall the region is in
better financial shape and in the longer term, the regions
fundamentals are backstopped by a multitude of factors that are
shaping its economic future.

APAC already has the second highest number of ultra-rich


individuals after North America; home to many of the fastestgrowing HNWI markets, such as Hong Kong and India, the region
is tipped to become the largest wealth market as early as next
year. Add to this the expected growth in the regions middle class,
backed by the emergence of the intrepid traveler from China
the worlds largest source market for tourists. These factors can
only reinforce intra-regional travel, a key force driving growth in
the Asia Pacific hospitality industry that is forecast to grow 4.9%
annually into the next decade.
Airlines are taking advantage of the expected boom in air travel in
the region, which is expected to grow 6.6% annually until 2030.
Air Nippon Airways parent company announced plans in August
to acquire a 49% stake in Asian Wings Airways, a mid-tier airline in
Myanmar. Airports are also spending big to ramp up their
capacities. Incheon International Airport in Korea is already in its
third phase of expansion; Singapores Changi International Airport
will be adding its fourth terminal at a cost of USD1.1 bn by 2018
and build an iconic retail-leisure development to woo travelers.
Airports of capital cities in the region, such as Bangkoks
Suvarnabhumi Airport as well as the Kuala Lumpur International
Airport, are all gunning for capacities of over 100 mn passengers
annually.
Major hotel groups, such as Starwood, Accor, InterContinental
and Mantra, are also hot on expansion plans; Accor will be
expecting to add another 100 hotels in Indonesia while Four
Seasons will make a highly anticipated entry into Korea when its
317-room luxury hotel opens in the heart of Seouls CBD in 2015.
Fasten your seatbelt - there might be some turbulence in the air
for the regions hotel markets. As we enter 2014 with some
cautious optimism, we are confident we will see strong growth in
those markets that have finally opened up to investment!

Hotel Views
2014

HOTEL VIEWS 2014

CUSHMAN & WAKEFIELD

BEIJING, CHINA

Hotel Views
2014

BEIJING, CHINA

Economy1
In the first half of 2013, Beijings economy remained stable.
Although the growth rates of some sectors have declined, the
quality of GDP growth was enhanced with rapidly growing
residential incomes. Beijings total GDP in the first half of the year
attained USD111.2 bn, and the real GDP growth rate was 7.7%
YOY, 0.5 percentage point higher than a year before. The tertiary
sector developed steadily, with corporate profits continuing to
rise. The added value of the tertiary industry totaled USD87.6 bn,
representing an annual growth rate of 7.3% and accounting for
78.8% of the total GDP volume. Of all tertiary-sector activities,
real estate added value had the fastest growth rate at 13.1%,
although sales increased at a slower pace than previously.
Increases in total retail sales of social consumer goods
decelerated and total revenue reached USD63.2 bn, with an
annual increase of 8.8%. Meanwhile, inflation rates remained stable
since their peak in 2011, with CPI increasing to 3.5% in the first
half of the year. As a result of weak external demand, Beijings
export growth rate declined, and total import and export totaled
USD210.8 bn.

Japan (ranked as the top three international source markets),


experienced a significant drop in the first half of 2013. Some
measures have been considered or taken in order to attract more
foreign transit tourists, following a drop in overnight arrivals in
the past six months. In addition to the promotion of its 72-hour
visa-free policy, the city is also considering cooperation with
Beijing Capital International Airport and Air China to promote
the city as a short-stay destination and attract more transit
tourists. In 2012, Beijing International Capital Airport received a
total of 81.9 mn passengers, registering a YOY growth of 4.1%
over the previous year.
BEIJING VISITOR ARRIVALS 20082012

BEIJING GDP 2008 2012

Source: Beijing Statistics Bureau

Source: Beijing Statistics Bureau

Tourism arrivals
Beijing welcomed a total of 231 mn visitors in 2012, representing
a YOY growth of 8.1%. However, the tourism market showed signs
of a slowdown in 2012, with the growth rate dropping by 8.3
percentage points from 2011. Figures from the Beijing Statistics
Bureau (BSB) indicated that the city received 5 mn overseas
visitors in 2012, representing a negative growth of 3.7% as the
international markets remain sluggish. With a dominant share of
98%, domestic visitors were 226 mn in 2012, up by 8.4% on a YOY
basis. Impacted by the continued international economic
downturn as well as the deteriorating air quality at the beginning
of 2013, international visitations to Beijing continued to
experience a downward pressure in the first half of the year.
International visitors were 2.1 mn in the first six months of 2013,
down by 14.3% over the previous year, while domestic visitors
recorded a moderate YOY growth of 7.2% to 107.7 mn during the
same period. In terms of the country of origin, the US, Korea and

Economic data was converted to USD at constant exchange rates

Quick Review Hotel Views 2013:


AOR for five-star segment was 64% in 2011 and was
expected to decrease to 61% in 2012. However, it
remained unchanged in 2012 as per latest published
figure.
ADR for five-star segment was USD125 in 2011 and was
further expected to increase to USD138 in 2012. It was
USD138 in 2012 as per latest published figure.
Air Arrivals represented a YOY growth of 4.1% in 2012
which was lower than 6.4% in 2011.

CUSHMAN & WAKEFIELD

BEIJING, CHINA

Hotel supply
In 2011, the launch of a new star-rating standard by the China
National Tourism Association (CNTA), that sets higher criteria for
star-rated hotels, resulted in a reduction of star-rated hotel
inventory from 729 in 2010 to 612 in 2012. According to the
latest figures from the Beijing Tourism Bureau, the city had 62
five-star, 130 four-star, 207 three-star, 191 two-star and 22
one-star hotels as at the end of 2012. However, it should be
noted that this new policy has had a lesser impact on the
high-end hotel segment. The market continued to see the entry of
new upscale hotels in recent years, especially in traditional prime
locations of the city, such as the CBD, Lufthansa, and Wangfujing.
Notable openings in 2012 included a 289-key Conrad Beijing, a
313-key Four Seasons Hotel, a 369-key East Hotel by Swire and a
220-key Marriott Executive Apartments. Additionally, Waldorf
Astoria, Rosewood, W, a second Four Seasons and Mandarin
Oriental are slated to open in late 2013 and 2014. Our market
research showed that the development of upscale and luxury
hotels will continue to remain active in the next couple of years.
The scarcity of land supply in the city central areas is expected to
increase the competition between developers and operators on
the expansion of their upscale hotel portfolio. In addition, the
governments planning and development on new commercial
zones in suburban areas, such as Tongzhou New City and Dongba
Commerce & Trade Area, will provide new opportunities for the
development of hotel properties in the near future.

Hotel Performance2
Driven by the steady growth of the tourism market, all key
performance metrics for star-rated hotels in Beijing continued to
show a general upward trend in 2012, with occupancy reaching
60.0% and ADR RMB523 (USD83). In the first half of 2013, ADR
grew by 2.6% to RMB534 (USD85) compared to the same period
of 2012. However, overall occupancy fell to 54.9% in the same
period, which may be the result of the governments tightening
financial control measures and leadership change in China. Among
all hotel segments, five-star hotels suffered the most as a result of
the changes in the economic and political environment.
Preliminary figures from BSB indicate that ADR for the five-star
segment was RMB878 (USD140) in the first half of 2013, down by
0.6% compared to the same period last year, while five-star
occupancy level declined YOY by 3.4 percentage points to 58.7%.
It is observed that one of the causes of the stagnant demand
growth might be the eight disciplines called upon by the new
leadership last December, which require local governments to cut
entertainment expenditures, ceremonies, bureaucratic visits and
meetings.

2
KPIs are shown in the local currency first due to recent exchange
rate volatility against the USD. The local currency was converted to
USD at rates indicative for the period and these are shown in brackets.

10

BEIJING HOTEL MARKET PERFORMANCE 20101H2013

Source: Beijing Statistics Bureau /Cushman & Wakefield Hospitality

Outlook
Beijing is set to continue to see positive GDP growth in 2014.
However, the growth rate is expected to be more moderate, due
to the global economic slowdown and the governments cooling
measures. Consequently, international visitation is anticipated to
experience a decline as a result of the economic uncertainty in
western countries. However, the domestic market should maintain
a healthy growth trend, boosted by rising disposal income levels.
Market performance for Beijings hotel market, in particular the
luxury segment, is expected to experience continued downward
pressure in 2014 due to the stagnant demand growth and
austerity measures by the government on hotel dining, banqueting
and meetings. However, we would expect that the citys
aggressive tourism planning in the 12th Five-Year Plan should
provide new potential opportunities for the development of the
tourism market in the coming years. A number of key activities
under this plan include the rapid development of citys
transportation infrastructure network; the strategic promotion of
the citys core areas such as the CBD East Expansion Area and
Financial Street Expansion Area; and the development of several
high-end industrial zones such as Tongzhou High-end Business and
Service Zone, Shougang High-end Industrial Integrated Service
Area, Lize Financial Business District and Huairou Culture and
Technology New District. Finally, the capital will also play host to
some international conventions and exhibitions such as the 9th
International Garden Expo in 2013, World Seed Conference in
2014, and the World Athletics Championships in 2015, to name a
few.

Cushman & Wakefield Forecast 2014

ADR (USD90)
AOR (57%)

Hotel Views
2014

SHANGHAI, CHINA

CUSHMAN & WAKEFIELD

11

SHANGHAI, CHINA

Economy3
Shanghais economy is still facing dual pressure from the complex
external environment and its own development transformation.
Despite such challenges, the citys real GDP grew by 7.7% during
the first half of 2013, exceeding expectations, and 0.1 percentage
point higher than the national growth rate of 7.6%. The tertiary
industry maintained a strong growth (up by 9.6%), accounting for
61.7% of the citys total GDP-added value. Inflation levels remain
modest at 2.3%, down by 1.3 percentage points compared to the
same period last year. Although Shanghai demonstrated steady
growth in general economic development, it still faces challenges
such as instability due to excess liquidity in capital markets and
slowed export growth. Recently, the State Council has approved
the overall plan of Shanghais pilot free-trade zone project. The
RMB will be fully convertible in the zone, enhancing the citys
capability to establish itself as a key regional financial, trading, and
shopping center. The pilot free-trade zone project is expected to
launch on the national stage as it is implemented in other cities in
the future.

2012. Although domestic arrival figures have yet to be released,


we would expect a more moderate growth rate for this segment
of the market considering the strong demand from domestic
travelers for both commercial and leisure purposes. Airport
arrivals at Pudong and Hongqiao airports combined grew at a
CAGR of 11.4% between 2008 and 2012. In 2012, the two
airports aggregately received 78.7 million airport arrivals,
representing a YOY growth of 5.6%.
SHANGHAI VISITOR ARRIVALS 20082012

Shanghai GDP 2008 2012


Source: Shanghai Statistics Bureau

Hotel supply

Source: Shanghai Statistics Bureau

Tourism arrivals
Total visitor arrivals in Shanghai registered a strong growth of
23% per annum between 2008 and 2012, with a sharp increase of
79% to an unprecedented level of 232.8 million in 2010 due to
the hosting of the Shanghai World Expo. International arrivals
declined by 4% and 2% in 2011 and 2012 respectively, since the
substantial growth of 35% in 2010. This can be largely attributed
to the decreased demand in the post-Expo period and the
continued global economic downturn. Nevertheless, the citys
international arrivals still maintained a CAGR of 6% between
2008 and 2012, a reflection of its higher degree of
internationalization compared to other cities in China. The
sluggish international markets continued to be felt in the first half
of 2013. The preliminary figures from the Shanghai Statistics
Bureau (SSB) indicated that the city welcomed approximately 3.6
million international arrivals, a drop of 10.1% compared to the
same period of 2012.Visitors from the traditional top three
overseas source markets (Japan, the US and Korea) reached
410,007, 308,119 and 259,641 respectively in 1H 2013, down by
33%, 7% and 15% respectively, compared to the same period in

12

Impacted by the new stricter star-rating standard launched by the


CNTA in 2011, star-rated hotel inventory in Shanghai shrunk from
297 in 2011 to 278 in 2012. However, it is said that many new
hotels have not sought accreditation and the number of
properties should be significantly higher than reported.
Nonetheless, it is observed that the appetite for upscale hotels
remains strong as demonstrated by the continued growth of
five-star hotel stock, increasing from 44 in 2010 to 55 in 2012, up
by 25% in three years. International brands show no signs of
slowing their expansion in Shanghai. Following the opening of
several internationally branded five-star hotels in 2012 and 1H
2013 (such as Renaissance Shanghai Caohejing, Double Tree by
Hilton, Four Seasons Hotel Shanghai Pudong, Eaton Luxe,
Mandarin Oriental Shanghai, and Jiang An Shangri-La), the market
is expected to continue seeing an influx of branded hotel supply
in the coming two to three years. It is worth noting that the new
additions include a W hotel, two Hyatt Place hotels, one Hyatt
House, a Sheraton Hotel and a Marriott Hotel, amongst others. In
addition, the former 2010 Shanghai World Expo site is scheduled
for redevelopment into a sustainable urban development with
several new hotel properties under planning, which will potentially
include a 600 to 650-room Hyatt property and a 300-room
Conrad by mid-2015. Two boutique hotels, which have not yet
been named, are also expected to open on the site.

Economic data was converted to USD at constant exchange rates

Hotel Views
2014

SHANGHAI, CHINA

SHANGHAI HOTEL MARKET PERFORMANCE 20101H2013

Source: Shanghai Statistics Bureau /Cushman & Wakefield Hospitality

Quick Review Hotel Views 2013:


AOR for five-star segment was 60% in 2011 and dipped
to 59% in 2012, which was in line with Cushman &
Wakefields estimate.
ADR was USD164 in 2011 and was further expected to
decline to USD152 in 2012, according to Cushman &
Wakefields estimate. It dipped to USD151 in 2012 as per
latest published figure.
Air Arrivals represented a YOY growth of 5.6% in 2012,
outpacing the 3.7% growth in 2011.

Hotel Performance4
Driven by the increasing demand generated by hosting the 2010
World Expo, market-wide ADR in Shanghai experienced a YOY
growth of 22% from RMB563 (USD82) in 2009 to the historic
peak level of RMB683 (USD103) in 2010. However, low
international arrivals as well as the oversupplied situation in the
post-Expo period caused ADR to suffer in 2011. SSB figures show
that market-wide ADR for star-rated hotels was RMB628
(USD99) in 2011, down by 8% over 2010. The continued global
economic downturn further hindered the ADR growth in 2012
with the KPI remaining stable at RMB628 (USD99). In 1H 2013,
average rates went up by 1.1% to RMB638 (USD101). The
hosting of the 2010 World Expo boosted Shanghais market-wide
occupancy level to a historic peak of 67.2% in 2010, which was
followed by a 12.0 percentage-point decline in 2011, as a result of
star-rated room supply outpacing the growth of room-night
demand post-Expo. Overall occupancy level recovered to 56.9%,
an increase of 1.7 percentage points in 2011. As the market has
yet to absorb much of the supply, occupancy continues to suffer
(55.8% in 1H 2013), remaining at the same level compared to that
in 2012.

Outlook
Several negative factors, such as the slowdown of Chinas
overheated economy, the insufficient domestic consumption
demand, the continued financial crisis in Europe, as well as the
Chinese leadership change, have had a significant impact on the
tourism and hospitality industries in Shanghai. The market also
currently faces an oversupply of hotel rooms and the rapidly
growing numbers of high-end hotel properties might put further
downward pressure on existing hotel performance (especially
ADR). Nevertheless, it is noted that a number of up-coming
opportunities could favor Shanghais hotel industry, such as the
entry of Disneyland and the redevelopment plan for the former
2010 World Expo site. Shanghai Disneyland is estimated to attract
10 mn visitors per annum and to become a new hot spot for
Shanghais tourism industry while boosting the development of
related industries.

Cushman & Wakefield Forecast 2014

ADR (USD105)
AOR (54%)

4
KPIs are shown in the local currency first due to recent exchange
rate volatility against the USD. The local currency was converted to
USD at rates indicative for the period and these are shown in brackets.

CUSHMAN & WAKEFIELD

13

tokyo, japan

14

Hotel Views
2014

Tokyo, Japan

Economy
The Japanese economy in the first half of 2013 saw stable GDP
growth, up sequentially 1.0% in 1Q13 and 0.9% in 2Q13. This
growth is sustained by stable domestic demand, which includes
robust consumer spending and public investments emergency
economic package as part of the second arrow of Abenomics.
Notably, the corporate sector has been gearing up investment
activities and has switched from defense to offense mode in
response to the bold monetary easing policy called the first
arrow of Abenomics. According to some analysts, the recovery
has proved to be robust, supported by resurges in stock price,
J-REITs and real estate company stock indexes after a decline in
2Q 2013.

TOKYO INTERNATIONAL ARRIVALS 2010-1H 2013

Source: Japan National Tourism Organization

Japan GDP 2008 2012

Source: Roubini Economists, Cabinet Office Govt. Japan

Tourism arrivals
According to the Japan National Tourism Organization, Japan
reported a total of 8.4 mn international arrivals in 2012 with a
YOY growth of 34.6%, showing a steady recovery from the
aftermath of the earthquake in early 2011. Seventy-six per cent
of total arrivals came from Asia Pacific, with South Korea as the
largest source market with 24.4% of the total, followed by Taiwan
and China. 2013 showed strong growth along with the weakening
Yen and the recent improvement in the Japanese economy. 1H
2013 recorded 4.9 mn arrivals, with a YOY growth of 21.0%. In
1H 2013, arrivals from Korea recorded 4.9 mn, with a growth of
39.7% compared to 1H 2012, showing a full recovery from the
significant shortfall caused by the 3/11 earthquake.

Quick Review Hotel Views 2013:


International arrivals strongly grew by 34.6% in 2012
compared to 2011 as per latest estimates.
AOR for selected hotels was 70.5% in 2011; it increased
to 82.6% in 2012 as per latest estimates.
Tokyo has been selected to host 2020 Olympic and
Paralympic Games.

CUSHMAN & WAKEFIELD

15

Tokyo, Japan

Hotel supply

Outlook

According to Japans Ministry of Health, Labor and Welfare, the


Tokyo Metropolitan area had 684 hotels with 96,113 rooms at
the end of March 2012, showing a slight decrease of 0.4% in the
number of properties, yet a slight increase of 0.5% in total room
inventory over the previous year. While the latest statistics have
yet to be published, it is expected that the total supply has slightly
increased, as the market saw a few more new openings after
March 2012, including the Palace Hotel as a part of mixed-use
development in Otemachi and Tokyo Station Hotel. Furthermore,
the city is expected to continue witnessing an influx of new
supply in the near future. Whilst the majority of new supply is
expected to be limited-service hotels, a few luxury and upscale
hotels are planned to make their debut in the Tokyo market. For
example, Hotel Chinzanso Tokyo, formerly the Four Seasons
Hotel Tokyo at Chinzanso, reopened after reflagging in early 2013.
The Prince Sakura Tower Tokyo also reopened after renovation in
2013 as Marriotts first Autograph Collection hotel in Japan.
Furthermore, Aman Tokyo (84 keys) and Andaz Tokyo (164 keys)
are planned to open in 2014.

The hotel market is benefitting from the boosted level of demand


in business and leisure travel, supported by the growth in
consumer spending power as the economy is expected to be
stimulated by the Abenomics policies. The continuing drop in
value of the Yen is likely to continue boosting the growth in
foreign arrivals. As demand recovers, the Tokyo hotel market is
poised to see further improvement in trading performances in
2013, eventually recovering to pre-earthquake levels.
Furthermore, as Tokyo was recently chosen to host the 2020
Olympic and Paralympic Games, the city is likely to reinforce its
established image as a tourist destination in the mid- to longterm, resulting in a positive impact to the overall hotel market.

