Online polling platform STR Global has released its report on hotel industry performance in the first three quarters of 2014. The survey covers 3,211 Chinese hotels, 16.2% of them luxury to high-end hotels, 25.4% high-end to mid-range hotels and 58.3% mid-range to economy hotels.
General industry figures
Demand for hotel accommodation of all classes increased at a faster rate than supply, leading to increases in occupancy rates ranging from 1.54% to 6.45% year-on-year. Super luxury hotels had the highest increase in occupancy at 6.45%. Luxury hotels had a 3.07% increase, whereas high-end, mid-range and economy hotels had increases of 1.54%, 1.61% and 1.75% respectively.
Overall average room rate (ARR) dropped as a result of government austerity measures. The ARR for high-end hotels fell 3.32% y-o-y. Luxury and super luxury hotel APR were down 2.81% and 2.71% respectively while the ARR for mid-range and economy hotels diminished by 1.41% and 0.51% respectively.
Revenue per Room (RevPar) declined for high-end hotels while other classes of hotels saw a slight increase, as of August this year. Super luxury hotels had the highest increase of RevPar at 3.7% to RMB511.30, while mid-range hotels had a RevPar increase of 1.3% to RMB160.40 and high-end hotels' RevPar dropped 2% to RMB360.29.
Future supply
As of September, the Chinese hotel market had a capacity of 1,265,600 rooms and this will increase by 24.79% or 313,800 rooms in the future. Super luxury hotels capacity will get the biggest boost, at 85.1%, followed by luxury and high-end hotel brand chains at 68.3% and 63.4% respectively.
Beijing hotel market trends
Both supply and demand for Beijing hotel market has been slowing since 2012, but demand started to pick up again in the beginning of 2014. Supply had been increasing at a steady rate of 5% while demand dropped year on year since early 2012 and continued to slide till the end of 2013. The market rebounded and has been growing steadily since then.
Beijing hotels' performance
Occupancy rates at luxury hotels registered the highest increase at 10.83% to top 62%, but at the expense of lowered RevPar. Super luxury hotels had a 6.13% increase in occupancy to 66%. High-end hotels maintained their occupancy whereas mid-range and economy hotels had occupancy fell 1.7%, to 70% and 79% respectively.
Average room rates (ARR) for luxury hotels dropped 7.25% to RMB1224.13. Super luxury hotels' ARR dropped 6.89% to RMB776.32, while the ARR for mid-range and economy hotels edged down by 1.0% to RMB463.09 and RMB246.36 respectively.
Overall outlook
Overall, the rise in occupancy rates has slightly lifted revenues while government policies have driven ARR downward. Despite certain highlights in the performance of the industry, new supplies will continue to present challenges.(Translation by David)
