In this week’s roundup of news from the Asia/Pacific region: expectations for Hong Kong; hotel opportunities with the New Silk Road; and more.
Hotel News Now each week features a news roundup from a different region of the world. Today’s review covers the Asia/Pacific region.
Demand rebound, capital projects boost Hong Kong hotels
The hotel industry in Hong Kong reported strong results in 2017, according to an analysis by STR’s Jan Freitag and Jesper Palmqvist. The region reported 224 hotel openings, representing slightly less than 70,000 rooms. Occupancy achieved 88.5% while average daily rate grew 2.6% after four years of rate decline, leading to 5.5% growth in revenue per available room.
“STR expects that the healthy increase in Hong Kong room demand will continue for the coming years,” the two write. “Supply growth will be well over 2% in the next few years, but occupancy growth should remain positive, albeit at a slowing pace.
“ADR growth will make up the majority of the RevPAR increase, and we expect room rates to increase just over 3% for the next few years. This then will drive RevPAR growth to over 3% in 2018 and 2019. Our forecast, just like the Hong Kong’s economy, is heavily dependent on the continued influx of people coming over from mainland China.”
China’s new Silk Road to open up hotel demand
As the Chinese government funds domestic and international infrastructure projects dubbed the New Silk Road, hotel companies see an opportunity to open hotels catering to the routes, writes HNN’s Terence Baker. The country has pledged about $8 trillion to improve “infrastructure and its own routes to market across 68 countries,” according to the World Economic Forum.
“If you look back at the history, you will see railways always have opened destinations,” said Joseph Fischer, CEO of business consultancy Vision Hospitality & Travel. “In the 19th century, they changed the U.S. forever, as did (President Dwight D.) Eisenhower’s (Federal Aid Highway Act of 1956). High-speed trains will change Europe as we know it, too, and it will not take decades. Low-cost air carriers will go bust, while trains will go to new cities and develop infrastructure and change the way people think.”
STR: Asia/Pacific hotel performance for January 2018
The hotel industry in the Asia/Pacific region reported mixed results in the three key performance indicators during January 2018, according to data from STR, parent company of HNN. While occupancy grew 4.6% year over year to 67.5%, average daily rate fell 2.8% to $109.95, resulting in RevPAR growth of only 1.7% to$74.18.
Indonesia reported negative year-over-year results. Occupancy declined 1.4% to 53.9% while ADR fell 7.3% to 980,755.81 Indonesian rupiah ($71.30), leading RevPAR to drop 8.6% to 528,320.37 rupiah ($38.41).
Conversely, Mainland China saw occupancy grow 9.7% to 62.9%, which counteracted the 3.3% decline in ADR to 453.32 Chinese yuan ($71.63) enough to still grow RevPAR 6% to 285.24 yuan ($45.07).
MGM Resorts foresees strong performance in 2018
During the company’s fourth-quarter and full-year 2017 earnings call, executives at MGM Resorts International celebrated the long-awaited opening of the MGM Cotai in Macau, China, writes HNN’s Bryan Wroten. The property had opened just in time for the Chinese New Year.
As of the call, only 900 of the property’s 1,390 guestrooms were open, while the rest will become available in the spring.
“We’re excited about the opportunities they offer us,” Chairman and CEO Jim Murren said. “We think we’re very well-positioned for the market in terms of the type of product the customer is looking for. We’re confident we’re able to build market share.”
Deals and developments
- Marriott International opened the 136-room Fairfield by Marriott Belitung, its first hotel in Belitung, Indonesia.
- Hotel Culture, a subsidiary of Singapore’s Mary Chia Holdings, entered into an agreement with JL Asia Resources to sell the Porcelain Hotel for 64.8 million Singapore dollars ($49.4 million).
- Thailand-based Singha Estate will purchase six hotels from Outrigger Hotels for a deal not to exceed $350 million. The deal includes: the Outrigger Laguna Phuket Beach Resort, Outrigger Konotta Maldives Resort, Outrigger Koh Samui Beach Resort, Outrigger Mauritius Beach Resort, Outrigger Fiji Beach Resort and Castaway Island.
- GIC Private, a sovereign wealth fund in Singapore, and a group of investors have signed an agreement to acquire a 55% stake in AccorHotels’ property business, AccorInvest.
- Thailand’s Minor Hotels announced the launch of its new upscale brand, Avani+, which debuted its first property in Luang Prabang, Laos.
- InterContinental Hotels Group announced it will open the 299-guestroom InterContinental Tianjin Yujiapu Hotel & Residences next month in Tianjin, China.
- Qatar Airways purchased the 174-room Sheraton Melbourne Hotel for 135 million Australian dollars ($106.3 million).
- Singapore’s Naumi Hospitality debuted in Australasia with the 193-room Naumi Auckland Airport.
Compiled by Bryan Wroten.