Hotel Performance
Tokyos hotel market is witnessing a steady recovery in its
performance throughout 2012 and during the first quarter of
2013. According to HOTERES research, hotels in the city enjoyed
an increase in occupancy in 2012. The average occupancy rate of
selected hotels was 82.6%, representing an increase of 12.1
percentage points over 2011. In 1H 2013, the rate was 82.9%,
showing further growth of 1 percentage point over the same
period in 2012. The rebounded occupancy level is likely to lead to
uplifts in ADR.
Tokyo HOTEL MARKET PERFORMANCE 20102012

Source: Japan Ministry of Health, Labour and Welfare

16

Hotel Views
2014

mumbai, india

CUSHMAN & WAKEFIELD

17

Mumbai, India

Economy 5
Mumbai, the economic hub of India, contributes over 20% to
Indias total GDP. The urban agglomeration has a population of
nearly 18.4 mn and as of the FY2012-13, it was estimated to have
a GDP of over INR181,366 crores (USD40.4 6 bn), up by 0.03%
YOY. The city houses the headquarters of major corporate houses
like Reliance Industries, Tata Group, Aditya Birla Group and Essar
Group, to name a few. Indias major financial institutions like
Reserve Bank of India, National Stock Exchange and Bombay
Stock Exchange, as well as Multi-Commodity Exchange of India
are also located in Mumbai. The citys diversified economy covers
an entire gamut ranging from entertainment and media, to
software, hospitality, textiles and manufacturing. Although with the
growth of the city there has been a substantial decline in the
number of industries, micro, small and medium size and
manufacturing units in Mumbai still provide employment to nearly
0.24 mn people.
MUMBAI GDP FY08-09 - FY12-13

MUMBAI AIR ARRIVALS FY07-08 - FY12-13

Source: Airport Authority of India

Hotel supply
As of 2012, the total organized inventory accounted for over
14,000 keys. The inventory is primarily dominated by the luxury
segment with 33%, followed by 26% in the midscale segment, 21%
in the budget segment, 12% in the upper upscale segment and 8%
in the upscale segment. Five new hotels opened for business in
2012, adding a total of 1,193 keys to the existing room supply,
namely Sofitel Mumbai in BKC with 300 keys, Shangri-La (to be
rebranded) in Lower Parel with 390 keys, Ginger in Andheri with
116 keys, Country Inns and Suites with 94 keys, and Ibis and Royal
Tulip in Navi Mumbai with 196 and 97 keys, respectively. 2013 has
seen the introduction of only Residency Sarovar Portico in Malad
with a total of 71 keys.

Source: Economic Survey of Maharashtra


Note: Unit: INR Crores;Values include Mumbai City and Suburban and dont
reflect Greater Mumbai

Tourism arrivals 7
In FY2012-13, the total number of air arrivals surpassed 30 mn, of
which 67% were domestic and 33% were international. Currently,
Mumbai has only one airport with two terminal buildings, known
as the Chhatrapati Shivaji International Airport, which during
FY2012-13 handled an average of 82,760 passengers daily. The key
source markets in terms of total arrivals are the UK with 26%, the
US with 23.7% and Canada with 6.7%. The good news is that the
city is planning to add a new terminal to the existing airport and a
new airport in Navi Mumbai. Chhatrapati Shivaji is expected to
get a new terminal by the end of the year, referred to as T2. The
capacity for the improved airport is approximately 40 mn
passengers annually, spread over an area of 439,000 square meters
(sqm). The new airport is to be called the Navi Mumbai
International Airport and it aims to reduce the heavy congestion
at Chattrapati. The new airport is to be ready by 2014. However,
even though construction has not yet started, the recent approval
by the Union Ministry of Environment and Forests marks a major
milestone for the project.

18

Quick Review Hotel Views 2013:


The AOR across all the hotels in the city reached 64% in
2012 as compared to 61% of our estimates.
ADR decreased to USD152 in 2012 from USD187 in 2011.
In FY2012-13, the citys tourism witnessed a slight
decrease of 1.8% YOY in overall visitor arrivals.

Hotel Views
2014

Mumbai, India

Hotel Performance 8

Outlook

In 2012, the estimated occupancy for the market was 64%, an


increase of 3 percentage points YOY. Similarly, ADRs were
recorded to be INR8,100 (USD152), having decreased by 7.3% in
INR and 19.1% on the dollar YOY. A total of 1,193 keys across
various segments were added to the hotel supply in 2012. The
majority of the demand is driven by the business and transient
segment, with an almost 70% share of total demand. In 1H 2013,
Mumbais occupancy is estimated to have increased by 2
percentage points to 65% over 1H 2012. With respect to ADR,
the city hotels suffered a 23.6% decline YOY in its INR value
(-25.9% in USD), plummeting from INR10,100 (USD189) in 1H
2012 to INR7,714 (USD140) in 1H 2013.

The year 2013 is set to see some major infrastructure facilities


transform Mumbai. In particular, the new airport terminal is
expected to start operations in October and should be able to
handle up to 40 mn passengers annually. Further improvements
include the proposed Mumbai Metro, which is expected to be
operational beginning with Line 1 (Versova-Andheri-Ghatkopar
Corridor) by October 2013. Hotel supply increased in 2013 and
is set to continue to grow in 2014. Next year, we would expect
to see major additions to the citys hotel inventory, such as JW
Marriott Sahar Airport with 525 keys, Conrad Hilton in Juhu with
275 keys, Radisson Blu in Powai with 335 keys, IBIS in CST
Mumbai with 196 keys, and Lemon Tree with 298 keys. With
further increases in supply, ADR and AOR are likely see a drop in
the short-term.

MUMBAI HOTEL MARKET PERFORMANCE 2008-2012

Cushman & Wakefield Forecast 2014

ADR (USD146)
AOR (61%)

Source: Cushman & Wakefield Hospitality

5
All financial figures are sourced from the economic survey of
Maharashtra with respect to the Financial Year Calendar (April to
March)

Values include Mumbai City and Suburban and do not reflect Greater
Mumbai. Economic data was converted to USD at constant exchange
rates
6

7
All air travel data provided is by the Airport Authority of India and
with respect to the Financial Year (April to March)
8
KPIs are shown in the local currency first due to recent exchange
rate volatility against the USD. The local currency was converted to
USD at rates indicative for the period and these are shown in brackets.

CUSHMAN & WAKEFIELD

19

ncr, india

20

Hotel Views
2014

NCR, INDIA

Economy 9
The National Capital Region (NCR) in India comprises urban
areas of the National Capital Territory (Delhi), Gurgaon,
Ghaziabad, Noida, Greater Noida, Faridabad and Manesar and has
a total population of 16.3 mn. Delhis per capita income in
FY2012-13 registered a growth of 6.9% YOY and was significantly
higher than the national average of INR39,168. In FY2012-13,
Delhis GDP registered a growth of 9% annually and contributed
4.0% to the countrys GDP. The regions tertiary sector,
comprising trade, hotels, restaurants, transportation,
communication, business and financial services, real estate,
storage, administration and other services, contributed 85.8% to
Delhis GDP in FY2012-13 compared to 80.5% in FY05. Due to
the continuous increase in the urbanization of the NCR,
contribution from the primary and secondary sectors (i.e.
agriculture and manufacturing) is steadily declining and currently
stands at 0.6% and 13.6% respectively. The trade, hotels and
restaurants sub-sector is the second largest contributor to the
NCRs economy after financial, insurance, real estate and business
services, and contributes to one-fifth of the total State GSDP. This
sector grew at 8.6% during FY13 over the previous year.

foreign tourists over 2011 levels. January is normally the peak


month for visitors to Delhi; the period October to March
achieves moderate peaks, while July to September is the low
season.
NCR AIR ARRIVALS FY07-08 - FY12-13

Source: Airport Authority of India

NCR GDP FY08-09 - FY12-13

Quick Review Hotel Views 2013:


Source: Directorate of Economics and Statistics, Delhi

Tourism arrivals 10
Air arrivals decreased in FY2012-13 for the second time after a
slump in FY2008-09 in the past five years. The Indira Gandhi
International Airport welcomed total of 34.4 mn visitors, a
decrease of 4.2% in FY2012-13 over FY2011-12. In FY2012-13,
domestic arrivals declined by 9% to 22.8 mn, while foreign arrivals
increased by 8% to 11.6 mn. The ratio of domestic to foreign
arrivals was 66:34 in FY2012-13, against that of 70:30 in FY201112. Delhi alone accounted for 11.3% of the total foreign tourist
arrivals to the country with 2.3 mn. The top three source markets
for foreign tourist arrivals to Delhi are the US, the UK and
Canada with a respective 11%, 8% and 4% of total arrivals at its
airport in 2011. Information retrieved from the Ministry of
Tourism suggests that the total number of tourism arrivals in the
capital state in 2012 was 20.8 mn, with a domestic to foreign ratio
of 89:11. The growth rate was 19.9% for domestic and 8.6% for

AOR was 64% in 2011 and was expected to increase to


65% in 2012. However, it fell to 62% in 2012 as per latest
estimates.
ADR was expected to increase to USD160 in 2012.
However, it declined to USD147 in 2012 as per latest
estimates.
Tourism Arrivals declined by 4.2% in FY2012-13 over the
previous year; however, it increased by 20% in FY2011-12,
over FY2010-11.

9
All economic data is provided by the Directorate of Statistics and
Economics of Delhi and is in relation to the Financial Year (April to
March). Economic data was converted to USD at constant exchange
rates
10
All air arrival data is provided by Airport Authority of India with
respect to the Financial Year (April to March)

CUSHMAN & WAKEFIELD

21

NCR, INDIA

Hotel supply
NCR currently has over 23,500 units in the organized and
unorganized segments, combined. Seventy-five percent of total
units are in the organized sector. Micro-market wise, NCR has
65% of its total organized inventory in Delhi, 21% in Gurgaon, 5%
in Noida and Greater Noida, 3% each in Manesar and Ghaziabad,
and 2% in Faridabad. In 2012, the total inventory went up by 9%,
that is, approximately 1,500 units entered the market last year.
Prominent new entrants were Park Plaza by Sarovar Hotels and
Kempinski Hotel in Delhi, Pullman Hotel and Double Tree by
Hilton in Gurgaon, Radisson Hotel in Ghaziabad and Savoy Suites
in Manesar. Of the total NCR hotel inventory, the luxury segment
contributes the highest share of about 34% of the total inventory,
followed by midscale with 30%, upscale with 16% and upper
upscale with 12%. The budget segment has the least contribution,
amounting to only 8% of the total inventory. NCR has a robust
pipeline of upcoming hotels with approximately 18,000 keys
expected to enter the market over the next five years. The
majority of this new supply is expected to be in Delhi (34%), given
the development of the Hospitality District near the international
airport. The opening of a number of new hotels in this area has
been delayed by a few months because of safety and security
concerns raised by the Airport Authority of India (AAI). Noida
has a share of about 25%, Gurgaon with 21%, Greater Noida 13%,
Manesar 4%, and Faridabad 3% of the total upcoming supply in the
NCR.

Hotel Performance 11
The hotel performances in NCR have been declining over the
past three years, with the exception of 2010 that showed a minor
improvement over 2009 figures. The urban agglomeration of NCR
has various micro-markets, namely Delhi, Noida, Gurgaon,
Faridabad and a few other cities that perform differently. Overall
in the NCR in 2012, AOR dropped to 62.0% from 64.2% in the
previous year and ADR to INR7,835 (USD147), down by 7% in its
INR value over 2011 (-18.8% on the dollar value). As a result
RevPAR declined to INR4,858 (USD91), marking a decrease of
10.2% on the rupee in 2012 over 2011. The decrease in the key
performance metrics is mainly a result of slower economic
growth and significant additions to supply. Among the micromarkets, Delhi achieved the highest ADR of USD149, while Noida
recorded an AOR of about 64% in 2012. This negative trend
seems set to continue, as preliminary figures for 1H 2013 show a
sluggish performance with ADR estimated to be USD132 against
USD156 in 1H 2012, and AOR plummeting to 54% from 66%
during the same period last year.

NCR HOTEL MARKET PERFORMANCE 2008 - 2012

Source: Cushman & Wakefield Hospitality

Outlook
Historically, NCR has been a lucrative market for most hospitality
players, which can be ascertained by the quantum of inventory
existing and upcoming. The Hospitality District at DIAL 12 will
have an influx of fresh inventory in NCR in the second half of
2013, after obtaining clearance from the AAI. A total of over
4,200 keys are expected to open in the next five years in the
Hospitality District alone. Delhi, the capital city of India, has
outgrown its boundary as an agglomeration to its suburbs to
accommodate its increasing population and livelihood. However,
the demand of hospitality accommodation remains strong in the
prime areas in the city. As the availability of land continues to be a
constraint in these areas, this has triggered hotel development in
micro-markets like Noida, Gurgaon and Faridabad. ADR and AOR
might experience further decreases in 2013, given the economic
instability in the light of the impending General Elections due in
2014, coupled with the strong pipeline of new hotel inventory
entering the market. The stiff competition, together with lower
AOR, is likely to put downward pressure on ADR this year. With
such a scenario, budget and midscale segment hotels are likely to
perform better than the upper upscale and luxury hotels, given
their flexibility to play in a lower price segment.

Cushman & Wakefield Forecast 2014

ADR (USD146)
AOR (61%)

11
KPIs are shown in the local currency first due to recent exchange
rate volatility against the USD. The local currency was converted to
USD at rates indicative for the period and these are shown in brackets.
12

22

Delhi International Airport Limited

Hotel Views
2014

Jakarta, indonesia

CUSHMAN & WAKEFIELD

23

Jakarta, indonesia

Economy
GDP growth is projected to have reached 6.0-6.2% during 2Q
2013. For the full year, growth is forecast to be within the range
of 6.3-6.8%. The stock market index decreased 6.4% during the
second three months of the year, with the composite index
closing at 4,515 on June 21. On the currency side, the Rupiah
depreciated by 2.3% over the quarter to Rp.9,936 per USD1.00.
Meanwhile, the Bank of Indonesia (BI) took action to increase the
BI Rate to 6.0%, after maintaining the rate at 5.75% for the
previous five consecutive quarters. Inflation over the first five
months of 2013 reached 2.3%, higher than the 1.2% recorded in
the same period last year. This higher inflation was mainly
attributed to rising food prices.
INDONESIA GDP 2008 2012

Source: Indonesia Central Statistics Bureau

Tourism arrivals
The city experienced continuous growth in the number of visitors
over the past five years. According to the Jakarta City
Government Tourism and Culture Office, the city welcomed a
total of 28.8 mn air arrivals in 2012. Domestic and international
air arrivals reached over 22.9 mn and 5.9 mn respectively, showing
that the majority of arrivals were generated within the nation. In
growth terms, domestic air arrivals in 2012 grew by 15.3%
compared to 2011, whilst international air arrivals grew at a rate
of 8.4%. As a capital city, Jakarta continued to see growing
demand for MICE along with increased business activities, both
domestically and internationally, and the governments promotion
to encourage the business, which significantly contributed to the
increase of demand for the citys hotel market.

JAKARTA AIR ARRIVALS 2008 2012

Source: Jakarta City Government Tourism and Culture Office

Hotel supply
In 2012, the total room inventory was 26,113, with a growth of
8.4% compared to 2011. As the demand is expected to grow
along with infrastructure (including new air routes), a number of
global hotel operators continue to expand in the nation. An
example is Accor Group that added more than a half dozen new
openings from 2H 2012 to its current portfolio of approximately
11,000 rooms. Local hotel companies also intensified their growth
efforts, such as Santika Hotels & Resorts, one of the major leading
local hotel companies. The group came up with an aggressive
expansion plan to increase its portfolio from its current 57 hotels
to 100 hotels by 2016. Along with other expansion activities of
major hotel operators, it is expected that a further 5,900 rooms
will be added to the existing room inventory by the end of 2015.

Quick Review Hotel Views 2013:


AOR was 71.7% in 2011; it increased to 72.7% in 2012 in
conformity with our estimate of 73%.
ADR was USD76 in 2011, growing further to USD83 in
2012 as per latest estimates, just USD1 higher than our
forecast.
The city will host the APEC Summit in October 2013,
which is likely to boost MICE demand in late 2013.

24

Hotel Views
2014

Jakarta, indonesia

Hotel Performance

Outlook

According to STR Global and Cushman & Wakefield research, the


Jakarta hotel market showed continuous improvement in
performance over the past years. Occupancy increased from
71.7% in 2011 to 72.7% in 2012. ADR also showed growth of 8.4%
from USD76 to USD83. With increases in both occupancy and
ADR, RevPAR increased by 9.8% from USD55 to USD60. In 1H
2013, while occupancy stayed stable at 72.7%, ADR further grew
to USD88 with an increase of 6% compared to the average ADR
for the entire 2012, indicating that the market stays resilient.

Concerns remain as the nations economy has experienced a


slowdown and uncertainty along with higher inflation and
weakening currency. However, the Jakarta hotel market is likely
to remain resilient in the short-term as the demand is expected
to grow steadily, boosted by upcoming major international events
including the APEC Summit. Furthermore, the government
strongly aims to attract multinational companies and to improve
the infrastructure to accommodate more MICE demand by
developing new convention centers in the capital city, which
would benefit the citys overall hotel market in the medium and
long-term. The lack of new supply in 2013 could also potentially
result in better performances this year. However, potential
downward pressure in KPIs might be caused by increases in new
supply for the coming years, which would impact the overall
market performance in terms of RevPAR and profit level.

