china hotel market outlook-final-en - china travel … powerpoint - china hotel market...

CHINA HOTEL MARKET OUTLOOK

Topics To Cover

• Historical Supply Growth

• Developers Outlook

• Hoteliers Outlook

• Key Issues For 2009

• The Crystal Ball

HISTORICAL SUPPLY GROWTH

China Hotel Supply Database

• China Database has 6,008 hotels with 1.3 million rooms

• Cover all 31 provinces, 282 cities and towns

• Hotel's Opened: 4,861 hotels with 977,573 rooms

• New Supply: 1,147 hotels with 300,104 rooms

• From budget, mid-tier, up-tier to luxury hotels.

Note: 1 all the data collected YTD March 2009; 2 exclude HK, Macau, Taiwan

Star-rating For All Existing Hotels

100.0%4,861Total Opened Hotels:

6.5%315No-rating

13.5%654Pending

34.8%1,694Budget

0.3%132-Star

3.5%1713-Star

28.1%1,3644-Star

13.4%6505-Star

RatioNo.Star-rating

Note: 1 all the data collected YTD March 20092 exclude HK, Macau, Taiwan

Pending, 13.5%

No-rating, 6.5%

5-Star, 13.4%

Budget 34.8%2-Star, 0.3%

3-Star, 3.5%

4-Star, 28.1%

China Hotel Supply Growth

22%959,73729%4,7382008

22%789,03728%3,6692007

18%648,90223%2,8562006

14%548,93118%2,3222005

Growth%RoomsGrowth%Hotels

Hotel Supply Growth

Note: exclude HK, Macau, Taiwan

China Existing Rooms Supply – 2000 to 2008

2000Budget, 2%

Domestic,

53%

International

, 46%

Domestic,

39%

International

, 44%

Budget, 17%

International

, 31%

Domestic,

20%Budget, 49%

2005

2008

Note: 1 exclude HK, Macau, Taiwan

Supply Growth Excluding Budget

Note: 1 exclude HK, Macau, Taiwan; 2 exclude budget hotels; 3 source from Intl & Domestic HMCs, Horwath HTL

3%984,6552%3,8772012

5%957,1754%3,7992011

9%913,3997%3,6622010

11%837,7488%3,4282009

13%756,49812%3,1652008

14%672,19815%2,8162007

13%591,92614%2,4572006

12%524,73314%2,1562005

Growth%RoomsGrowth%HotelsYear

China Hotel Supply Growth – Hotels

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2005 2006 2007 2008 2009 2010 2011 2012

0%

2%

4%

6%

8%

10%

12%

14%

16%

Hotels Growth%


China Hotel Supply Growth – Rooms


0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2005 2006 2007 2008 2009 2010 2011 2012

0%

2%

4%

6%

8%

10%

12%

14%

16%

Rooms Growth%

New Supply – Market Positioning: 2009 & 2010


4 No-rating properties include independent hotels and seeking operator hotels.

No-rating, 34% Luxury, 6%

Top-tier, 38%

Mid-tier, 22%

Existing Hotel Supply – Beijing

51%1995902008

27%843912007

19%483072006

15%342592005

Growth %New HotelTotal

Including Budget Hotels

33%983982008

12%323002007

12%292682006

12%252392005

Growth %New HotelTotal

Excluding Budget Hotels


Existing Room Supply – Beijing

38%37,360134,4352008

18%14,61397,0752007

12%8,57982,4622006

10%6,45273,8652005

Growth%

NewHotel

Total


30%25,080110,0632008

10%8,03784,9832007

8%5,95676,9462006

7%4,94070,9902005

Growth%

NewHotel

Total



Openings in 2008 – Beijing Vs. China


22%170,70037,360Rooms

19%1,069199Hotels

RatioChinaBeijing


30%84,30025,080Rooms

28%34998Hotels

RatioChinaBeijing

Intl. HMCs Deal Signing – 2007 Vs. 2008

1305346312008

142313133472007

TotalQ4Q3Q2Q1

Hotel Supply - including budget hotels

1024829252008

104192726322007

TotalQ4Q3Q2Q1

Hotel Supply - excluding budget hotels


CHINA DEVELOPERS SURVEY

China Hotel Developers Survey

What impact do you expect the current economic crisis will have on newhotel developments?

