First global hotel performance data for the full year 2005 from the HotelBenchmark Survey by Deloitte shows that across all regions of the world – Europe, Asia and the Middle East – revenue per available room (revPAR) continued to record positive growth throughout the year.
Hotels in the Middle East retained pole position for the second year running, posting double-digit revPAR growth of 21.4%. Across Asia, hotel performance slowed during 2005 compared to the previous year. Although the region recorded a healthy increase in revPAR of 9.1%, it was a far cry from the record-breaking results achieved in 2004, when revPAR grew 25%. In Europe, growth was steady – but with revPAR up just 4.1% - it remains the slowest growing region in the world.
Throughout 2005 the hotel industry faced a number of challenges including natural disasters and the continuing threat of terrorism. Yet despite this hotel performance remained resilient and any adverse effects on trading caused by these events was short lived. International visitor arrivals continued to improve throughout 2005 and latest estimates from the World Tourism Organisation (UNWTO) suggest growth will be 5-6% in 2005, resulting in the overall number of international tourist arrivals reaching the 800m mark. Although this growth is not as high as that achieved in 2004, when international visitor arrivals increased 10.7%, it is still an exceptional rise and one of the reasons why hotel performance has continued to improve.
Hotel investment in Asia continues to steam ahead, as the region’s large domestic populations and relatively undeveloped hotel markets provide huge untapped potential. This coupled with a surge in low-cost airlines and the relaxation of visa requirements continues to drive intra-regional travel and has helped boost a 10% increase in international visitor arrivals to the region.
Hotel performance in the Middle East once again exceeded expectations in 2005, recording solid growth. As the region experiences the largest wave of hotel and airport construction ever, hotel performance can only improve further. However, with some markets potentially reaching an over supply situation, the region must be careful not to price itself out of the market relative to other destinations, in particular Asia.
During 2005, hotel performance across Europe was a mixture of the good, the bad and the unexpected – but overall, the region is moving in the right direction. More than ever, hotel markets across Europe mirrored political, sporting and economic events. During the Pope’s funeral in April average room rates in Rome recorded an €80 premium. In contrast the 2012 Olympic celebrations in London were short lived in July when terror struck in the capital killing 52 people. Occurring just before the summer holiday season, leisure visitors stayed away from London resulting in August occupancy falling to the lowest levels ever recorded.
Julia Felton, Executive Director of HotelBenchmark™ at Deloitte commented: “Although the threat of terror remains across all regions of the world, travellers are becoming more resilient and continue to travel. This is evidenced not only in the continuing strong hotel performance of 2005, but the record number of international visitor arrivals across the globe. While hotel performance across the Middle East and Asia will continue to race ahead, trading across Europe will remain steady throughout 2006. As the hotel industry begins to consolidate and new brands enter the market, steady but sustainable growth in business performance will help keep the industry moving in the right direction throughout this year.”
By: N. Peter Kramer