JAKARTA HOTEL MARKET PERFORMANCE 2010 1H 2013

Cushman & Wakefield Forecast 2014

ADR (USD90)
AOR (73%)
Source: STR Global, Cushman & Wakefield

CUSHMAN & WAKEFIELD

25

hong kong, sar

26

Hotel Views
2014

HONG KONG, SAR

Economy
The upswing in the local economy in late 2012 carried over into
the first quarter of 2013, whereas GDP growth registered 2.8%
over the same period a year earlier. Second quarter indicators
released thus far point to a similar momentum, but the slowdown
in China and weaker-than-expected recovery of the US economy
serve as reminders that globally, the recovery remains fragile. The
local economy is forecast to expand by 3.3% this year, but its
growth could fall short of this target if the major economies
continue to stall and exports decline. Nonetheless, private
consumption in China will still provide the boost to the economy
and support growth through the remainder of the year, even as
the slowdown continues. Private consumption grew by 7.0% in
the first quarter, after a growth of 2.8% in 4Q 2012. Strong
consumption and tourism growth is supporting much more
sustainable retail sales in 2013. Through the first half of 2013,
retail sales increased by 14.4% YOY. Through June 2013, the
number of total and Mainland China tourist arrivals increased by
13.6% and 20.7% YOY respectively. Tourism will remain a pillar of
the local economy and continue to support growth in the retail
and hotel sectors.

ranked as the top three markets in terms of the number of visitor


arrivals, which stood at 1,003,792, 514,833 and 504,479,
respectively in 1H 2013.Visitors from Japan dropped by 22.3% on
a YOY basis, which can be largely attributed to a territorial dispute
over the Diaoyu Islands between China and Japan.Visitor arrivals
from long-haul markets witnessed different degrees of decline in
1H 2013.Visitor arrivals from the US, which is also one of the top
five source markets, reached 555,310 during 1H 2013, contracting
by 7.4% from the level recorded in the same period in 2012. Total
air arrivals into Hong Kong were 11.6 mn in 2012, up by 4.8%
showcasing a more moderate growth compared to the 8.2%
growth in 2011 over 2010 and 18.1% in 2010 over 2009.
HONG KONG AIR ARRIVALS 2008 2012

HONG KONG GDP 2008 2012

Source: Hong Kong Tourism Board

Source: Census and Statistics Department, Hong Kong

Tourism arrivals
Hong Kongs tourism industry has been closely tied up with
Mainland China. Hong Kong has been the top outbound tourism
destination for mainland residents. China and Hong Kong have
become the worlds largest two-way tourism markets in the 15
years since the territorys return to the mainland. Mainland China
has opened the individual visit scheme to Hong Kong for
residents of 49 Chinese cities, whilst Hong Kongs total tourism
investment in Mainland China reached USD17.1 bn with the
establishment of 2,904 tourism enterprises. The aggregated
numbers of visitors for this two-way tourism market reached 108
mn. Driven by the continued strong growth of Chinese market,
Hong Kong received more than 25.4 mn visitors in the first six
month of 2013, registering a YOY growth of 13.6% from the same
period of 2012.Visitors from Mainland China reached 18.8 mn
during the same period, reflecting a 20.7% YOY growth from the
previous year, accounting for 74.2% of the total visitor arrivals.
Among the short haul markets, Taiwan, South Korea and Japan

Quick Review Hotel Views 2013:


AOR for High Tariff A hotels was 85% in 2011 and was
expected to slightly decrease to 82% in 2012, according
to Cushman & Wakefields estimate. It remained stable at
85% in 2012 as per latest published figure.
ADR for High Tariff A hotels was USD287 in 2011 and
was expected to further increase to USD320 in 2012,
according to Cushman & Wakefields estimate. It was
USD317 in 2012 as per latest published figure.
Air Arrivals represented a YOY growth of 4.8% in 2012.
However, it had increased by 8.2% in 2011, compared to
the level in 2010.

CUSHMAN & WAKEFIELD

27

HONG KONG, SAR

Hotel supply
As at the end of June 2013, Hong Kong features 217 hotel
accommodations, providing a total of 68,677 hotel rooms. Among
that, the number of High Tariff A, High Tariff B and Medium Tariff
hotels were 29, 63 and 49, offering 14,837, 22,698 and 11,745
rooms, respectively. Although the number of hotels and the
number of rooms maintained CAGRs of 9.1% and 5.3%
respectively over the past five years, such high growth has been
offset by strong growth in room-night demand, which is
considered the main reason behind the buoyant occupancy level
recorded in this market. The strong demand potential as well as
the outstanding performance achieved by existing hotels further
boosts the confidence and interest of hotel owners and
developers in the development of hotel projects. The market is
expected to see an influx of hotel supply in the coming five years,
with the largest on record in 2013 and further strong growth in
2014. The number of hotels and the number of rooms are
expected to increase from an estimated 233 and 71,219 in 2013,
to 277 and 78,025 in 2017, forecasting to maintain CAGRs of
4.4% and 2.3%, respectively in the period of 2013-17. It is
observed that traditional internationally branded hotel operators
are continuing the expansion of their brand portfolio. Examples
are openings of Courtyard by Marriott Hong Kong Sha Tin and
Hotel Indigo Hong Kong Island in 1Q 2013, and the proposed
opening of Penta Kowloon in 2H 2013, Novotel Nathan Road
Kowloon Hong Kong Extension Project in 1Q 2015, Rosewood
Hotel and Shangri-la Hotel in 2016 and 2017 respectively.
Additionally, domestic brands, such as Butterfly, Ovolo, Brighton
and Dorsett, remain active with a number of hotels under
construction and planning.

Hotel Performance
As the third largest financial center in the world following New
York and London, Hong Kong is also a hub for conference and
events, and a strategic business gateway connecting China and the
rest of world. Hong Kongs hotel market has largely benefited
from a continuous annual demand growth generated by the
buoyant business and MICE activities, as well as increasing
numbers of visitor arrivals, which help the citys hotels to achieve
the highest performance levels in recent years. After a successful
2012, figures from HKTB showed that in the first six months of
2013, ADR for all hotels in Hong Kong was HK$1,423 (USD184),
a slight decline of 1.6% compared to the same period of 2012,
whilst occupancy stood at 87%, remaining stable when compared
to the corresponding period of 2012. Market-wide RevPAR was
HK$1,238 (USD160), down by 1.6% over the same period last
year. In terms of performance by market segment, High Tariff A
market-wide occupancy remained flat at 84%, grew moderately by
2 percentage points YOY, while ADR dropped by 2.3% YOY to
HK$2,368 (USD305) in YTD June 2013. As a result, RevPAR of the
luxury hotel market remained stable at HK$1,989 (USD257), up
by 0.1% YOY.

28

HK HOTEL MARKET PERFORMANCE 2010 1H 2013

Source: Hong Kong Tourism Board/ Cushman & Wakefield Hospitality

Outlook
Since the global economy has not yet showed clear signs of
recovery in 2013, we would expect Hong Kongs tourism market
to continue to be negatively impacted by the shrinking demand as
a result of the global economic recession.Visitor arrivals from
major international source markets might lack growth momentum
to reverse the downward trend or might grow at a moderate rate
in the short-term. However, total visitor arrivals to the city are
expected to rise, largely driven by the increasing demand from
Mainland China as well as the robust growth of the MICE market.
Hong Kongs tourism market will further benefit from the tourism
promotion and cooperation between Hong Kong and Mainland
China, as well as the citys infrastructure construction. According
to HKTB estimates, Hong Kong is estimated to receive 51.9 mn
of visitor arrivals in 2013, representing a YOY growth of 6.8%.
Among that, visitors from Mainland China are expected to grow
by 8.9% on a YOY basis to reach 38.0 mn in the year. In addition,
the development of infrastructure facilities such as the Kai Tak
Cruise Terminal in mid-2013 is expected to further enhance the
tourism appeal of Hong Kong and bring a new growth point for
the tourism industry of Hong Kong. The market supply growth
will likely exert some downward pressures on the hotel market
performance. However, occupancy is still expected to remain high,
supported by the strong demand growth. ADR, albeit in a steady
growth trend, might grow at a more moderate pace, considering
the shrinking corporate travel budget.

Cushman & Wakefield Forecast 2014

ADR (USD185)
AOR (87%)

Hotel Views
2014

singapore

CUSHMAN & WAKEFIELD

29

SINGAPORE

Economy

SINGAPORE INTERNATIONAl ARRIVALS 2007 2012

The Singapore economy expanded by 1.3% on a YOY basis in


2012, culpably less than the 5.2% in 2011, as weak external
demand weighed on growth. While the weakness was still evident
in 2013, the economy expanded by 2% in the first six months of
2013 as economic growth quickened in the second quarter of
2013, supported largely by a broad-based pick-up in the services
sector. The official forecast for GDP growth in the city-state has
been revised to between 2.5% and 3.5%, up from 1.0% and 3.0%,
for the full year. Despite its large dependency on foreign trade,
evidence demonstrates that Singapore is still in good shape. The
developed South-east Asian nation remains a favored destination
among corporate and leisure travelers.
Source: Singapore Tourism Board

SINGAPORE GDP 2008 2012

Source: Ministry of Trade and Industry

Tourism arrivals
According to the Singapore Tourism Board (STB), the preliminary
estimated data for total international arrivals to Singapore in 2012
reached 14.4 mn arrivals, up 9.3% from 13.2 mn in 2011. The
majority of foreign arrivals were from the Asia Pacific region, with
Indonesia as the largest source market, followed by China and
Malaysia. 1H 2013 again showed strong growth in international
arrivals, recording 7.6 mn with growth of 7.5% compared to 1H
2012. According to the International Congress and Convention
Association (ICCA), Singapore was picked as Asias Top
Convention City for 11 years running and hosted a record of 150
ICCA events in 2012, the highest so far. The nations strong
positioning as Asias top convention city contributed to growth in
demand by attracting more MICE demand. In addition, the
improvements in tourism attractions and infrastructure such as
Gardens by the Bay, the River Safari and Marine Life Park, and
Singapore Sports Hub boosted demand growth by enhancing its
destination image and attracting more travelers. Furthermore,
Singapore Changi Airport recently released its expansion plan to
build a fifth terminal by mid 2020, which will significantly
contribute to increases in tourism arrivals by adding up to 50
million passengers per year to the current capacity of around 66
million passengers per year.

30

Quick Review Hotel Views 2013:


AOR was 86.5% in 2011; it slightly decreased to 86.0% in
2012 as per latest estimates. Our estimates were close at
88%.
ADR was USD195 in 2011, growing further to USD206
in 2012 as per latest estimates. Again, we estimated
USD207, very close to the mark.
The nation was picked as the top convention city in Asia
in 2012, as stated last year.

Hotel Views
2014

SINGAPORE

Hotel supply
The recent surge in new hotel openings in Singapore continued in
2012, though at a much slower pace. Total room-nights available
for 2012 were 12.4 mn, an increase by a mere 1.1% compared to
2011 levels at 12.2 mn. In 2012, a few major international brands
made their debut in Singapore including W Singapore Sentosa
Cove and Park Royal on Pickering. The market expects a sizeable
new supply in 2013, as more than 4,000 rooms are planned to
open by the end of the year. Supply in the pipeline include the
Dorsett Regency (in China Town with 285 keys) opening in 3Q13,
the Westin Singapore Marina Bay (in Asia Square Tower II with 305
rooms) that should be operational before year-end, followed by
Sofitel So Singapore (in the former Ogilvy Centre with 134 keys)
in 1Q14, Holiday Inn Express in 2Q14 (with 442 keys) and Patina
Hotel in 1Q15 (with 157 keys), to name a few.

Hotel Performance
According to STB, the recently updated preliminary data showed
that the estimated hotel room revenue for 2012 almost reached
S$2.8 bn (USD 2.2 bn), resulting in a further 8% growth compared
to 2011. The average occupancy throughout 2012 was 86.0%. That
is a decrease of 0.5 percentage point compared to 2011s
occupancy. With stable occupancy, ADR increased from S$245
(USD195) to S$257 (USD206), reflecting a 4.9% growth from
2011. RevPAR reached a record high of S$221 (USD177), up by
4.3% from 2011. Among Singapores four hotel tiers, luxury hotels
enjoyed the largest growth in RevPAR by 7.3%, recording a new
high at S$344 (USD275). The RevPAR of upscale hotels rose by
6.2% to S$259 (USD207), while mid-tier hotels and economy
hotels recorded RevPAR growth by 4.5% to S$171 (USD137) and
1.6% to S$94 (USD75) respectively. For 1H 2013, the estimated
market-wide average occupancy stayed stable at 86%, dipping by a
mere 0.2 percentage point compared to 1H 2012. However, ADR
for 1H 2013 reached S$255 (USD205), up 2.3% from S$249
(USD199) over the same period last year.

SINGAPORE HOTEL MARKET PERFORMANCE 2010 2012

Source: Singapore Tourism Board / Cushman & Wakefield Research

Outlook
While the concerns on any potential impact on demand due to
uncertain global economic climate remain, the market is still
expected to have healthy demand growth, together with an
increased variety of demand generators, supported by the
governments investment in tourism infrastructure and attractions.
Yet, given the sizeable new supply in the medium-term, there also
exist some concerns of slowed growth in hotel performances.

Cushman & Wakefield Forecast 2014

ADR (USD202)
AOR (86%)

CUSHMAN & WAKEFIELD

31

colombo, sri lanka

32

Hotel Views
2014

COLOMBO, SRI LANKA

Economy
Sri Lanka is steadily moving up the middle-income country
rankings, on the back of sustained domestic consumption,
investments and growth in the services sector. After a steady
growth of 8% in 2010 and again in 2011, the economy slowed
down to a more moderate growth rate of 6.4% in 2012 amidst
global headwinds, fiscal consolidation and moderation in external
demand. The growth in 2013 is expected to reach 6.8% and is
likely to accelerate further to 7.2% in 2014, largely supported by
an improving industrial output, monetary easing and a stable
growth in services. The government has prioritized the
improvement of transportation infrastructure over the next two
to three years and the developments are already in progress. A
modernized international airport at Colombo, an expressway
between Colombo and Kandy, a brand new terminal at Colombo
port and developments at Hambantota are underway. The tourism
industry has already crossed USD1 bn revenue target by 2012 and
is all geared up to reach USD3 bn by 2016. Tourist arrivals have
significantly increased at an average of 25% over the last three to
four years and are likely to exceed 1.1 mn this year, the highest
ever recorded. Domestic tourism is also growing at a brisk pace
of 30% per annum, and the overall outlook for the tourism
industry remains exuberant for the short to medium-term.

India was a primary contributor among the top ten source


markets with 20.3% in 2011. The UK was the second highest
contributor with approximately 12.4%, and Germany the top third
source market with 6.5% of the total arrivals. Bandaranaike
International Airport (BIA) at Katunayake has been providing
access to 99.8% tourist traffic into Colombo and Sri Lanka, while
the remaining 0.2% gains entry through Colombo Harbour. These
figures are set to change, as another international airport at
Hambantota opened in March 2013, which is far from Colombo
but may affect the statistics of Mode of Entry to the country.
SRI LANKA INTERNATIONAL AIR ARRIVALS 2008 2012

Source: Sri Lanka Tourism Development Authority, Cushman & Wakefield Research

SRI LANKA GDP 2008 2012

Source: Cushman & Wakefield Research, CEIC, World Bank, ADB

Tourism arrivals
Sri Lanka received 1.0 mn foreign tourists in 2012, an increase of
17% from 31% in 2011, successfully achieving its set target of 1
mn arrivals for 2012. Total tourist arrivals increased by 15% in
2011, to about 2.4 mn. The government is now focusing on
meeting the target for 2016 set at 2.5 mn tourists. 1H 2013
witnessed arrivals of over 0.5 mn tourists against 0.45 mn in 1H
2012, with a growth rate of 13% over the same period last year.
The highest increase was recorded in the month of May, when
arrivals jumped up by 21.8% over the same month in 2012.
November, December and July have been the peak months for
tourist arrivals in Sri Lanka in the last three years. December
2012 recorded the highest number of arrivals in the three-month
period, and also saw a 15% increase over December 2011. In
terms of source markets, the latest figures available refer to 2011.

Quick Review Hotel Views 2013:


AOR was 85% in 2011; it declined to 76% in 2012 as per
latest estimates.
ADR was USD110 in 2011, growing further to USD122 in
2012 as per latest estimates.
The second international airport in Sri Lanka at
Hambantota has opened in March 2013, as stated last
year.

CUSHMAN & WAKEFIELD

33

COLOMBO, SRI LANKA

Hotel supply

Outlook

As per the data retrieved from Sri Lanka Tourism Development


Authority (SLTDA), the total number of graded establishments in
Colombo in 2012 was 3,054 keys, a decline from the 3,086
recorded in 2011. Subsequently, there has been a further marginal
decrease in the number of keys as a few of the hotels are under
renovation. However, as per Cushman & Wakefield Hospitality
research, Colombo City had about 3,800 keys in the classified
hotels, spread across 40 hotels in 2012. Of these, 40% of the
rooms belong to the luxury category, while about 22% belong to
the upper upscale, followed by 20% in the midscale, 10% in the
upscale and the remaining 8% in the economy category. Colombo
has a strong pipeline of over 6,300 upcoming keys in various
stages from planning to under construction. Out of these, 50%
belong to the luxury segment, 23% to midscale, 20% to upper
upscale and the rest to upscale. Out of the upcoming supply, 27%
is likely to begin operations by 2014, 7% by 2015, 46% by 2016
and 20% by 2017. Of the total upcoming supply, 66% is confirmed
while 34% is in planning stage. Some of the branded hotels in the
pipeline are Sheraton, OZO by Onyx, ITC, Hyatt Regency, Four
Points by Sheraton, Jetwing and John Keells, Shangri-La, Mvenpick
and NEXT Hotel, to name a few.

Sri Lanka has plans to open a mega casino in Colombo by 2016,


which is likely to attract affluent tourists from its key source
markets, such as China and India, in an effort to diversify its
tourism avenues, in order to be more competitive with
destinations like Singapore, Bangkok and Kuala Lumpur. According
to the governments Development Policy Framework, the focus of
the tourism planning will be on Green Tourism, Domestic Tourism
and Upscale13 Tourism. The country also recognizes the important
of the MICE segment, but its capital city lacks the appropriate
facilities to host large events. Thus, plans are underway to build
quality convention centers around Colombo, while the upcoming
new hotels are also developing considerable meeting space.
Another segment sought after by the country is Religious Tourism,
more specifically, Buddhist Tourism. As such, the country has
drawn up a number of plans to stimulate this market, for example,
the organization of Buddhist festivals (e.g. Wesak Festival, Buddhist
Film Festival and other events), as well as the collaboration with
Myanmar to promote historic shrines and worship places.
Moreover, Sri Lanka is also planning to expand its air connectivity
to other Buddhist Circuits in neighboring South Asian countries.
With the opening of the new international airport at Hambantota,
tourist influx through the existing airport at Katunayake is likely
to witness a drop. Also, the PPP project for the redevelopment of
Colombo South Harbour Project is underway to uplift the
facilities of the existing port and to strengthen the growing
demand for port services. The first phase is likely to cost USD780
mn and is expected to complete by 4Q13. The government is
sanctioning grants for infrastructure improvement and to support
new hotel development in the country to achieve its target of 2.5
mn visitor arrivals by 2016. ADRs are likely to consolidate in the
short to medium-term, given the governments intervention.

Hotel Performance
The market-wide occupancy in the graded establishments was
75.8% in 2012, a decrease of 8.8 percentage points over 2011. As
AOR dropped, hotels in Colombo enjoyed higher ADRs, which
went up by 11.0% from USD110 in 2011 to USD122 in 2012.
ADR decreased by 16.1% in 2011 from USD131 in 2010. As
tourist arrivals are on the rise, it would appear that Colombos
hoteliers are trying to optimize occupancy and ADRs to increase
profit levels. An obstacle could come from the minimum room
charge limit posed by the government after the end of the civil
war, with the aim of helping the tourism sector recover. Tourism
accounts for one of the top six foreign exchange earners to the
country and is growing in importance.
COLOMBO HOTEL MARKET PERFORMANCE 2010 2012

Cushman & Wakefield Forecast 2014

ADR (USD125)
AOR (76%)

Source- SLTDA and Cushman & Wakefield Hospitality

34

13
Upscale tourism is to target high spending tourists as it is expected
that the average spending per tourist per day to increase to over
USD200 in next ten years

Hotel Views
2014

SEOUL, SOUTH KOREA

CUSHMAN & WAKEFIELD

35

SEOUL, SOUTH KOREA

Economy
Koreas growth forecast by the central bank was lowered to 2.6%
from 2.8% due to prolonged uncertainty over the global economy.
Koreas central bank froze the key interest rate at 2.5%, a move
aimed at supporting the governments drive for the economic
stimulus. The South Korean economy grew slower than what was
earlier forecast, as consumer spending remained subdued and
export growth slowed amid the Yens slide. Although the growth
of the global economy had been somewhat more sluggish than
estimated at the beginning of the year, it is showing a gradual
trend of recovery. Although uncertainty surrounding the Korean
economy still persists, the government expects that the economy
will steadily recover due to the fiscal stimulus measures and
monetary policy.