0% 5% 10% 15% 20% 25% 30% 35% 40%

Significant Dropout (>50%)

Moderate Dropout (25%)

Delay in Excess of 1 Year

Insignificant Impact

Don't Know


How long do you think it will be before there is a significant pick-up in thehotel sector of the property market in China?

0% 10% 20% 30% 40% 50% 60% 70%

0-3 Months

3-6 Months

6-12 Months

More Than 1 Year


How much do you think Central Government policies and the economicstimulus package will help hotel development in China?

Will Not Help13%

Will Help A Little78%

Will Help A Lot9%


What are the major development issues (for hotels) that you face?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Land Availability

Land Cost

Cash Flow Problems

Debt Availability

Debt Cost

Brand Availability

Infrastructure Issues

Others


What will be your main development focus for the next 3 to 5 years?

Purely Residential5%

Purely Commercial9%

Mixed Use86%


How do you rank the investment return potential of the followingproperty types?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Residential Office Retail Hotel Industrial

R1 R2 R3 R4 R5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Residential Office Retail Hotel Industrial

R1 R2 R3 R4 R5


How do you rank the investment return potential of the followingproperty types?


Do you think there will be a lot of hotel transactions in thecoming 12 months?

Less Transactions62%

Similar Volume14%

Increase inTransactions

24%


What are your expectations for construction costs for thenext 12 months?

0% 5% 10% 15% 20% 25% 30% 35% 40%

Decline of 30% or More

Decline Between 15% to 30%

Decline Between 0% to 15%

No Change

Increase By 0% to 15%

Increase By 15% to 30%

Increase By More Than 30%

CHINA HOTEL MARKET SENTIMENT SURVEY

Sentiment Survey Overview

• Participants from 46 countries

• Survey conducted in 16 languages

• About 2,800 responses

• More than 20 reports produced to date

• Follow-up survey to be conducted June/July

Sentiment Survey Overview

• Participants from 51 cities

• More than 300 responses

• Reports produced for China, Beijing, Shanghaiand Shenzhen

• The second survey conducted in China

Overall Sentiment Ranking

• Each answer to each question was given ascore.

• Negative answers scored negative points,positive answers positive points.

• Minimum score representing the most negativeoutlook equaled -150. Maximum scorerepresenting the most positive outlook equaled+150. A score of zero equated to a neutraloutlook.

Asia Sentiment Rankings

Japan -72.1

South Korea -7.2

China -40.8

India -40.1

Indonesia -4.3

Hong Kong -52.7

Singapore -64.3

Thailand -44.9

Malaysia -32.8

Market Performance Outlook - China

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Occupancy ADR Revenue

Much Better

Better

Same

Worse

Much Worse

China was slightlymore negative than theglobal average with 66

percent of therespondents stating

that market-wideoccupancy

performance would getworse than 2008. Only 9percent said it would be

better.

Hotel Performance Outlook - China

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


-15% plus -10% to -15%

-5% to -10% 0% to -5%

0% to +5% +5% to +10%

+10% plus

About 70% or more ofhoteliers across China

expect declines inoccupancy, ADR andtotal revenue in 2009.

Only 10 percent or lessexpect growth.

Hotel Performance Outlook - China

On average, hoteliers inChina expect declinesin market performanceof close to 5% in 2009.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


-15% plus -10% to -15%

-5% to -10% 0% to -5%

0% to +5% +5% to +10%

+10% plus

Hotel Performance Outlook – Key Cities

Occ % ADR

Beijing 0% to -5% -5% to -10%

Shanghai 0% to -5% 0% to -5%

Shenzhen -5% to -10% 0% to -5%

Guangzhou 0% to -5% 0% to -5%

Hangzhou 0% to -5% 0% to -5%

Sanya 0% to +5% 0% to -5%

Suzhou -5% to -10% 0% to -5%

Chongqing +5% to +10% 0% to +5%

Xian 0% to -5% 0% to -5%

Dalian -5% to -10% -5% to -10%

Factors Affecting Performance - China

Amongst the abovementioned factors,central government policy has the

most positive response as 42 percentof the hoteliers stated that

government policy would have apositive impact on performance, as

most respondents expected the RMB4 trillion economic stimulus packageto boost domestic demand. Global

economy, due to concerns withregards to the worsening financial

crisis, had the highest negativeresponse rate of 82 percent.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Stock