SEOUL AIR ARRIVALS 2008 2012

Source: Korea Tourism Organization

KOREA GDP 2008 2012

Source: Statistics Korea

Tourism arrivals
In 2012, the nation welcomed a total of 11.1 mn international
arrivals (out of 24.9 mn total arrivals), with a strong growth of
13.7% YOY, exceeding the nations target of 10 mn international
arrivals for the first time ever. Once again, the Asia Pacific region
made up the majority of international arrivals by taking up almost
80% of the total. Japan continued to be the largest source market,
followed by China and the US. The robust growth was mainly
driven by the Chinese market, which recorded a YOY growth of
27.8%, while the Japanese and US markets grew at a much slower
pace, by 7% and 5.5% respectively. However, 1H 2013 showed
moderate growth with an increase of 3.6% compared to the same
period in 2012. The major shortfall was caused by the Japanese
market, which decreased by 26%. This was mainly due to the sharp
strengthening of the Korean Won against the Japanese Yen, a result
of the current Abenomics policies implemented in early 2013. On
the other hand, the Chinese market expanded by 46% and
became the largest source market for 1H 2013, replacing Japan.
Incheon International Airport is currently undergoing its third
expansion phase, which is to be completed by 2017 and should
bring its handling capacity to 62 mn passengers a year. By 2020,
the airports capacity is expected to reach 100 mn, upon
completion of the fourth expansion phase.

36

Quick Review Hotel Views 2013:


AOR was 81% in 2011; it slightly declined to 79% in 2012
as per latest estimates. Our forecast had the KPI growing
to 84%.
ADR was USD142 in 2011, rising to USD146 in 2012 as
per latest estimates. We were more conservative and
estimated ADR to remain at USD142.
International arrivals to the nation exceeded 10 mn for
first time ever, as stated last year.

Hotel Views
2014

SEOUL, SOUTH KOREA

Hotel supply
According to the Ministry of Culture, Sports, and Tourism, Seoul
has 178 hotels with 28,433 rooms as of June 2013, showing a
further increase of 4.7% in total room inventory from 2012,
after 2012s growth of 7.9% from 2011 levels. Notable additions
to the citys inventory include the Conrad Seoul (434 rooms)
that opened in November 2012 as a part of Seouls International
Finance Center, and is located in Yeoido, Seouls financial district,
followed by the new Ibis Insadong with 363 rooms that opened
September 2013. Seouls second JW Marriott is also expected to
open in December 2013. The city also saw the debut of various
mid-tier brands, developed and launched by local hotel companies,
who are expanding across the country. Furthermore, the city
is expected to continue witnessing an influx of new supply over
the next three to four years. While the majority of new supply is
likely to be in the mid-scale and select-service segments, such as
Ibis Budget Ambassador Dongdaemun that plans to open in 2014,
a few projects are expected to be in the upscale or luxury space,
including the Four Seasons Hotel Seoul, which will be opened in
2015, leading to a more diverse mix in the citys hotel inventory in
the near future.

Hotel Performance
While the official hotel performance statistics for 2012 have not
yet been published, Cushman & Wakefields preliminary data
shows that Seouls hotel market had steady but moderate growth
in 2012, albeit the growth rate slowed down relatively to previous
years. The market-wide occupancy rate stayed around at 79%,
slightly decreasing by 1 percentage point compared to 2011.
However, it is estimated that ADR improved by almost 5% YOY,
from KRW157,116 (USD142) to approximately KRW165,000
(USD146), as the market-wide occupancy remained robust. The
resulting market-wide RevPAR grew by 2.5% YOY from
KRW126,867 (USD114.5) to KRW130,053 (USD115.4). With
some changes in demand dynamics mainly caused by a sharp
decline of the Japanese market during early 2013, the market
experienced some downturn in performance. While the marketwide performance data for 2013 is not available yet, our research
showed that selected major hotels experienced a sharp decrease
in RevPAR by around 15-20% in 1Q 2013, as the market was not
ready for the sharp changes in demand dynamics. The industry
stakeholders expect that the market will need some time to
recover to achieve a similar performance level to 2012s.

SEOUL HOTEL MARKET PERFORMANCE 2010 2012

Source: Ministry of Culture, Sports & Tourism and Cushman & Wakefield Hospitality

Outlook
While concerns remain over the fluctuations in exchange rate and
expected new supply entering the market in the near future,
Seouls hotel market is expected to continue to grow in the midto long-term, thanks to the growing demand from China that is
lessening the effects of the decline in demand from the Japanese
market. The upcoming major international events, including the
2014 Incheon Asian Games and the 2018 Pyeongchang Winter
Olympics, are likely to enhance the awareness of Korea as a
tourism destination.

Cushman & Wakefield Forecast 2014

ADR (USD129)
AOR (71%)

CUSHMAN & WAKEFIELD

37

bangkok, thailand

38

Hotel Views
2014

BANGKOK, THAILAND

Economy14
According to the National Economic and Social Development
Board (NESDB), the 2013 GDP growth has been revised
downward to 3.8-4.3% from the previous forecast range of
4.2-5.2%, as the Thai economy is slated for weaker-than-expected
economic conditions. This is particularly attributed to the slow
economic reforms by the government, the uncertain recovery of
the global economy and the continuous strengthening of the Thai
Baht. In April 2013, the Baht reached its 16-year strongest value
against the US dollar, leading to lower-than-anticipated growth of
exports, due to the negative impact of the European debt crisis
and quantitative easing in the US. Consequently, economic
management in the remaining quarters is expected to come into
effect. NESDB pointed out that weakening economic momentum
and ensuring the stability of the currency should be considered as
key priorities. With a GDP growth of 5.3% in 1Q 2013, the Thai
economy continued to expand, but at a slower pace than in 4Q
2012.
BANGKOK GDP 2008 2011

2013, to about 12.7 mn visits, up from 10.6 mn in 1H 2012. This


growth is being mainly fuelled by the top six source countries,
namely China, Malaysia, Japan, Russia, Korea and India, each
contributing more than a million tourist arrivals to the country.
The peak season for Bangkok is October to February. Lean
months occur during the monsoon seasons, with August and
September receiving the lowest levels of tourist inflows.
BANGKOK AIR ARRIVALS 2007 2012

Source: Airports of Thailand Public Company Limited


Note the chart shows the combined air arrivals at BKK and DMK

Source: Office of National Economic and Social Development Board

Tourism arrivals
Thailand received a total of 22.3 mn international air arrivals in
2012, representing a YOY growth of 16%. Bangkok has two
international airports, Suvarnabhumi Airport (BKK) and Don
Mueang International Airport (DMK). The newer Suvarnabhumi
Airport caters to 90% of the air arrivals, while Don Mueang
International Airport caters to 10% of the arrivals. The
international visitor arrivals at Suvarnabhumi Airport are the main
contributors to the citys overall tourism and hospitality market.
According to the latest air transport statistic by Airport of
Thailand (AOT) Authority, BKK received a total of 25.5 mn
visitors, with a dominant share of 73% foreigners in 2012, up by
4.1% over the previous year. Domestic visitors accounted for 27%
of visitor arrivals, witnessing a growth of 31.3% during 2012.
Arrivals at DMK were 1.4 mn in 2012, mostly domestic.
International tourist arrivals recorded a growth of 20% in 1H

14

Economic data was converted to USD at constant exchange rates

Quick Review Hotel Views 2013:


In 2011, Bangkoks hotels AOR was 62.2% and the
estimated ADR USD98. ADR was expected to increase
to USD109 with AOR rising to 65%. As per latest
estimates, ADR went up to USD105 with AOR rising to
69%.
In 2011, the dominant inventory was the upper midscale
segment, accounting for 34% of total inventory and it
stood at 32%, as the 2012 estimates show.

CUSHMAN & WAKEFIELD

39

BANGKOK, THAILAND

Hotel supply
Bangkok has a substantial supply of hotels, with more than 61,000
keys as of 2012. Of the total inventory, 51% belongs to the
midscale and upper midscale segments. The upscale hotels
constitute 18%, followed by upper upscale with 16%, luxury with
14% and the remainder in economy hotels. As per our research,
Bangkok has about 241 star-rated hotels in 2012, including 26
luxury and 36 upper upscale hotels, contributing 26% towards the
total hotel stock. However, the midscale and upper midscale
segments, combined, amount to 55%, followed by 17% of the
upscale segment and the rest being economy hotels. The majority
of the existing upper upscale and luxury hotels in Bangkok are
located in the areas of Ploenchit, Riverside, Sathorn, Silom and
Sukhumvit. A few of the notable openings in 2012 were W hotel,
Sofitel So Hotel, Okura Prestige Hotel, Eastin Grand Hotel,
Oriental Residence, Glow Pratunam, Best Western Plus, Tune
Hotel Asoke and Lit Hotel. Approximately, a total of 2,700 keys
were added across different segments. Forty-one per cent of this
supply belonged to the luxury segment, followed by the upscale
segment with 28%, midscale and upper midscale segments with
14%, upper upscale with 9% and the remainder 8% were economy
hotels. In 1H 2013, about 1,700 keys opened in Bangkok, with
1,000 more waiting to be opened in 2H 2013. Some of these new
hotels are Hilton, Mercure Siam, Ibis Siam, Double Tree by Hilton
Sukhumvit and Holiday Inn Sukhumvit. There will be further
significant additions of more than 3,200 keys between 2014 and
2017.

Hotel Performance
Bangkok hotels enjoyed an increase in ADR of 7.0% to USD105 in
2012. AOR rose by 7.1 percentage points to 69.3%. Room rates
and occupancy levels have moved upwards over the past three
years, given the healthy growth rate of tourist arrivals. In 2012, the
tourism industry rebounded strongly from the impact of political
strife and the 2011 floods. RevPAR jumped by 19.3% in 2012, over
2011, from USD61 to USD73. However, as far as 1H 2013 is
concerned, the momentum seems past, as ADR decreased to
USD97 against that of USD110 in 1H 2012 and AOR only had a
marginal increase of 1 percentage point to 65% over the same
period, which was not enough to offset the negative effect of the
ADR decline.

40

BANGKOK HOTEL MARKET PERFORMANCE 2008 1H13

Source: Cushman & Wakefield Hospitality

Outlook
The supply of new inventory being added in 2013 is going to
exert some downward pressure on ADRs in the short-term.
However, AOR may not be as affected as Bangkok is likely to see
further improvement in tourist arrivals with Tourism Authority of
Thailands forecast of 24.5 mn arrivals by the end 2013. The
planned expansion of Suvarnabhumi Airport is likely to increase
the hubs handling capacity by 15 mn passengers per annum, to a
total of 60 mn. This is expected to further boost demand for
room-nights for the city in the long-term.

Cushman & Wakefield Forecast 2014

ADR (USD114)
AOR (68%)

Hotel Views
2014

HO CHI MINH CITY, VIETNAM

CUSHMAN & WAKEFIELD

41

HO CHI MINH CITY, VIETNAM

Economy
According to the General Statistics Office of Vietnam, HCMC
achieved a GDP growth rate of 9.2% in 2012 a great result,
albeit a slowdown compared to the growth of 10.3% in 2011.
During 1H 2013, HCMCs GDP reached nearly USD16.2 bn, an
increase of approximately 7.9%, slightly under the growth rate of
8.1% in the first half of 2012. In 1H 2013, total new registered and
additional FDI reached approximately USD188.9 mn from 175
projects, decreasing significantly by 23% YOY. The property sector
ranked second with circa USD40.5 mn, accounting for
approximately 21% of the total investment. Singapore continues
to be the leading investor with USD71.6 mn from 28 new
projects, accounting for 38% of the total new investment into
HCMC, followed by Japan (14.4%) and Holland (11%).

HCMC AIR ARRIVALS 2008 2012

Source: Ministry of Culture, Sport & Tourism

HCMC GDP 2008 2012

Source: General Statistics Office of Vietnam

Tourism arrivals
Tan Son Nhat Airport is the largest airport in Vietnam and
accounts for the majority of inbound arrivals. By 2020, HCMC is
expected to have a new international airport, which will be
located approximately 40 kilometers from the city and will serve
as its second airport. The new hub is expected to ease the traffic
at Tan Son Nhat and should be able to service approximately 100
mn passengers. During 2012, the total number of air arrivals to
HCMC was 10.2 mn, increasing by 4.2% over 2011. The top three
major source markets were Russia, accounting for 19% of total
tourist arrivals, followed by China with 18% and Korea with 12%.
Of the total air arrivals into HCMC, 30% were international
visitors, whilst 70% were domestic.

42

Quick Review Hotel Views 2013:


In 2011, hotels in HCMC recorded an AOR of 70% with
an ADR of USD110. ADR was expected to be USD105 at
AOR 61% in 2012.
In contrast, in our latest estimates for 2012, ADR rose
to USD112, though the decrease in AOR was less than
expected to 64%.

Hotel Views
2014

HO CHI MINH CITY, VIETNAM

Hotel supply

Outlook

HCMC currently features a total inventory of over 9,100 keys.


The midscale hotels remain dominant in the market with
almost 33%, followed by the hotels in the upscale segment with
25%, luxury with 23% and upper upscale with 12%. In 2012,
two significant branded hotels made their entry in the market,
namely the Ibis Saigon that opened in June 2012 with 140 keys,
and Novotel Saigon Centre in May 2012 with 247 keys. Notable
openings in the next five years are likely to include the Pullman
Saigon Centre (306 Keys) in 2013, Le Mridien Saigon (350 Keys)
in 2014 and the Ritz-Carlton (250 keys) in 2017.

With Vietnams economic revival, HCMC is poised to benefit and


witness strong growth in the near future, as the city is the
economic center of the country. The Vietnamese government is
trying to shape policies for tourist arrivals into the country and is
in talks with Cambodian and Thai authorities to work towards a
single visa for tourists. Tourists visiting either one of these
countries would benefit from the provision of a single visa, valid
for traveling through the three neighboring countries. A gradual
enhancement towards suitable infrastructure is likely to come
about as HCMC authorities are proposing improvements such as
a rapid transit network (or metro connectivity), which is likely to
ease connectivity in the city for local population and tourists alike.
The Department of Culture, Sports and Tourism (DoCST) has
launched a Tourism Promotion Center that aims at providing
advice and ensuring implementation of strategies, programs and
plans to generate tourism. Additionally, the DoCST is working
with the HCMC Tourism Association to establish a promotion
center for MICE tourism. Such an entity would conduct studies
with the primary focus of supporting and promoting investments
in MICE tourism, thereby aiding the development of this segment.

Hotel Performance
In 2012, AOR for the city dropped by 6 percentage points to
63.9% YOY, whilst ADR increased by 1.8% YOY to USD112,
resulting in a 7% decline in RevPAR to USD72. This can be partly
attributed to a significant increase in supply that outpaced growth
in demand, thus lowering occupancy levels. In 1H 2013, AOR was
61%, having seen negligible growth over the 1H 2012 level, which
was 60%. ADR climbed 15% to USD120 for 1H 2013, compared
to the USD104 achieved in 1H 2012.
HCMC HOTEL MARKET PERFORMANCE 2008 2012

Cushman & Wakefield Forecast 2014

ADR (USD132)
AOR (63%)

Source: Cushman & Wakefield Hospitality

CUSHMAN & WAKEFIELD

43

44

BANGKOK, THAILAND

Hotel Views
2014

REGIONAL HOTSPOTS
In this third edition of Hotel Views we have again expanded our
coverage of new destinations that we believe present new and
interesting opportunities in 2014. Our Regional Hot Spots now
include Thimphu, Kathmandu and Manila in addition to the eight
destinations that were presented last year. Some of these markets

are among the top exotic travel destinations in Asia, while others
have seen steady tourism growth in recent years. We believe
these hotspots offer great potential to developers, hoteliers and
investors alike to create the ultimate tourists dream of Asian
hospitality.

CUSHMAN & WAKEFIELD

45

dhaka, bangladesh

46

Hotel Views
2014

DHAKA, BANGLADESH

Economy15
Bangladeshs GDP has managed to record consistent 5.56%
growth rates for the most part of the last decade. From 6.7% in
2011, the growth has slowed to 6.3% in 2012 and is expected to
moderate further to 5.8-6% in 2013. However, the outlook for
2014 remains positive with projections reaching above 6%,
supported by a pick-up in exports, growing investments and
domestic consumption. The country is one of the largest
ready-made exporters in the world and employs more than 3 mn
people with revenues exceeding USD12 bn per year. Dhaka
houses a larger share of garment manufacturers in Bangladesh,
which came under heavy scrutiny after a string of accidents and
the Rana Plaza collapse in April this year. The travel and tourism
sector contributed 2.2% of GDP in 2011 and the sector noticed a
rise of 7.3% in 2012. Demand in the hotel sector arises primarily
from Bangladeshs growing middle class population of over 30 mn,
of which 1.5 mn reside in Dhaka.

foreign tourists slowed down significantly. Tourists planning on


visiting the country became apprehensive of the prevailing
political unrest and decided to postpone or cancel their trips.
Overall, tourist arrivals into the country have grown at an average
of 10% per annum over the last three to four years. Bangladesh
Parjatan Corporation has recently undertaken a study
(Bangladesh Tourism Vision 2020), in which the findings indicate
that the country is relatively unknown at the global level.
Bangladesh has yet to realize the importance of the travel and
tourism industry and the long-term economic benefits associated
with it.
DHAKA INTERNATIONAL AIR ARRIVALS 2008 2012

BANGLADESH GDP 2008 2012

Source: WTTC, Cushman & Wakefield Research

Hotel supply

Source: CEIC, World Bank, ADB, Cushman & Wakefield Research

Tourism arrivals16
Dhaka is well connected to India, the Middle East and South-east
Asia. More than 30 international airlines fly into Dhaka, which has
seen passenger traffic grow from approximately 3.2 mn in 2005 to
6 mn passengers in 2012. Dhaka attracts tourists for its numerous
historical and archeological sites; it has the longest natural
uninterrupted beach in the world (124 kilometers) and is home
to several World Heritage Sites. The tourist season in Dhaka
occurs during winter, that is from November to February, as
summers are hot and humid and the city has a long rainy season
that makes it inconvenient to travel for tourists. The government
created a Tourism Board in 2009 in addition to the Bangladesh
Parjatan Corporation, which has existed for the last 40 years to
expedite the growth of tourism in the country. The government is
keen on promoting tourism, and in 2011 allocated USD8.3 mn to
the Board for promoting and branding Bangladesh as a new
tourism destination on the world stage. Dhaka is the main port
of entry for tourists coming into the country. A relatively stable
political environment in 1H 2012 and the improving economic
outlook in the Eurozone boosted tourist arrivals in Dhaka in
2012. The good times, however, did not roll into the first half of
2013. Afraid of being caught up in political turbulence, arrivals of

15
16

All economic data is reported in Financial Years (July-June)


All air arrival data is reported in Calendar Years

Dhaka is currently underserved in terms of quality hotel


accommodation. With the expansion of Bangladeshs economy, the
demand for hotels is increasing. The existing hotels are inadequate
to fulfill demands of the growing number of guests in the country.
The pipeline for the upcoming hotels in the organized segment
looks promising. Approximately 3,000 keys are under various
stages of development in the city. A number of international hotel
chains like Hilton, Marriott, Sheraton, and Mvenpick are set to
open hotels in the fast growing city of Dhaka. Ten more hotels will
be set up in Bangladesh within next four to five years. Completion
and commencement of operations of the proposed hotels will
provide a big boost to the countrys hospitality industry. Le
Mridien and Four Points by Sheraton are slated to open later
this year, while Courtyard by Marriott and Best Western Premier
are scheduled for openings in 2014. The year 2015 is expected to
witness the openings of Mvenpick, Hilton and Novotel Dhaka,
while other hotels like Sheraton Dhaka and JW Marriott will
open in subsequent years. With its proposed 700 rooms,
Marriotts second hotel in Dhaka, the JW Marriott, will be one of
the largest JW Marriott hotels in Asia and is likely to be a new
landmark in the city.

CUSHMAN & WAKEFIELD

47

DHAKA, BANGLADESH

Hotel Performance

Outlook

Dhaka has only 1,200 quality rooms at its existing five luxury
hotels, which are not enough to cater to the needs of the visitors
to the capital. These hotels are able to command a premium and
therefore, are also able to achieve robust AOR. The majority of
the existing hotel supply in the city lies in the unorganized
segment, with only six hotels in the branded hotel segment. The
number of hotel reservations coming through travel agents in the
city saw a decline in 1H 2013, as compared to the corresponding
period last year, due to the political turmoil in the country. The
citys hotels noticed a positive spike in 2012 in terms of key
performance indicators; however, the first half of 2013 has not
been very encouraging and KPIs have been declining, indicating
that the year might close below the 2012 figures. Dhaka hotels
collectively achieved an ADR of USD78 with an AOR of 68%
during 1H 2013, while hotels in the branded segment recorded an
ADR of USD157 with an AOR of 75%.

Though classified as a low-income country, Bangladesh is growing


fast and aspires to reach middle-income status by 2021.
Bangladesh has seen 7.5% annual growth in the hotel industry in
recent years. The travel and tourism sectors contribution to
Dhakas GDP is expected to grow by 6.1% annually until 2022, as
suggested by a WTTC study. Despite the challenges of growing
population, recent political turmoil and limited availability of
skilled labor for the industry, the medium to long-term outlook
for travel and tourism in Dhaka looks positive. With the rise in
income levels of the middle-class and upper-class Bangladeshi
population, domestic tourism has begun to develop quite
significantly. Dhaka has a few new and modern hotels; the city,
however, still suffers from a lack of sufficient quality hotel
inventory. With the almost a dozen branded hotels in the pipeline
that will hit the market in the next five years, that equation is
poised to change. Foreseeing a significant opportunity, a number
of local and international entrepreneurs have come forward with
the necessary investment to expand the sector in Dhaka.

DHAKA HOTEL MARKET PERFORMANCE 1H 2012-1H 2013

Source: Cushman & Wakefield Hospitality

48

Hotel Views
2014

THIMPHU, BHUTAN

CUSHMAN & WAKEFIELD

49

THIMPHU, BHUTAN

Economy17
Nestled between India and China, this landlocked nation, perched
high in the Himalayas, weaves an enigmatic allure. Only
superlatives describe this nation the youngest democracy; the
worlds highest airport; the last Shangri-La. Steeped in Buddhist
culture, the kingdom is known for its adoption of Gross National
Happiness as an alternative development model. However, the
opposition, which swept into power this year, is likely to lean
towards harder economic targets to foster growth. The aim is to
retain the crucial elements of its heritage while modernizing. Its
capital, Thimphu, is an anachronism that symbolizes this evolution:
the only capital city without any traffic lights, yet caught in a
housing boom. Dependent on India for aid as well as a primary
market for its exports, Bhutan has achieved remarkable economic
growth and made significant progress in reducing poverty and
advancing social development over the past decade. The estimated
GDP growth rate for the country slowed in 2011-12, to 8.5%
from 11.7% during 2010-11, as loans dried up in the face of the
Indian Rupee liquidity crunch18.
BHUTAN GDP FY2008-09 - FY2012-13

THIMPHU INTERNATIONAL AIR ARRIVALS 2010 2011

Source: National Statistics Bureau of Bhutan

Hotel supply
The inventory in Thimphu is relatively limited in terms of number
and variety. Currently, the commercial accommodation that is
available is in the form of hotels, guest houses, farm-stays and
home-stays. Of the total 470 keys across all hotels, the budget
segment dominates 86% of the inventory. The only known
branded hotels is the Taj Tashi with 66 keys, operated by Taj
Hotels Resorts & Palaces.

Source: Royal Monetary Authority of Bhutan

Tourism arrivals
Currently, the only international air access to Thimphu is via Paro,
which lays 55 kilometers west of the capital. The nearest railway
station is Hasimara, 150 kilometers from Thimphu, and is located
in the state of West Bengal. As of 2012, Druk Air - Royal Bhutan
Airlines offers domestic and international connectivity at Paro
International Airport in Bhutan. Internationally, it connects
Bhutan with Bagdogra, Bangkok (Suvarnabhumi), New Delhi,
Dhaka, Gaya, Kathmandu, Kolkata and Singapore. The airport is
also serviced by Buddha Air, which provides charter services from
Kathmandu. According to the latest statistics retrieved from the
National Statistics Bureau of Bhutan, the total number of visitors
to Thimphu in 2011 was 35,282, implying an increase of 32% over
2010. The capital city receives approximately 24% of the total
visitors to the country, making it the second most visited city
after Paro. With respect to seasonality, the city, much like the rest
of the country, sees a maximum inflow of tourists during autumn
(August-October) and spring (February-April). The majority of
travelers visiting Thimphu are from the US, Japan, China and the
UK.

50

17
All financial figures are provided by the Royal Monetary Authority of
Bhutan and are in relation to the Financial Year Calendar (July-June).
Economic data was converted to USD at constant exchange rates
18
Bhutanese Ngultrum is pegged to the Indian Rupee

Hotel Views
2014

THIMPHU, BHUTAN

Hotel Performance

Outlook

Thimphu has a total of 470 keys across 41 hotels. As mentioned


earlier, Thimphu has only one branded hotel, the Taj Tashi (66
keys). In 2012, the overall market recorded an AOR of 41%,
increasing by 2 percentage points over the previous year and 5
percentage points over 2010. Overall, ADR reached
approximately USD145, increasing by 3% over 2011 and 4% over
2010. ADR has been driven upwards due to the presence of the
luxury hotel Taj Tashi; if the hotel is excluded from the sample, the
rest of the market will have achieved an ADR of USD61 with 40%
occupancy.

With the initiatives and steps taken by the Tourism Council of


Bhutan, various opportunities are being explored to attract
visitors to the region. For instance, adventure, nature, culture, and
spirituality and wellness are some of the tourism avenues that the
government is actively pursuing. In addition, Bhutan is being
promoted as an integral part of the Buddhist Circuit by the
country, in collaboration with the Indian and Nepalese
governments as well. An international convention center is
currently under development, and the city is trying to attract a
bigger share of MICE demand and to promote the country as a
destination for MICE, as per the countrys 10th Five-Year Plan. At
present, there are no major hotels planned for the city. However,
Thimphu, thanks to various government initiatives, is likely to see
an increase in the room-night demand in the medium to longterm.

THIMPHU HOTEL MARKET PERFORMANCE 2010 2012

Source: Cushman & Wakefield Hospitality

CUSHMAN & WAKEFIELD

51

bali, indonesia

52

Hotel Views
2014

BALI, INDONESIA

Economy
GDP growth is projected to have reached 6.0-6.2% during 2Q
2013. For the full year, growth is forecast to be within the range
of 6.3-6.8%. The stock market index decreased 6.4% during the
second three months of the year, with the composite index
closing at 4,515 on June 21. On the currency side, the Rupiah
depreciated by 2.3% over the quarter to Rp.9,936 per USD1.00.
Meanwhile, the Bank of Indonesia (BI) took action to increase the
BI Rate to 6.0%, after maintaining the rate at 5.75% for the
previous five consecutive quarters. Inflation over the first five
months of 2013 reached 2.3%, higher than the 1.2% recorded in
the same period last year. This higher inflation was mainly
attributed to rising food prices.
INDONESIA GDP 2008 2012

Source: Statistics Indonesia

Tourism arrivals
The total number of tourists who visited Bali in 2012 was 8.9 mn,
increasing at a rate of 6.2% over 2011. The domestic to
international tourist ratio was 68:32, against 67:33 in 2011. During
2012, over 6 mn domestic tourists visited Bali. The peak was
witnessed in December 2012 as compared to other years, across
all months with regard to domestic tourists. Close to 0.7 mn
domestic tourists visited during December 2012, with arrivals
increasing at a rate of 30% as compared to the previous year.
Generally, June to December are more favorable months as
compared to January to May, as far as domestic visitors are
concerned. In 2012, the total number of international tourist
arrivals in to Bali was 2.9 mn, having grown by 4.9% over 2011
and, nearly by 47% since 2008. For international tourists, Bali is
not a seasonal destination. For example, in 2012, total
international tourists consistently made up 8-9% of total visitors
with the exception of May when the figure was 7%. The average
length of stay in Bali is 3.2 days. Australia is the top source market
for foreign tourists to Bali, contributing about 28.5% to the total
number of international visitors in 2012. China follows in the
second position with a share of 10.8%. Japan is in the third
position, but is likely to fall behind Malaysia in the near future,
with their respective contributions being 6.6% and 6.2%
respectively.

BALI AIR ARRIVALS 2008 2012

Source: Survey Result by Bali Government Tourism Office

Hotel supply
According to Badan Pusat Statistik Indonesia, by the end of 2012,
Bali had 24,215 hotel rooms. These rooms are spread over 218
classified hotels. The classified inventory increased by 6% over
2011. Bali has about 1,696 non-classified hotels with about 24,322
keys. In 2012, approximately 1,400 keys entered the market. A few
of the key openings were Sheraton Bali Kuta Resort (203 keys),
Swiss-Belhotel Rainforest (161 Keys), Pop! Hotel Kuta (223 Keys),
Fave hotel ByPass Kuta (160 Keys), and Ibis Styles Kuta Circle
(191 Keys). The pipeline surge can be partly attributed to the
growth of the MICE market with more international conferences
being organized in Bali, such as the ASEAN19 summit, the APEC20
summit and Miss World contest of 2013, to name a few. As per
recent estimates, about 11,200 more keys are likely to enter the
market in the coming five years. Of these, 6,600 keys are in the
pipeline for 2013 itself. Of the upcoming supply in 2013, about
34% belong to the midscale segment, followed by 31% in the
upper upscale segment, 13% in the luxury segment, 11% in the
upscale and 10% in the budget segment. However, overall, 31% of
the total upcoming supply in five years belongs to the midscale
segment, followed by 25% in the upper upscale segment, with 22%
in the luxury segment, 14% in the upscale and 9% in the budget
segment. Brands such as Ritz-Carlton, Ramada, Best Western,
Sofitel, Shangri-La, Regent, Mvenpick, Renaissance and Jumeirah
have hotels in the pipeline.

19
20

Association of South-east Asian Nations


Asia Pacific Economic Co-operation
CUSHMAN & WAKEFIELD

53

BALI, INDONESIA

Hotel Performance

Outlook

Over the past five years, Balis hotels have witnessed a continuous
increase in ADR. In 2012, ADR remained stable at USD150 over
2011. AOR, however, declined by 3 percentage points to 69% over
the same period, resulting in a RevPAR decreased by 5% to
USD104. Bali is a popular leisure destination, a market largely
driven by demand from global holiday-makers, but also attracts a
good share of the MICE business. The large addition to its hotel
inventory is one of the reasons driving down AORs, albeit ADR
continues to rise.

Balis market continues to hold a positive outlook, given its leisure


demand orientation. It is also emerging as a new destination for
weddings, as well as for its wellness and spas. With growing tourist
arrivals each year, Balis hospitality market has been growing
consistently over the past few years. Ngurah Rai International
Airport, a well-connected airport located in southern Bali, is the
third busiest airport in Indonesia. This hub is being upgraded from
its current handling capacity of 13.5 mn passengers to 25 mn by
2025. The construction is likely to be completed before the APEC
summit that will take place in October 2013. This is going to give
a boost to Balis tourism infrastructure, providing strength and
exposure for holding more MICE activities.

BALI HOTEL MARKET PERFORMANCE 2010-1H 2013

Source: Cushman & Wakefield Hospitality

54

Hotel Views
2014

KUALA LUMPUR, MALAYSIA

CUSHMAN & WAKEFIELD

55

KUALA LUMPUR, MALAYSIA

Economy
Kuala Lumpur (KL) is the federal capital and most populous city in
Malaysia. The city covers an area of 243 square kilometers and
has an estimated population of 1.7 mn as of 2012. The city was
ranked 49th by the A. T. Kearney Global Cities Index 2012 and
66th among global cities for economic and social innovation in the
2012-2013 thinknow Innovation Cities Index. Under the efforts
of the Economic Transformation Programme (ETP) implemented
by the Malaysian government, Kuala Lumpur has been ranked 4th
in CNN Travels Survey on the top 10 best shopping cities in the
world in 2012, and the second best shopping destination in Asia
Pacific by Globe Shopper Index. In relation to the MICE sector,
Kuala Lumpur has been selected to host the 127th International
Olympic Committee event in 2015 and is expected to receive
approximately 1,500 international delegates. The per capita GDP
of Malaysia, in real terms, reached USD6,765 in 2012, an increase
of 3.9% over 2011, on the back of a 5.6% rise in GDP.

region provided the low travel cost, inexpensive accommodation


and attractive shopping options. Visitor arrivals in Kuala Lumpur
are also expected to get a boost with the addition of a new Kuala
Lumpur-based low-cost airline, Malindo Air, taking to the skies.
Additionally, Malaysian Airlines joined One World Alliance and
other major airlines like Qantas, British Airways and Air France
are resuming flights to Kuala Lumpur.
KL AIR ARRIVALS 2008 2012

MALAYSIA GDP 2008 2012


Note: KLIA only
Source: Malaysia Airport Holdings Berhad Annual Report 2012

Hotel supply

Source: Bank Negara Malaysia

Tourism arrivals
Arrivals to Malaysia went up by 1.3% to a total of 25.0 mn arrivals,
compared to 24.7 mn arrivals in 2011. The growth is expected to
continue to increase throughout the remainder of 2013, based
largely on the strength of the economies of various countries
within the Asia Pacific region. Singapore was the biggest
contributor to Malaysias tourist arrivals, followed by Indonesia,
China and Thailand. Inbound travel will should be boosted by the
burgeoning middle classes in emerging economies, particularly in
China and India. By 2017, the inbound arrivals in the country are
expected to reach over 32 mn per year. In 2012, the arrivals ratio
at Kuala Lumpur International Airport (KLIA) was 69.6% foreign
arrivals to 30.4% domestic. The seasonality of visitor arrivals can
be broadly classified as high season, which occurs between
December to January and June to August; low season between
February to March and September to October; and shoulder
season between April to May and in the month of November. The
tourism sector contributes significantly to the capitals economy,
providing income, employment and business opportunities.
Furthermore, business tourism is on the rise, as conferences and
conventions have become an important source of the income in
the industry. Tourism numbers are expected to stay positive, as
Malaysia is still more affordable than most other options in the

56

The 565-room Crowne Plaza was permanently closed in January


2013 and the 482-room Aloft in KL Sentral opened in 1H 2013.
Of the total supply of hotel rooms, 30,144 (72.6%) were in Kuala
Lumpur, while the remaining 11,347 (27.3%) were outside the city
limits. The long-term goal is to have an additional 37,000 upscale
and upper upscale hotel rooms by 2020. As of December 2012,
there were a total of 41,491 hotel rooms in the Klang Valley, of
which 9,412 were midscale, 13,694 upscale and 12,401 upper
upscale hotel rooms. In Kuala Lumpur city, the total supply of
hotel rooms stood at 30,144. Of this, 26.3% were upper-upscale,
34.8% upscale, 19% midscale, and the remaining 19.9% budget
hotel rooms. An estimated 1,456 hotel rooms in Kuala Lumpur
city will enter the market this year, including the Pullman Kuala
Lumpur in Bangsar (513 rooms) and Aloft in KL Sentral (482
rooms) that contribute the bulk of new rooms. The total number
of rooms in Kuala Lumpur city, i.e. existing and new 2013 supply,
should surpass 3,800 keys. The future supply of hotel rooms from
2014 to 2018 is expected to reach 2,366, contributed by St Regis
Hotel in KL Sentral (208 rooms), scheduled to open by the end
of 2014; Best Western Bangsar (216 rooms), slated to open in
2015; Banyan Tree Signatures Pavilion Kuala Lumpur (50 rooms) in
2015; The Regent (238 rooms) in 2015; Four Seasons Hotel (231
rooms) in 2016 and Harrods Hotel (250 to 300 keys), expected
to open in 2018, among others.

Hotel Views
2014

KUALA LUMPUR, MALAYSIA

Hotel Performance

OUTLOOK

Kuala Lumpur has some of the lowest hotel room rates when
compared to other markets in the region, like Hong Kong and
Singapore. The opening of new upscale hotels in the city is not
expected to impact the AOR for Kuala Lumpur hotel market in
2013. The overall AOR for 1H for Kuala Lumpur went up
marginally to 70% in 2013 from 69% in 2012. This is in tandem
with the increase in international and domestic tourists. The AOR
of upper upscale hotels in Kuala Lumpur for 1H 2013 was 77% as
compared to 75% in the same period in 2012. The upscale hotels
recorded an AOR of 72%, up from 70% in 1H 2012. The midscale
hotels managed an AOR of 70% in 1H 2013 as compared to 69%
in the same period in 2012. Overall, ADR of midscale to upper
upscale in Kuala Lumpur improved in 1H 2013 when it was
recorded at USD53, USD78 and USD122 for midscale, upscale
and upper upscale hotels respectively as compared to USD50,
USD72 and USD114 a year ago. As for budget hotels, AOR
recorded a marginal rise from 60% in 1H 2012 to 62% in 1H
2013. ADR for this segment has largely remained unchanged from
last year at USD30-35. The AOR of serviced apartments in Kuala
Lumpur was 74% in 1H 2013, up from 71% a year ago. ADR stood
at USD87 in 1H 2013 compared to USD85 in the same period in
2012.

Tourism continues to play an integral part in Kuala Lumpurs


service-driven economy. The industry has been identified as a
National Key Economic Area (NKEA) with the potential to
generate high revenues for the country. A total of 12 entry point
projects have been identified under the Tourism NKEA to further
develop the industry until 2020 and create half a million job
opportunities for Malaysians. By 2020, Malaysias tourism industry
is expected to attract 36 mn tourists and record USD51.3 bn
tourist receipts. To achieve this goal, a Visit Malaysia Year 2014
campaign has been designed for next year. Medical tourism in
Malaysia, and thereby in Kuala Lumpur, has witnessed an
astounding growth in the recent past and is poised to see large
volumes of patients coming into the country for cardiovascular,
orthopedic, aesthetics, optometry and dental treatments. Hotel
management companies such as Hyatt Hotels Corporation, Accor
Group and Starwood Hotels & Resorts are set to increase their
footprint in the market. The overall AOR and ADR for hotels in
Kuala Lumpur are expected to improve slightly in 2013.