Market

Local

Eco

no

my

Glo

bal

Eco

no

my

Local

To

urism

New

Supply

Glo

bal

Oil

Prices

Exch

ange

Rates

Cen

tralG

overn

men

tPo

licy

Expo

rts

Very Positive Impact

Positive Impact

No Impact

Negative Impact

Very Negative Impact

Factors Affecting Performance – Key Cities

Global Econ New Supply Exports

Beijing 1 3 4

Shanghai 1 3 2

Shenzhen 2 7 1

Guangzhou 2 8 1

Hangzhou 1 5 2

Sanya 1 5 2

Suzhou 2 1 3

Chongqing 1 8 2

Xian 1 7 2

Dalian 2 3 1

Market Segment Performance - China

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Do

mestic

Co

rpo

rate

Foreign

Co

rpo

rate

Do

mestic

Leisure

FIT

Foreign

Leisure

FIT

Do

mestic

Leisure

Gro

up

Foreign

Leisure

Gro

up

MIC

E

Much Better

Better

Same

Worse

Much Worse

The majority of the hoteliers held ableak outlook for international

demand in 2009, as over 85 percent ofrespondents stated that performance

across foreign corporate, foreignleisure FIT and foreign leisure group

would get worse.

On the other hand, hoteliers in Chinaare much more positive on domestic

demand sources, with 20 to 30percent of respondents expecting

domestic demand to record growth.

Market Segment Performance – Key Cities

Dom. Corp Int’l Corp Dom. Leisure Int’l Leisure

Beijing 8.4 -84.4 7.5 -81.6

Shanghai -2.0 -75.0 -3.9 -78.9

Shenzhen -40.2 -101.8 -40.2 -101.8

Guangzhou 46.9 -37.5 56.3 -37.5

Hangzhou -10.7 -75.0 0.0 -53.6

Sanya -42.9 -100.0 -10.7 -100.0

Suzhou 37.5 -87.5 37.5 -75.0

Chongqing 25.0 -50.0 0.0 -50.0

Xian 30.0 -75.0 15.0 -105.0

Dalian -75.0 -120.0 -60.0 -135.0

KEY ISSUES FOR 2009

Key Issues For The Hotel Industry

For the first time in a long time, the economy is viewed innegative terms for the market outlook.


• Financial services industry

• Light manufacturing

• Export-oriented industries

• Automobile Industry

For the first time in a long time, the economy is viewed innegative terms for the market outlook.


Owners Cash Flow Situation May Impact On Operationsand Owner/Management Relations


Owners Cash Flow Situation May Impact On Operationsand Owner/Management Relations

• Developers survey show that cash flow issues are listedas a major impediment to future development – it willalso be an issue for hotels that are already in operation

• Owners will be seeking/requiring stronger cash flows tohelp them get through the next 12 months

• There will be a stronger focus and attention to assetmanagement by owners to maximize cash flow

• Hotels less than 12 months old will particularly be underpressure


Booking patterns will change in response to theeconomic environment


Booking patterns will change in response to theeconomic environment

• Booking engines like eLong and Ctrip, alreadyimportant in many hotel markets in China, will becomean even more important driver of bookings

• Short-term pick up in bookings will become stronger,making it harder for budgeting and staffing

• There will be a shift down in demand to lower ratedhotels


Domestic demand sources will continue to become moreimportant


Domestic demand sources will continue to become moreimportant

• China Hotel Market Sentiment Survey shows us that theoutlook for international demand segments is notpositive – hoteliers are looking to domestic demandsources in 2009

• International hotel groups will have to makeadjustments to booking channels used and salesstrategies

• Price competition is likely to increase in the short term


While development trends may slow down, new supplywill continue to be a major issue for many markets.


While development trends may slow down, new supplywill continue to be a major issue for many markets.

• Horwath supply database shows a potential 80,000rooms to enter the market in 2009 (excluding budgethotels).

• Hotels opened in 2008 will also continue to impact themarket in 2009.

• Beijing will particularly feel the effects of new supply in2009, given an incredible amount of new supply in 2008.

The Crystal Ball – 2009

First Half

All markets!!!!

Second Half

THANK YOU!

china hotel market outlook-final-en - china travel … powerpoint - china hotel market...

Documents