KL HOTEL MARKET PERFORMANCE 1H 2012 - 1H 2013

Source: Cushman & Wakefield Hospitality

CUSHMAN & WAKEFIELD

57

male, maldives

58

Hotel Views
2014

MALE, MALDIVES

Economy21
The Maldivian economy is powered mainly by tourism and its
multiplier effect in the transportation, communication, and
construction sectors, which accounts for 28% of the GDP. Over
90% of tax revenues come from import duties and tourismrelated taxes. While income disparity remains high and limitations
on resources constrain expansion, the Maldives has yielded
considerable social progress. Between 2000 and 2010, real GDP
growth averaged around 6% per annum. The tourist destination
has recently been affected by a political coup, which ousted the
islands first elected president and led to political unrest. Of the
Maldives 1,191 islands, only 200 are inhabited, with the greatest
concentration on the capital island, Mal and another 100 islands
house resorts. With its pristine beaches and exquisite ecosystem,
the archipelago is portrayed as a tropical paradise, with island
resorts developed for the top-end of the tourist market.
MALDIVES GDP 2008 2012

2013-2017 to monitor and support the growth of the largest


revenue-generating industry of the country.
In terms of source markets, Europe registered a decline of 3.7%
compared with 2011, generating 517,809 tourists to the Maldives
in 2012 and accounting for 54% of all arrivals during the year. In
terms of arrivals, Asia Pacific grew at an average rate of 21.6% and
the market share increased from 22.9% in 2008 to 40.1% in 2012.
Americas is ranked third place. Tourist arrivals from this region
increased at an average annual rate of 13.9% over the past five
years, from 2008 to 2012. A total of 21,843 tourists visited the
Maldives from the Middle East in 2012. The region has been
posting double-digit growth rates over the last five years, with a
CAGR of 28.6%. Albeit still relatively small, its market share
increased from 1.3% in 2008 to 2.3% by 2012. The main reason
visitors come to the Maldives is honeymoon (23%), then health
and wellness (22%), closely followed by diving (19%). About 17%
stated that their main reason for visiting the Maldives is for
holiday and/or rest and relaxation. Other reasons include
snorkeling, birthday and anniversary celebrations.
MALDIVES AIR ARRIVALS 2008 2012

Source: Asian Development Bank

Tourism Arrivals
Mal is the only entry point to the country of Maldives and the
center of all administration and bureaucracy. Maldivian, the airline
of the Maldives, has its head office in Mal and the city also
houses the head office for the airline FlyMe, which commenced
operations in 2011. Over the past five years (2008-2012), tourist
arrivals to the Maldives increased at a CAGR of 8.8%. After two
years of exceptionally strong positive growth in 2010 (+20.7%)
and 2011 (+17.6%), the Maldives kicked off 2012 with high
expectations to achieve a target of 1 mn tourists during the year.
However, due to a sudden change in government administration in
February and subsequent political unrest within the country, 2012
ended with tough results in terms of tourist arrivals. Despite
arrivals falling short by roughly 42,000 tourists to reach the 1 mn
mark, figures released by the ministry show that overall arrivals
rose 2.9% from 931,333 in 2011 to 958,027 in 2012. Growth rates
were slow and below average for all months, except for the
month of January. Declines were registered during usually peak
months such as February (-4.7%), March (-5.3%), April (-0.8%), May
(-1.4%) and November (-3.7%). The positive growth for the year
accounts for the outstanding performance during the month of
January (+21%). The Ministry of Tourism, Arts and Culture has
devised the Fourth Tourism Master Plan for the period of

Source: Ministry of Tourism, Arts and Culture

21

Economic data was converted to USD at constant exchange rates


CUSHMAN & WAKEFIELD

59

MALE, MALDIVES

HOTEL SUPPLY
The supply of hotel inventory has increased at a steady rate over
the last five years between 2008 and 2012, at a CAGR of 4.8%.
While the number of establishments increased from 274 in 2008
to 352 at the end of 2012, bed capacity of these establishments
increased by 19.8%. At the end of 2012, there were a total of
28,120 beds registered in the Maldives. This inventory is spread
across hotels, marinas, guesthouses, resorts, and safari boats. At
the end of 2012, there were 105 islands developed into resorts
with a total bed capacity of 22,889 registered with the Ministry of
Tourism Arts and Culture, which was 81% of the total bed
capacity of the country in 2012. In 2012, four new islands with a
combined bed capacity of 651 were developed and made available
to the market. These include Vagaru island (Viceroy Maldives) in
Shaviyani Atoll with 97 beds, Mudhdhoo island (Dusit Thani
Maldives) in Baa Atoll with 200 beds, Olhuveli and Embudhufushi
islands as one resort (Niyama) in Dhaalu Atoll with 154 beds, and
Falhumafushi island (The Residence Maldives) in Gaafu Alifu Atoll
with 200 beds. Out of the 19 hotels registered with the Ministry
of Tourism, Arts and Culture, 15 are located in the capital city of
Mal, on Kaafu Atoll, which has the largest concentration of
accommodation supply in the Maldives (39.9% of the total bed
capacity in 2012). The percentage, however, has been dipping over
the last few years with other atolls being developed. After Kaafu
Atoll, Alifu Dhaalu Atoll (South Ari Atoll) with 3,818 beds in 2012
has the second highest supply, followed by Alifu Alifu Atoll (North
Ari Atoll) in third place with 1,988 beds. The Maldives has a total
of over 4,000 beds sanctioned or under construction, of which
3,347 keys are proposed to be functional by 2016. The remainder
of 2013 is expected to see 300 new keys in three different
projects being added to the current supply.

Hotel Performance
Mal, being the epicenter of activity in Maldives, happens to be the
most densely populated island in the country and also has the
highest concentration of resorts and hotels in the country. The
Maldives, with its unique one-island-one-resort concept, is one of
the worlds leading island destinations for tourism. Mal maintains
the highest ADR in the region, being a high-end luxury tourist
destination. The market recorded an AOR of 83.2% in 1H 2013 as
compared to 82.4% during the corresponding period in 2012.
ADR was USD751 in 1H 2013 as compared to USD670 in the
same period in 2012. The Maldives reported a double-digit growth
in RevPAR (13.2%) and ADR (12.1%) in 1H 2013. Being
predominantly a leisure/holiday destination, Mal notices a
relatively high average length of stay, which has seen a marginal dip
from 7.2 days in 2012 to 6.6 days in the current year.

60

MALDIVES HOTEL MARKET PERFORMANCE


1H 2012 - 1H 2013

Source: Cushman & Wakefield Hospitality

Outlook
Despite reports of political instability that led to decreases in
occupancy in last quarter of 2012, hoteliers in the Maldives
managed to achieve an increase in ADR, which indicates the
countrys potential. The economy of the Maldives is forecast to
recover modestly, growing by 4.3% in 2013 and 5.5% in 2014, as
the anticipated gradual global economic recovery boosts tourism.
Higher spending ahead of the 2013 national elections is expected
to add a fillip to growth. In 2014, the new government is likely to
initiate the implementation of its intermediate macroeconomic
policy which, as a result, may improve local investments in the
tourism sector. Rising extremism in the region remains a concern
for the tourism industry in Mal, which has affected the market in
recent years. Southern Maldives is currently being targeted to
pave the growth of future tourism in the country. Inflation will
likely ease to 9.3% by the end of 2013 and subsequently to 8.5%
in 2014, thanks to base effects and the improved availability of
foreign exchange. The modest pick-up in tourism may improve the
current account balance to some extent, but the deficit is
expected to remain wide, even deteriorating slightly to 27.8% of
the GDP in 2013 before improving to 22.0% in 2014.

Hotel Views
2014

YANGON, MYANMAR

CUSHMAN & WAKEFIELD

61

YANGON, MYANMAR

Economy
In the past two years, the government of Myanmar has enacted
sweeping changes, including ending the house arrest of the
democracy activist Daw Aung San Suu Kyi, allowing elections that
put her into Parliament and liberalizing its economy, as a result.
With longstanding economic sanctions eased, investors are
flocking to the Indochina economy, lured by expectations of
explosive growth in untapped sectors. Companies like Unilever
and Coca-Cola are opening plants in the kingdom and economic
growth is expected to average over 6% in the next five years as
the economy modernizes and its population urbanizes.Yangon, the
erstwhile capital of the nation, is a storied city where the
legendary Strand Hotel still stands. It is the countrys main
commercial hub, with a population estimated to be close to 5 mn.
The importance of tourism to the national economy is likely to
grow dramatically and Yangon is the logical gateway for tourists to
the country.

number of tourist arrivals in Yangon is very low when compared


to other destinations in the region like Singapore, Bangkok and
Hong Kong. The two major source markets for Yangon are
Thailand, accounting for 16% arrivals, and China, contributing 12%
of the total arrivals. The tourist season in Yangon remains to be
the dry season from October to March as the wet season limits
leisure activities and accessibility to many sites. Domestic travel
accounted for 69% of the total arrivals in Yangon in 1H 2013,
whereas the remaining 31% were foreign arrivals.
YANGON INTERNATIONAL ARRIVALS 2008 2012

MYANMAR GDP 2008 2012


Source: Ministry of Hotels and Tourism

Hotel supply

Note the data is in Myanmar Kyat (MMK) in bn


Source: Asian Development Bank

Tourism arrivals
Myanmars tourist arrivals are expected to grow by 30% in 2013
to 1.3 mn, and rise to 2 mn by 2015. Tourism has become one of
Myanmars biggest industries. The country, which until 2011 was
largely off-limits to most, welcomed 1.1 mn tourists last year. With
the governments plan to spend USD500 mn to build
infrastructure and accommodation for the tourism industry, the
total number of visitors could increase to 7.5 mn by 2020. With
its natural beauty and its wealth of Buddhist monuments and
pagodas, Myanmar might eventually see as many visitors as
Thailand, which is currently getting about 21 mn a year. According
to the Ministry of Hotels and Tourism, the number of
international arrivals in Yangon totaled approximately 560,000 in
2012, a sharp increase of 53% YOY, and it is expected that this
number will rise by 60% YOY in 2013, reaching 900,000. From
2003 to 2011, international visitor arrivals grew by 12.8% but
growth has been much stronger over the past four years. Post the
relative downtrend in 2007 and 2008, international visitor arrivals
have shown tremendous growth in Yangon, recording growth
rates of 26.8%, 22.7% and 53.4% in 2010, 2011 and 2012,
respectively. Although the growth looks promising, the actual

62

Approximately 20% of hotel room supply is represented by


international hotel brands, which originate mainly from Asia.
According to the Ministry of Hotels and Tourism, there are
approximately 9,000 hotel rooms currently in Yangon. While
there is disparity regarding which hotels are fit for international
standards, the general consensus amongst hoteliers and various
industry sources appears to be in the range of 1,500 to 2,500
rooms. Our research indicates that the total stock of midscale
to upper upscale rooms in Yangon is approximately 3,000. Total
future supply from 2013 to 2015 is approximately 3,200 rooms.
Based on Cushman & Wakefields current estimates, international
quality hotel supply in the city is expected to grow at a CAGR
of 36.7% between 2012 and 2016, given that all the projects
underway are near completion. In the organized segment, upper
upscale and luxury hotels currently constitute 18% of the citys
inventory, upscale hotels 13%, midscale hotels 9%, budget hotels
3% and the remaining 57% of the inventory lies in the unorganized
and non-branded segments. Amongst notable international hotel
companies that are expected to begin operations, Accor is
scheduled to open the 366-room Novotel Yangon in early 2014;
Hilton Worldwide signed a management agreement in March
2013 to manage the 300-room Hilton Yangon Hotel, which will
be part of a mixed-use development scheduled to open in 2014;
and Shangri-La has announced its plans to open a Shangri-La
Residence later this year and a Shangri-La Hotel in 2016.

Hotel Views
2014

YANGON, MYANMAR

Hotel Performance

OUTLOOK

The Yangon hotel market has suffered from challenging operating


conditions in the past due to the anti-government saffron
revolution in 2007 and the cyclone Nargis in 2008. However, post
the suspension of the economic sanctions, the industry is
experiencing a significant growth in demand from both the leisure
and business segments. Tourist numbers have risen to about 1 mn
a year, causing inflated hotel prices. However, supply is now
beginning to catch up. The existing hotels in Yangon have been
recording full occupancies during the weekdays throughout the
year and even weekends during the peak leisure season. With the
increasing demand projected in the coming years and limited
inventory in the market, hotels have been busy negotiating the
best possible deals with travel agents, and in response the
government introduced a cap of USD15022 to control the
skyrocketing room rates. In the first half of this year, the market in
the organized segment has recorded an AOR of 82% and ADR of
USD210.

After decades of limited development and modernization,


Myanmar is now entering a new era. As a result of restrictions
imposed by many foreign governments, foreign investments in
Myanmar have primarily been stemming from a limited number of
countries, focusing on a limited number of sectors. This has
caused Myanmars development to lag behind the rest of the
other ASEAN countries, and indeed behind the rest of the world.
Yangon has a strong foundation for high growth based on the
demographics of the population, providing an attractive low-cost
workforce, a rich supply of natural resources and abundant
agricultural resources, as well as tourism potential. The lack of
quality hotel inventory and rise in the tourist arrivals make Yangon
an attractive investment market for new hotel developments. The
new proposed international airport at Hanthawaddy in central
Bago, which is 80 kilometers north of Yangon and scheduled to
open in 2017, will help the city handle the strong anticipated
future growth of inbound tourism. Investments in Myanmar carry
a high degree of risk because of the lack of transparency in the
legal framework and the absence of a strong banking system. Lack
of clarity in foreign investment law and the abuse of human rights
in the country are likely to worry investors. Companies from
China, Thailand and Singapore have the advantage over other
foreign companies of being accustomed to the legal framework
and challenges that the market poses. Despite the challenges,
Yangon is poised to grow at a faster pace than the other emerging
markets across Asia and is likely to generate high levels of growth
across industries. The opportunity in real estate is attractive in
Yangon given the severe lack of office, hotels, retail and residential
developments. The democratic elections, scheduled for 2015, are
expected to bring about a change and put matters in perspective
for the future growth of the country.

YANGON HOTEL MARKET PERFORMANCE


1H 2012 - 1H 2013

Source: Cushman & Wakefield Hospitality

The cap was only applicable to rooms sold to travel agents/tour


operators and has expired in March 2013

22

CUSHMAN & WAKEFIELD

63

kathmandu, nepal

64

Hotel Views
2014

KATHMANDU, NEPAL

Economy23
After slowing down from 4.5% in FY2011-12 to 3.8% in FY201213, economic growth in Nepal is expected to moderate further to
3.5% during this year due to continued energy crisis, shortfall in
agriculture output and reducing investments. However, the
outlook for 2014 remains positive at 4.04.3%, given a rise in
agricultural output and foreign remittances, in addition to growing
investments in public domain.Visitor arrivals are rising steadily
and reached 600,000 in 2012. The growth is expected to remain
flat to moderate this year, but the upside potential remains
relatively stable, indicating a quick rebound in excess of 10%
annual growth rate recorded in the recent past (2010-12). Private
sector investment in hotels and the promotion of sustainable
tourism is likely to push the numbers upward over the next two
to three years. The National Planning Commission has already
prioritized infrastructure development, conservation of national
heritage sites and promotion of home-stay and village tourism to
increase the number of foreign arrivals.
NEPAL GDP 2008 2012

Source: Cushman & Wakefield Research, CEIC, World Bank, ADB

Tourism Arrivals24
Tourist arrivals via air and land reached a record high of over 0.8
mn in 2012, up by 9% YOY. Out of these, 74% arrivals are by air
and 26% are by land. Kathmandu has the only operational
international airport of Nepal, Tribhuvan International Airport.
India, China, Sri Lanka, the US and the UK are the top five source
markets for tourists into Nepal. India alone contributes to 20.6%
of the total tourists, while China contributes about 9%. In 2012,
January, October and November were the peak months of tourist
arrivals, while July and August were the lean months. The average
length of stay in Nepal is about 12.9 days. Kathmandu serves as
the base for most travelers while they travel to other popular
destinations such as Pokhra, Lumbini, Bagmati and Rapti.
Therefore, a typical stay in Katmandu is usually three to four days.

NEPAL VISITOR ARRIVALS 2009 2012

Source: Nepal Tourism Board

HOTEL SUPPLY
According to the Ministry of Culture, Tourism and Civil Aviation,
Kathmandu had over 11,000 keys across various star categories in
2012. Out of these, only 822 keys are branded ones. Kathmandu
has a total of about 522 hotels. According to the government data,
the five-star hotels comprise 2% of the total, but contribute 14%
of the total keys inventory, with three-star hotels (2.9%)
contributing about 5% to the total. Similarly, four-star hotels
(0.4%) contribute 2% to the total number of rooms, with two-star
(5.6%) category contributing 11%. The one-star hotels comprise
5% of hotels, contributing 5% of the total inventory. The economy
hotels (84.7%) lead in inventory with 63% contribution. Segmentwise, currently Kathmandu has no luxury hotels. Out of the total
keys, 5% fall in upper upscale category, 6% each in midscale and
upscale category and the rest in the budget category. There was
no fresh addition of new hotels in Kathmandu in the star-rated
categories in 2012. However, few of the four- and five-star hotels
underwent partial renovation. Also, citing the growing popularity
of the destination, a few new hotel projects have been announced
in Kathmandu. A Fairfield by Marriott is one of the announced
projects that are set to open in a couple of years. A Sheraton
hotel is also in the pipeline, which is likely to open by 2018 with
225 rooms. The Civil Aviation Authority of Nepal has proposed
building a five-star airport hotel under the BOOT (Build-OperateOwn-Transfer) model.

All economic figures are provided by the respective authorities in relation


to the Financial Year Calendar (16 July to 15 July)

23

24

Nepal tourist arrivals are reported in Calendar Years

CUSHMAN & WAKEFIELD

65

KATHMANDU, NEPAL

Hotel Performance

Outlook25

Kathmandu has witnessed only a marginal increase of about 3.4%


in ADR in 2012 over 2011, taking it to USD120. ADR was
calculated for three- star to five-star categories of hotels in the
city. The AOR has shown a decline of -1.8 percentage points in
2012 as compared to 2011, at 63.5%. Given the limited supply of
rooms in the branded or organized segments, the room rates are
satisfactory even though occupancy rate is moderate. The
purpose of visit to the country for tourists is primarily pleasure/
holiday (47%), followed by pilgrimage (13.7%), and trekking and
mountaineering (13.1%). Business visitors constitute only 3% of
the total, while conventions/conferences make up for 1.7%. The
rest falls under official, research, study or employment, other or
not specified categories.

The annual target of tourists has been set at 1.2 mn for FY201314, about 50% higher than that achieved in FY2012-13. The
government is looking forward to increasing the contribution of
tourism to the countrys GDP to 3%, from the current 2%. The
long-term plan is to attract 2 mn foreign tourists per year by
2020. However, in contrast to the target set for arrivals, the air
arrivals at Tribhuvan International Airport have declined by 3.9%
in 1H 2013 over the same period of 2012. Although, the peak
season has yet to come this year, achieving the target will be a
major task. Strong promotion and marketing policies are required,
along with low-cost carriers especially from the top two feeder
markets of India and China. Special emphasis is being put on the
development of the tourism sector. In mid-2012, the Nepal
cabinet approved a high level committees report on the
development of the tourism sector as an industry of national
priority. Thus, the government and the private sector are set to
implement various plans and programs. FDI in tourism in
FY2012-13 has become four times of that in the previous year.
This sector is the third highest recipient of FDI after the services
and manufacturing sectors. Also, Nepal has teamed up with India
to boost its share of Religious Tourism, wherein Lumbini will be
part of two, out of three in total, identified Buddhist Circuits to
be developed. This would also increase footfalls to Nepal,
benefitting Kathmandu partially as a transit location for such visits.

KATHMANDU HOTEL MARKET PERFORMANCE 20112012

Source: Cushman & Wakefield Hospitality

25
Figures provided are with respect to the Financial Year Calendar
(16 July to 15 July)

66

Hotel Views
2014

MANILA, PHILIPPINES

CUSHMAN & WAKEFIELD

67

MANILA, PHILIPPINES

Economy
The Philippines economy continues to surge under the Aquino
administration. After posting a GDP growth rate of 6.8% in 4Q12,
the country surpassed that level in 1Q13, as it grew by 7.8%
during the period. The growth was spurred by aggressive
government spending, improving business confidence and high
consumer expenditure. Moreover, the business process and
outsourcing (BPO) sector continued to support the economy, as
BPO firms continue to expand and strengthen their presence in
the country. Manufacturing, construction, financial intermediation
and trade also provided a boost to the economic growth. In 1H
2013, inflation for the Philippines averaged at 2.9%, lower than the
3.0% in the same period last year. It is still lower than the 3.2%
inflation rate for the whole 2012. The reason for the deceleration
was primarily due to the slower price increase of non-food items
such as petroleum products and electricity. Food items also
posted a lower price increase during the period. Unemployment
rose during 1Q13, climbing to 7.5%. This translates to an
estimated 3 mn unemployed Filipino workers. Moreover,
remittances during the first half of 2013 amounted to USD10.6
bn, exhibiting a 5.6% increase from the same period last year. The
countrys economic outlook remains bright, with the support of
recent investment upgrades by several international ratings
agencies, and the continued growth of the manufacturing,
construction and the BPO industries. Backed by the strong
economic growth of the country, Metro Manilas GDP at current
prices reached Php3,830 bn (USD90.7 bn) in 2012, registering a
YOY growth of 10.7%. The 2012 GDP growth for Manila was 3.4
percentage points higher than the growth registered in 2011.

city received a total of 2.7 million air arrivals in 2011, representing


a double-digit growth of 18.8% YOY. In the first half of 2013,
visitor arrivals to the Philippines continued to grow, increasing by
11% YOY from 2.1 mn last year to 2.4 mn this year. In terms of
the top five source markets, the Korean market continued to
remain at the top with 585,282 arrivals, registering a YOY growth
of 23.3% compared to the same period in 2012, accounting for
24.6% of the total visitor arrivals.Visitor arrivals from the US
increased by 2.9% to 585,282 during the first six months of 2013,
ranking second place among the source markets and constituting
15.3% of the total. With a share of 8.4% of total visitor volume,
the fourth biggest market originated from China with 199,157
arrivals, recording the strongest growth rate among the top ten
source markets of the country (+ 32.1%). The fifth largest market
came from Australia with 103,286 arrivals and a share of 4.3% of
the total, representing a double-digit growth of 11.5%, compared
to 1H 2012. An air service agreement was signed with Brazil and
it is expected that arrivals from this market will grow in the near
future.
MANILA AIR ARRIVALS 2008 2011

METRO MANILA GDP 2010 2012


Source: Department of Tourism

Note Metro Manila


Source: National Statistics Coordination Board (NSCB)

Tourism arrivals
In order to further promote the development of the tourism
industry, the Department of Tourism (DOT) launched a widely
publicized tourism marketing campaign named Its More Fun in
the Philippines in 2012, which helped the countrys ranking to
rise 12 notches to 82nd place, out of 140 countries in the World
Economic Forum (WEF) 2013 Travel and Tourism
Competitiveness Index. DOT figures show that visitor arrivals
grew from 2.8 mn in 2009 to 4.2 mn in 2012, posting a CAGR of
13% over the past four years. With regard to tourism arrivals in
Manila, according to the latest available figures from the DOT, the

68

Hotel Views
2014

MANILA, PHILIPPINES

Hotel supply
According to DOT, Philippines featured 6,873 hotel
establishments, providing a total of 162,403 rooms as at the end
of June 2012. Among that, there were 320 hotels distributed in the
Metro Manila area, with an offering of 31,790 rooms, accounting
for 4.6% and 19.6% of the total number of hotel establishments
and rooms, respectively. The Philippines strong growth potential
of tourist arrivals has strengthened developers determination and
confidence to venture into hospitality-related projects all over
the country. The country has 212 hotels under construction as
at the end of June 2012, that is, 15,030 hotel rooms being added
to the existing inventory. In Metro Manila alone, there were 21
new hotel developments, ranging from budget to deluxe under
construction, with approximately 7,200 rooms. Many of these new
developments will be gaming-oriented as parts of the planned
Entertainment City project in Paraaque, which is envisioned to
become a key gaming center in Asia and to attract 1 mn tourist
arrivals annually. In addition, international hotel operators are and
will be speeding up the hotel brands expansion in the country.
Aside from the recently opened Raffles and Fairmont hotels,
Mvenpick is stepping up its ambitious global expansion with the
signing of a new property in Makati City. Accor is strengthening
its presence with the addition of two new properties, namely
the Mercure Manila Ortigas and Novotel Manila Araneta. Other
notable new additions over next five years include the Belle
Grande Casino and Resort Manila in 2013, Shangri-La at The Fort
in 2014, the expansion of the Manila Marriott Hotel, the Grand
Hyatt Manila in 2015, the Westin Manila Bayshore in 2016 and the
Sheraton Manila in 2017. New openings are mainly clustered in
up-and-coming commercial districts, namely Resorts World and
Pagcor Entertainment City (in Pasay City, near Manila Bay) and
Bonifacio Global City, located near the Makati Area.

Hotel Performance
According to the figures from DOT, the average occupancy levels
for Metro Manila hotels started to decline in 2012, assessing at
67.3% (down by 2.0 percentage points YOY). In terms of
occupancy levels by market segments, the highest level was
achieved by the deluxe segment (defined as four to five-star
hotels), which stood at 72% in 2012, showing a minor decline of
0.8 percentage point over the previous year. Occupancy levels for
standard and first-class hotels (defined as three-star hotels) were
64% and 58% in 2012, down by 2.9 percentage points and 3.0
percentage points respectively from the 2011 levels. Economy
hotels recorded the lowest occupancy level of 55% and
experienced a sharp decline of 4.6 percentage points compared
to the level in 2011. There is no official data in terms of ADR for
Metro Manila. However, it can be said that the market has three
main commercial areas, hence three diversified rate levels: namely
Manila Bay, Ortigas and Makati. The Makati hotel market
continued to be the best performing market, rate-wise.

METRO MANILA HOTEL MARKET PERFORMANCE 2010


YTD JUNE 2012

Source: Department of Tourism Manila, Philippines


* Please note that the 2012 Inventory data is only up to YTD June 2012

OUTLOOK
Figures from the Philippines National Statistical Coordination
Board (NSCB) indicated that the country welcomed a total of 4.3
mn tourist arrivals in 2012. Although the figure exceeded the 4
mn mark, it is still below the governments targeted goal of 4.5 mn
arrivals. However, the NSCB expects that the country will
continue to attract increasing numbers of international tourists,
relying on its natural beauty, hospitality as well as the
improvement of some of the countrys main issues, such as traffic
congestion, poor and dirty environment, lack of tourism facilities
and infrastructure. It is estimated that the country will be able to
attract over 10 mn foreign tourists by 2016. The hotel market is
expected to benefit from the steady development of the countrys
tourism industry and to maintain solid occupancy level,
considering the continued positive growth of tourist arrivals as
well as the development of large-scale tourism projects such as
Entertainment City in Paraaque. These elements should induce
significant demand to the hotel market. In relation to supply, the
entry of more internationally branded hotels will not only
alleviate the countrys issue of lacking quality accommodation
facilities, especially in the high-end segment, but also help promote
the overall quality and environment of the hotel market, attracting
increasing numbers of visitation to the Philippines.

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69

macau, sar

70

Hotel Views
2014

MACAU, SAR

Economy
The handover of the Portuguese territory back into Chinese
hands in 1999 ended the casino monopoly of Stanley Ho and
since then, roughly three dozen large and small casinos have been
built. Billion-dollar investments from the likes of Sands and Wynn
Resorts have transformed Macau into the worlds premier casino
market. Casino revenues in Macau climbed 13.5% last year to a
record USD38 bn, dwarfing the combined earnings of second- and
third-placed Las Vegas and Singapores of USD12.1 bn. Primarily
built upon Chinese tourism, Mainland Chinese have been flooding
into Macau, the only place in China where gambling is permitted.
Economic growth averaged 14.1% in the last ten years and per
capita income makes the Macanese one of the worlds highest.
New hotel-casino projects are fueling expectations that the
market could hit between USD61 and USD76 bn in annual gaming
revenues by 2017. Much of the development centers on the Cotai
Strip, with projects portioned out over the next three years. Plans
are evolving however, as the gambling mecca is likely to spend
some effort to derive more earnings beyond gaming and to
expand its tourism base.

albeit still in a downward trend, overtook Japan as the fifth largest


source market for Macau. As for other Asia markets, both Thailand
and Vietnam recorded robust growth of 23% and 28% respectively,
comparing to the same period in 2012, thanks for their growing
economies. Although only accounting for a very small share of
0.6%, visitor arrivals from India still posted a positive YOY growth
of 2.3% to 83,957. The citys tourism department aims to capture
a bigger market share of outbound tourists from key markets like
Kolkata, Ahmedabad and Hyderabad, and is looking at promoting
customized offers to meet the needs of travelers from these
cities.
MACAU VISITOR ARRIVALS 2009 2012

MACAU GDP 2008 2012

Source: Macau Statistics and Census Service

Source: Macau Statistics and Census Service

Tourism Arrivals
Macaus economy is based on four main pillar industries: gaming
and tourism, export processing, finance and insurance, as well as
construction and real estate, among which the gaming and
tourism sector, dominated by the gambling industry, has played a
vital role in the local economy. Figures from the Macau Statistics
and Census Services (MSCS) showed that overseas visitor arrivals
to Macau experienced rapid growth over the past four years,
growing at a CAGR of 8.9%, from 21.8 mn in 2009 to 28.1 mn in
2012. In the first half of 2013, Macau received a total of 14.1 mn
visitor arrivals, representing an increase of 4.2% YOY. As the key
driver of the local tourism market, visitor arrivals from Mainland
China reached 8.9 million, posting a 9.8% YOY growth and
accounting for 63% of total visitor arrivals. Among the other top
five source markets, visitors from Hong Kong and Taiwan declined
by 3.3% and 8.6% to 3.3 mn and 0.5 mn, respectively. The Korea
market grew by 5.3% YOY to 0.2 mn, ranking in fourth place in 1H
2013. Given the prevailing political tensions with China, visitor
arrivals from Japan experienced a sharp decline of 32.8% YOY to
0.1 mn, falling out of the top five markets. The Philippines market,

CUSHMAN & WAKEFIELD

71

MACAU, SAR

HOTEL SUPPLY
Figures from MSCS indicate that Macau featured 99 hotel
establishments, providing 28,082 hotel rooms as at the end of
June 2013. Although the number of hotels remained unchanged
compared to the same period in 2012, the number of rooms grew
by 15.7% YOY. This is a reflection of the fact that most of newly
opened hotels are large-scale developments. One such example is
the newly opened Sands Cotai Center, which has had three
international branded hotels opening for business successively in
the period of 2012-2013, offering a total of approximately 5,800
hotel rooms. The overall positive hotel performance as well as the
strong demand potential continues to attract development and
expansion interests from developers and hotel operators.
Rosewood Hotel Group is planning to run a hotel under its
Pentahotel brand in Macau, a new destination target for the group.
Versaces first hotel venture in Asia will be the opening of Palazzo
Versace on the Cotai Strip in 2017, in partnership with SJM
Holdings. This hotel will be the third one that Versace opens
globally, following the original Palazzo on Australias Gold Coast
and the recently announced property in Dubai that is currently
under construction. MGM China Holdings got approval to
develop a new gaming resort on Cotai, which will include
approximately 1,600 hotel rooms, 500 gaming tables and 2,500
slots. Other notable new additions to the market include a
439-room St. Regis Hotel and a 250-room Jumeirah in the second
half of 2013, a 1,100-room JW Marriott Hotel, a 250-room
Ritz-Carlton Hotel in 2015, and a 1,700-room Wynn Hotel in
2016.

Hotel Performance
Supported by strong accommodation demand, which is largely
dependent on the growth of gaming-related tourism, Macaus
hotel market achieved robust growth in ADR and a relatively high
level of occupancy. Room rates for all type of hotels to
MOP$1,423 (USD175) in 2012, representing a YOY growth of
5.9%. AOR for all types of hotels declined by 1 percentage point
to 83%, compared to the same period in 2011. According to the
preliminary 2013 half year figures retrieved from the Macau Hotel
Association, three to five-star hotels achieved positive growth in
ADR, up by 1.4% to MOP$1,436 (USD176), compared to the
corresponding period in 2012. Market-wide occupancy stood at
85.8%, with a slight downward adjustment over the same period
in the previous year. Driven by the increase of both ADR and
occupancy rate, RevPAR for all types of hotels reached
MOP$1,232 (USD151) in 1H13, posting a growth of 2.0% on a
YOY basis. In terms of market performance by segment, room
rates posted positive growth in all hotel segments. Except for the
five-star hotel segment, which remained fairly stable, both three
and four-star hotels recorded growth, increasing by 4.4% and 5.1%
to MOP$904 (USD111) and MOP$1,096 (USD134), respectively.
Five-star room rates stood at MOP$1,687(USD206) in the YTD
June 2013, growing only by 0.2% over the corresponding period in
2012.

72

MACAU HOTEL MARKET PERFORMANCE 2010 1H2013

Source: Macau Hotel Association

Outlook
Backed by its convenient location (within three-hour flight to
Mainland China and many Asian countries), the unique cultural
and historical background as well as abundant entertainment
facilities, Macaus tourism industry is expected to continue to
flourish in the future. With the opening of the individual visit
scheme to Macau for residents of 49 cities in Mainland China and
the moderate extension of gaming licenses, Macaus economy is
moving from a heavy reliance on the gaming industry to a more
comprehensive growth pattern built on the continuous
development of non-gaming industries such as convention and
exhibition, retail and catering, entertainment, etc. The market is
expected to continue to see the development of large-scale hotel
schemes, which might exert some downward pressure on market
performance in the short-term. However, the further completion
and improvement of entertainment, MICE and commercial
facilities is anticipated to become a strong demand driver and to
boost visitation to Macau. We expect that market performance
for the overall hotel market will continue to remain positive with
strong ADR and high occupancy levels being forecast in the
long-term.

Hotel Views
2014

PHUKET, THAILAND

CUSHMAN & WAKEFIELD

73

PHUKET, THAILAND

Economy26
According to the National Economic and Social Development
Board (NESDB), the 2013 GDP growth has been revised
downward to 3.8-4.3% from the previous forecast range of
4.2-5.2%, as the Thai economy is slated for weaker-than-expected
economic conditions. This is particularly attributed to the slow
economic reforms by the government, the uncertain recovery of
the global economy and the continuous strengthening of the Thai
Baht. In April 2013, the Baht reached its 16-year strongest value
against the US dollar, leading to lower-than-anticipated growth of
exports, due to the negative impact of the European debt crisis
and quantitative easing in the US. Consequently, economic
management in the remaining quarters is expected to come into
effect. NESDB pointed out that weakening economic momentum
and ensuring the stability of the currency should be considered as
key priorities. With a GDP growth of 5.3% in 1Q 2013, the Thai
economy continued to expand, but at a slower pace than in 4Q
2012.
PHUKET GDP 2008 2011

PHUKET AIR ARRIVALS 2008 2012

Source- Airports of Thailand Public Company Limited

Hotel supply
The total inventory, as of 1H 2013, is around 32,500 keys
(excluding the economy segment), out of which the upscale
segment comprises 21%, followed by upper midscale (14.5%),
upper upscale (12%) and luxury (10.5%). The existing inventory is
majorly distributed across the midscale hotels, accounting for 42%
of the total inventory. The total upcoming supply pipeline is 5,860
keys by 2016, with 42% of the proposed hotels belonging to the
midscale segment. About 25% of the upcoming supply is being fed
into the upscale segment, followed by luxury (12%), upper upscale
(10%), economy (7%), and upper midscale (4%). The recent
openings in the first half of 2013 have been Regent, Pullman,
Thanyapura Sports Hotel, Avista Hideaway Resort and Spa, Tune
Hotel, Holiday Inn Express and Patong Beach Central, to name a
few. Other hotels in the pipeline that are expected in the second
half of 2013 are Days Inn, COMO Hotel and Hyatt Regency.

Source: Office of National Economic and Social Development Board

Tourism arrivals
The increase in the number of direct flights has made travelling
convenient and Phuket International Airport exceeded its stated
capacity by 30% in 2011. Phuket received 2.4 mn international
tourists in 2012, up by 17% over the previous year. Total
international arrivals from 2008 to 2012 have grown at an 18%
CAGR. The largest number of international visitors came from
China (22%), Russia (15%), Australia (10%), South Korea (9%) and
Malaysia (4%). Domestic arrivals are estimated to have reached
2.2 mn in 2012, up by 7% over the previous year and the domestic
to foreign tourist ratio is 47:53. Phuket International Airport has
37 scheduled passenger airlines running with six newcomers in
2011, namely Aeroflot, Strategic Aviation, Air China, Hong Kong
Airlines, Mahan Air and Jet Airfly. The airport is running at a
capacity more than it is built to handle, although expansions work
are currently underway, which are estimated to be completed by
2015. Meanwhile, by end of 2013, a temporary terminal building
and aircraft bays are being constructed in order to facilitate and
prepare for the busier season in October and November.
26

74

Economic data was converted to USD at constant exchange rates

Hotel Views
2014

PHUKET, THAILAND

Hotel Performance

OUTLOOK

Phuket is experiencing a surge of activity in the hospitality and


tourism space. The destination has maintained high occupancy
rates with reasonable ADRs. In 2012, the AOR increased 75%, an
increase of 1.6 percentage points over 2011. ADR had a lift of
6.2% over the previous year to USD138. Phuket International
Airport is the second busiest airport after Suvarnabhumi Airport
in Bangkok. Thus, the demand for room-nights is quite robust as
well. This has resulted in 8.5% increase in RevPAR, to USD104 in
2012. Luxury, upscale and upper-upscale hotels performed at an
AOR of 70% with an approximate ADR of USD195, while
midscale and upper-midscale hotels achieved an AOR of 76.2%
with an ADR of USD113.

Phukets hospitality market is growing stronger with each passing


year, given the quantum of tourist arrivals to this destination.
Travel to Thailand is cost-friendly for many Asia Pacific and
European countries. The improving connectivity with direct flights
to Phuket is an added boost to the tourists willing to travel to
this resort destination. The ratio of international to domestic
arrivals to Phuket has changed from 41:59 in 2008 to 53:47 in
2012. This indicates the growing share of international arrivals to
Phuket and its increasing attractiveness. Infrastructure needs to
be enhanced to provide quality facilities for travelers. Phuket
International Airports expansion is a constructive step towards
building more capacity to welcome the rising number of tourists.
Given the current trends and initiatives, the supply of upcoming
hotels is likely to get absorbed over the coming years without
affecting key performance figures in the short-term.

PHUKET HOTEL MARKET PERFORMANCE 2011 2012

Source- Cushman & Wakefield Hospitality

CUSHMAN & WAKEFIELD

75

hanoi, vietnam

76

Hotel Views
2014

HANOI, VIETNAM

Economy
According to the General Statistics Office of Vietnam, Hanoi
witnessed a GDP growth of 8.1% in 2012. Furthermore, the
overall economic growth of Hanoi in 1H 2013 has been higher
than that in the same period of 2012. Particularly, in 1H 2013,
GDP increased by 7.7% compared to the same period in 2012,
while CPI rose by 5.7% compared to the same period last year.
Total new registered and additional FDI in the first half of 2013
into the city reached around USD300 mn (104 projects). Hanois
economy, in 2013, is forecast to continue to face difficulties and
challenges more severe than that in 2012. However, the city has
called on authorities and sectors to exert more effort to keep the
economy of the capital on track. The citys GDP is expected to
see a growth of about 8-8.5% this year.
HANOI GDP 2008 2012

HANOI AIR ARRIVALS 2008 2012

Source: Hanoi Department of Culture, Sports and Tourism

HOTEL SUPPLY
The total inventory present in Hanoi is over 7,600 keys; the city is
largely upscale, which comprises almost 31% of the total
inventory, followed by midscale with 24%, upper upscale with 19%,
luxury with 14%, and budget with 11%. Presently, a number of
brands are expected to venture into Hanoi. During the first half of
2013, Hilton Garden Inn opened in April with 86 rooms, thus
marking the brands debut into Vietnam. Additionally, luxury
brands such as Intercontinental Hanoi (3Q 2013), expected to be
South-east Asias tallest hotel building with 359 keys, and JW
Marriott (3Q 2013) with 450 keys, are expected to change
inventory segmentation substantially.

Source: General Statistics Office of Vietnam

Tourism Arrivals
During 2012, the total number of tourism arrivals into Hanoi was
12.9 mn (down by 4.4% YOY), of which 85% accounted for
domestic whilst 15% accounted for international travelers.
However, in 1H 2013, Hanoi received 1.2 mn international arrivals
and 7.9 mn domestic tourists, showcasing a YOY increase of 15%
and 8%, respectively. Hanoi currently expects 15.5 mn tourists, of
which 2.25 mn are likely to be foreigners, as per the Municipal
Department of Culture, Sports and Tourisms latest estimates.
Vietnams top three feeder markets are China accounting for 21%
of total tourist arrivals, followed by South Korea with 10%, and
Japan with 8%. Noi Bai International Airport lies approximately 35
kilometers from the city center and is located in the Soc Son
District of Hanoi. The city is expected to host the 18th Asian
Games in 2019; as a result, the airport is expected to see a
second passenger terminal commence service in April 2015.

CUSHMAN & WAKEFIELD

77

HANOI, VIETNAM

Hotel Performance

Outlook

In 2012, AOR for the city witnessed a drop of 1.9 percentage


points to 61.4% YOY. ADR however, witnessed an increase of 8.0%
YOY, to USD117. Having seen an increase in budget inventory
YOY with branded hotels such as Easy GTC Hotel (70 keys)
making their debut, the occupancy for the budget segment was
60% with an ADR of USD37. The midscale segment recorded the
highest occupancy level of 64% with an ADR of USD73. Similarly,
upscale and upper upscale hotels recorded occupancy of 60%
with an ADR of USD138, and finally luxury hotels achieved
occupancy of 59% and ADR of USD125.

In 2013, tourism associations of Hanoi and HCMC, at the Vietnam


International Travel Mart (held in Hanoi), signed an agreement for
reduced air fares between the two cities to be offered by the
national flag carrier Vietnam Airlines and low-cost carrier Viet Jet
Air, thus making Hanoi a cheaper destination to travel to. Supply
in Hanoi is expected to see a substantial increase with the
opening of JW Marriott, InterContinental and Hilton Garden Inn
this year; market-wide occupancy levels are expected to continue
to drop, with a further adjustment in ADRs. Hanoi authorities
have launched a tourist support division to help resolve incidents
faced by tourists. As the host of the 18th Asian Games in 2019,
the city is likely to see an increase in hotel development activity.
The estimated investment of the games is USD150 mn and is
likely to account for a significant amount for demand in the
coming years.

HANOI HOTEL MARKET PERFORMANCE 2011 2012

Source: Cushman & Wakefield Hospitality

78

Hotel Views
2014

TRANSACTION UPDATE

2013 is turning out to be a resurgent year for hospitality


transactions in Asia. For the half year through June, total
investment volumes of value of hospitality assets, closed or
contracted, have reached USD5.16 bn, an increase of over 53%
from the same period last year. This level is already 93% of the
total investment volumes achieved for 2012. Preliminary estimates
show that hospitality investment volumes for 3Q13 are around
USD3.1 bn, and we forecast that the 2013 level could be in the
range of USD10-12 bn. This would make 2013 a record year for
hospitality investments post the global financial crisis.
Investment capital into hospitality assets in Chinese cities totaled
USD1.2 bn in the first half of 2013, a 73% increase over the same
period in 2012. Purchases of hotel assets in Tier-1 Chinese cities
made up the bulk of this volume. On the back of construction
efforts, the tourism industry in Japan continued to recover from
the earthquake in 2011. The country devoured over a quarter of
the capital into the core markets to reach USD1.2 bn in
transactions; 53.4% were bound for Tokyo. With a string of foreign
brands entering the capital in response to the demand for
high-end accommodation there, hoteliers are beefing up their
portfolio to take on the expected new competition.
Interest in Singapores hotel assets also surged from last year,
which recorded just USD75.3 mn in the first half of 2012, to
USD876.1 mn in the first half of 2013 Tourist arrivals in the island
republic have continued to grow despite uncertain economic
conditions last year, which underpinned the demand for hotel
assets. The sale of Park Hotel Clarke Quay to Ascendas
Hospitality REIT accounted for slightly over a quarter of
transactional volume.

Evidently, REITs are increasingly dominant in the hospitality scene,


as low global interest rates have provided an easy financing source
while spurring the popularity of the investment vehicle as an asset
class. Total REIT purchases in the same period reached USD1.2 bn,
or 23% of total transaction volume. Hong Kong listed Regal REIT
shelled out USD416.8 mn for two hotels that are still under
construction; Singapore, Australia and Japan accounted for the
rest.
Transactional activity has also become noticeably more diverse,
with frontier markets, such as Myanmar, Cambodia and Sri Lanka,
accounting for a growing proportion of investments. Some of
these countries have only recently become viable investment
destinations (such as Myanmar thanks to its political reforms or
Sri Lanka, where the civil war ended after 30 years). South-east
Asia is also experiencing an economic renaissance.
Rapid growth in China has also enabled the country to become
the worlds largest outbound tourism market. According to the
China Tourism Academy, last year, its citizens made estimated 83
mn overseas trips and spent an estimated USD102 bn, thus
fuelling investments. This has yielded gaps in the hotel industry
and, in turn, has thrown up opportunities.
Hotel assets have seen strong appreciation in the past year as a
result and are increasingly considered to be a viable asset class in
core-plus investment strategies. The market for hotel assets is
expected to remain buoyant.

APAC TOTAL INVESTMENT VOLUME BY COUNTRY 1H 2013

Source: RCA, Cushman & Wakefield Hospitality

CUSHMAN & WAKEFIELD

79

APAC NOTABLE HOTEL DEALS 1H 2013

PROPERTY NAME

CITY/COUNTRY

BUYER

SELLER

Hotel Renaissance

Seoul/S. Korea

IGIS Asset Mgmt

Sambu Construction

986.27

Grand Waldo Hotel

Macau/China

GEG

Get Nice Hldgs

418.81

Hilton Tokyo Bay

Urayasu/Japan

Japan Hotel REIT

Mitsui Fudosan

276.83

Hilton Guangzhou Tianghe

Guangzhou/China

Jinyinfeng Equity Invt Fund


(Shenzhen)

Talent Property Grp

271.57

Park Hotel Clarke Quay

Singapore

Ascendas Hospitality

Park Hotel Grp

237.30

North Point Hotel

Hong Kong

Regal REIT

Paliburg Hldgs Ltd

212.89

Sheung Wan Hotel

Hong Kong

Regal REIT

Regal Hotels Int'l Hldgs

203.86

Park Regis

Singapore

Unknown

Park Regis Invt

197.75

Peninsula Shanghai

Shanghai/China

Greenland Group

SPG Land (Hldgs)

174.62

Vinpearl Luxury Ho Chi Minh

HCMC/Vietnam

VIPD Group

Vingroup

155.24

Source: RCA
* The exchange rate used is indicative of the prevailing rate at the time of the transaction

80

PRICE
(USD IN MN)*

Hotel Views
2014

CONCLUDING REMARKS

Despite the recent rout in Asian financial markets and cuts in


GDP forecasts, long-term growth prospects for Asian economies
remain structurally healthy and a repeat of the 1997 financial
crisis is unlikely. Market-wide Asian hotels have had positive
RevPAR growth in 2012, although at a slower pace compared to
2011. So far in 2013, hotel performance remains a mixed picture
of growth, consolidation and decline in different markets. Due to
the large supply injections in several core markets over the past
two years, region-wide RevPAR this year might dip below 2012
levels, although hotel performances across individual cities will
vary widely. However, we expect next years hotel RevPAR growth
to make a positive turn as some of the recent excess supply gets
absorbed in several markets. Chinese outbound tourism should
continue to drive the regions growth.
Most markets are experiencing continuous growth in their
pipeline and room stocks both in terms of international and
domestic brands. International hotel groups such as Hilton and
Starwood are expanding rapidly in China, India and Indonesia.
Currently, these three markets have the largest pipeline. Southeast Asia is expected to remain the fastest growing sub-region in
Asia Pacific in 2013 as with previous years. Notably, destinations
like Myanmar and Cambodia are seeing a surge in visitor arrivals,
as rising foreign capital investments enter their markets. In South
Asia, Sri Lanka has been enjoying a tourism boom after the end of
the civil war in 2009. Tourist growth in Seoul was robust in 2012,
but is set to moderate in 2013, due to the weakened spending
power of Japanese visitors.

Asian authorities are also expanding capacities of transportation


hubs such as airports, rail, ports and city connectivity. Among the
developments, we find a high-speed rail system linking Malaysia
and Singapore, new airports in Navi Mumbai and Beijing, new
airlines taking to the skies, like Kuala Lumpurs low-cost carrier
Malindo Air as well as airport expansions in a number of cities.
Colombo is planning to build a mega-casino by 2016, while the
Philippines is developing the Paraaque Entertainment City. All
these developments should benefit tourism demand and present
much growth opportunities for hoteliers and developers.
Hotels in Asias key economic centers and tourism destinations,
such as Hong Kong and Singapore, are operating at close to full
capacity and have had robust revenue performances in recent
years. With large supply additions coming in, revenue growth is
likely to be limited in both markets. However, hotel capital values
continue to grow due to investor confidence and limited products
available for sale.
2013 is likely to be remembered as a record year for hospitality
investments and full-year volumes could reach USD10-12 bn.
Transaction activity remains healthy in prime markets like
Singapore, Japan and Tier-1 Chinese cities and would continue
into 2014. Going ahead, the Asian hospitality sector is likely to
remain active with sustained investment activities. Over the
medium-term, established markets with substantial inventory
pipeline could experience downward pressures in RevPAR while
emerging markets might present new and exciting opportunities
for hospitality developments.

CUSHMAN & WAKEFIELD

81

CONTACTS

Akshay Kulkarni

Sigrid Zialcita

Regional Director, Hospitality


South & South East Asia, Singapore
+(65) 6232 0819
Akshay.Kulkarni@ap.cushwake.com

Managing Director
Research, Asia Pacific
+(65) 6232 0875
Sigrid.Zialcita@ap.cushwake.com

Paola Orneli

Soo Jin

Associate Director,
Head of Hospitality, China,
+(86) 105921 0823
Paola.Orneli@ap.cushwake.com

Senior Manager
Advisory & Consulting, Seoul
+(82 2) 3708 8869
Soo.Jin@ap.cushwake.com

Juhie Tak

GERALD LIM

Manager
Hospitality Services, India
+(91) 124 4695 539
Juhie.Tak@ap.cushwake.com

Manager
Hospitality Services, South East Asia
+(65) 6232 0885
Gerald.Lim@ap.cushwake.com

CHInA
Address: 26/F The Headquarter Building
168 Xizang Zhong Lu
Shanghai, China 200001 PRC
Tel: 8621 2320 0808

JAPAn
Address: Sanno Park Tower 13F
2-11-1 nagatacho Chiyoda-ku,
Tokyo, Japan 100-6113
Tel: 813 3596 7070

SOuTH KOReA
Address: 5/F Korea Computer Building
21 Sogong-dong, Jung-gu
Seoul, South Korea 100-070
Tel: 822 3188 322

HOnG KOnG
Address: 9th Floor, St Georges Building
2 Ice House Street, Central
Hong Kong
Tel: 852 2956 3888

MALAYSIA
Address: Lot 3A-1, Level 4, Wisma W1M
7 Jalan Abang Haji Openg
Taman Tun Dr Ismail
Kuala Lumpur, Malaysia 60000
Tel: 603 7728 8116

TAIWAn
Address: Room
38/F
RePro A,
International
Inc.
Taipei
13F-2, 101
no.Tower,
89, SongRen Road
7exchange
Xinyi Road
Sec.One
5,
Square
Taipei, Taiwan 11049
Tel: 886 2 8101
2758 5115
6000

PHILIPPIneS
Address: 18/F Philamlife Tower
8767 Paseo de Roxas
Makati City Metro Manila
Philipines
Phillipines1226
1226
Tel: 63 2 830 8488

THAILAnD
Address: 31st FI., Bangkok Insurance
Building / Y.W.C.A.
25 South Sathorn Road,
Thungmahamek, Sathorn
Bangkok 10120, Thailand
Tel: 662 286 8899

InDIA
Address: 14th Floor, Tower C, Building 8
DLF Cyber City
Gurgaon, India Haryana-122002
Tel: 91 124 4695555
InDOneSIA
Address: Jakarta Stock exchange Building
Tower 2, 15th Floor
Jl. Jend. Sudirman Kav. 52-53,
Jakarta 12190
Tel: 62 21 2550 9500

82

SInGAPORe
Address: 3 Church Street
#09-03 Samsung Hub,
Singapore 049483
Tel: 65 6535 3232

VIeTnAM
Address: Room 602, Asia Tower,
6 nha Tho street, Hoan Kiem district,
Hanoi,Vietnam
Tel: 84 4 3938 1786

Hotel Views
2014

Photo creditS

1.

FRONT & BACK COVER


Munich Neue Pinakothek gallery ceiling:
Stock.xchng http://www.sxc.hu/browse.phtml?f=view&id=760208

15.

DHAKA, BANGLADESH
The Westin Dhaka
Pages 46 & 48: Starwood Hotels & Resorts, Inc.

2.

BEIJING, CHINA
Tangram Hotel Xinyuan Li
Pages 8 & 9: Tangram Hotels Group AG

16.

3.

SHANGHAI, CHINA
W Shanghai The Bund
Page 11: Starwood Hotels & Resorts, Inc.
Page 13: http://www.skyscrapercity.com/showthread.php?p=87419858

THIMPHU, BHUTAN
Taj Tashi Thimphu
Page 49: The Indian Hotels Company Limited
Uma by COMO Paro, Bhutan
Pages 50 & 51: COMO Hotels www.comohotels.com

17.

BALI, INDONESIA
The Samaya Ubud Bali
Pages 52, 53 & 54: The Samaya Villas Bali, Ubud Bali

18.

KUALA LUMPUR, MALAYSIA


Traders Kuala Lumpur
Pages 55 & 57: Shangri-La Hotels & Resorts

19.

MALE, MALDIVES
Gili Lankanfushi
Pages 58, 59 & 60: HPL Hotels & Resorts Pte. Ltd. 2013

20.

YANGON, MYANMAR
Summit Parkview Hotel
Page 61: http://www.pandaw.com
Page 63: iStock Photos

21.

KATHMANDU, NEPAL
Radisson Hotel Kathmandu
Pages 64 & 66: Carlson Rezidor Hotel Group

22.

MANILA, PHILIPPINES
The Peninsula Manila
Pages 67 & 68: The Hongkong & Shanghai Hotels, Limited

23.

MACAU, SAR
MGM Macau
Page 70: http://upload.wikimedia.org/wikipedia/commons/c/ce/MGM_Grand_Macau_edit1.
jpg
Pages 71 & 72: MGM Hospitality

24.

PHUKET, THAIL & Sofitel Krabi Phokeethra Golf & Spa Resort
Page 73: Accor http://www.sofitel.com/gb/hotel-6184-sofitel-krabi-phokeethra-golf-and-sparesort/index.shtml
Trisara Hotel, Phuket
Page 74: http://www.wallsforpc.com/wp-content/uploads/2013/05/TrisaraHotelPhuketThailand.jpg
Hotel Phuket
Page 75: http://www.asia-trip.info/wp-content/uploads/2012/11/Hotel-Phuket-Thailand.jpg

25.

HANOI,VIETNAM
Hotel De LOpera Hanoi | A MGallery Collection
Pages 76, 77 & 78: Accor
http://www.mgallery.com/gb/hotel-7832-hotel-de-l-opera-hanoi-mgallery-collection/index.
shtml

26.

TRANSACTION UPDATE
Renaissance Seoul Hotel
Page 80: Baron Reznik http://www.flickr.com/photos/baronreznik/4418052932/sizes/o/

27.

CONCLUDING REMARKS
PARKROYAL on Pickering, a PARKROYAL Collection Hotel
Page 81: Patrick Bingham-Hall

4.

TOKYO, JAPAN
Palace Hotel Tokyo
Page 14: http://commons.wikimedia.org/wiki/File:Palace-Hotel-Tokyo-03.jpg
Tokyo Station Hotel
Pages 15 & 16: Tokyo Station Hotel, JR Hotel Group

5.

MUMBAI, INDIA
Sofitel Mumbai BKC
Pages 17, 18 & 19: Accor http://www.sofitel.com/gb/hotel-6451-sofitel-mumbai-bkc/index.
shtml

6.

NCR, INDIA
Vivanta by Taj - Gurgaon NCR, New Delhi
Pages 20 & 21 The Indian Hotels Company Limited

7.

JAKARTA, INDONESIA
The Westin Jakarta
Page 23: Starwood Hotels & Resorts, Inc.
Page 24: Poole Associates Private Limited http://www.poole-associates.com/Westin-Jakarta.
htm

8.

HONG KONG, SAR


Hotel Indigo Hong Kong Island
Pages 26 & 27: InterContinental Hotel Group

9.

SINGAPORE
PARKROYAL on Pickering, a PARKROYAL Collection Hotel
Pages 29, 30 & 31: Patrick Bingham-Hall

10.

COLOMBO, SRI LANKA


Casa Colombo
Pages 32, 33 & 34: http://lustfab.com/casa-colombo/

11.

SEOUL, SOUTH KOREA


Sheraton Seoul D Cube City Hotel
Pages 35, 36 & 37: Starwood Hotels & Resorts, Inc

12.

BANGKOK, THAILAND
W Bangkok
Pages 38, 39 & 40: Starwood Hotels & Resorts, Inc

13.

HCMC,VIETNAM
Novotel Saigon Centre
Pages 41 & 43: Accor http://www.novotel-saigon-centre.com
Page 42: http://bk.asia-city.com/node?page=5

14.

REGIONAL HOTSPOTS
Taj Tashi Thimphu
Page 44: http://www.shafir.info/plain/bhutan~thimphu~taj_tashi_hotel_2.htm

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