From Paris to Tasmania, markets seek boost in demand
From Paris to Tasmania, markets seek boost in demand
12 JUNE 2018 7:23 AM

Here’s a look back at insights into demand drivers and obstacles to growth in markets around the world.

GLOBAL REPORT—The hotel industry may be a “street-corner” business, but those street corners are in every corner of the world. And the one thing they’re all after is growing demand.

The obstacles and opportunities to grow demand for hotels in these markets are both similar and as unique as their cultures.

Over a series of articles and analysis in the past six months, Hotel News Now and its parent company, STR, have shared insights into those demand drivers and difficulties in markets around the world, from Sri Lanka to Australia and Paris to the United Arab Emirates.

A look at performance data for Sri Lanka hotels showed that demand growth has slowed in the market, while supply has steadily accelerated. STR’s Jesper Palmqvist and Jan Freitag reported in April that despite this, hoteliers in the country have pricing power, as reflected by record growth in average daily rate.

HNN’s Terence Baker reported for a story in January that global visitors to Sri Lanka are increasing, though not at a pace enough to combat growing supply. To continue to boost demand, hoteliers in the country are looking to highlight Sri Lanka’s historical sights, tea plantations and beaches as part of an experiential round-trip package.

On the continent of Africa, hotel supply growth is leveling off after a sharp increase, and a rebound in demand following civil unrest and terrorism has given hoteliers some pricing power, STR’s Freitag, Maryke Dreyer and Kostas Nikolaidis wrote in April. In turn, this recent upswing in performance is likely to be attractive to developers, which could swing the supply and dynamic the other way.

Continued supply growth in the United Arab Emirates hotel industry is keeping key hotel performance metrics from improving, STR’s Philip Wooller and Freitag wrote in April, though “the imbalance between supply and demand growth has only recently flipped in favor of demand growth.”

Meanwhile, hotels in Hong Kong are capitalizing on especially high weekend demand and occupancy by driving average daily rates. “After four years of rate declines, in 2017 Hong Kong hotels finally saw an increase in (ADR),” write STR’s Palmqvist and Freitag. “Revenue per available room increased 5.5% during the year, driven almost equally by increases in occupancy and ADR.”

China’s hotel and tourism industries, as a whole, look to benefit from “a massive reshaping of infrastructure, both domestically and internationally, known as the New Silk Road,” HNN’s Baker reported in February. These infrastructure improvements are expected to buoy development of new hotels in the country.

“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.”

The 2018 Winter Olympics was a much-needed demand boost for South Korea’s hotel industry, which is looking to rebound from a sharp decline in international guests due to economic and political unrest and changes in visa policies, STR’s Palmqvist and Freitag reported in February.

“Recent history shows that the country’s hotel industry experiences wide swings in performance, and 2018 will be no different,” Palmqvist and Freitag write. “It will be important for operators to keep an eye on the new supply and understand their potential for ADR increases given the continued healthy occupancy environment.”

The Paris market is also showing signs of resiliency, following a spate of terrorism incidents in France in 2015 and 2016, with an influx of inbound visitors and rise in hotel occupancy, HNN contributor Tamara Thiessen reported in May.

Helping boost demand for Paris hotels is a focus on diversifying its rooms supply. “The modernization of the Parisian hotel portfolio, which started in 2010, has since intensified, with some €6.5 billion ($7.8 billion) in all being pumped into the renovation of existing hotels and the creation of new establishments,” said Jean-Philippe Duchêne, director of hotel investment consultancy Wise Dôme Conseil. “The scale of the phenomenon is unprecedented. At the same time, a significant proportion of pre-existing rooms will have been renovated.”

A surge in tourism to Greece has spurred investment in improvements at its airports, with a new airport due to open later this year, and fueled significant growth in occupancy, ADR and RevPAR at the country’s hotels, HNN’s Baker reported in April. But hotel operators and investors still face challenges, particularly in identifying destinations for new development and securing financing.

Spain’s capital of Madrid set a record in 2017 for tourists (approximately 12 million), and hotel investors and developers are taking notice, HNN contributor Benjamin Jones reported in March. High-profile luxury brands looking to open hotels in the market over the next several years include W Hotels & Resorts and Four Seasons Hotels and Resorts.

“It is becoming well known for its food and beverage scene and other features, which are attracting more and more people. The Madrid hotel market is getting very strong, the city is a great weekend destination and there is no reason to believe that any of this is going to change anytime soon,” said Felicity Black-Roberts, VP of Hyatt Hotels Corporation acquisitions and development for Europe and North Africa.

On Australia’s island state of Tasmania, hotel “developments worth more than $855 million are either underway or planned,” HNN’s Thiessen reported in February. This investment is being driven by international visitors to the island, which have more than doubled in two decades.

“To have so much interest in investing in Tasmania, especially by some of the global hotel chains, is a feather in the cap for the industry and government,” said Tasmanian Hospitality Association CEO Steve Old, who added better government promotion and investments have reaped record visitor numbers even in winter.

An increase in bookings from groups, for conventions and cultural events, in Ukraine’s capital of Kiev is helping its hotel industry on the road to recovery, with the country seeing its first new hotel projects since the beginning of its economic crisis in 2014, HNN contributor Vladislav Vorotnikov reported in January.

“(2017) is also the first time in three years that we should witness any internationally-branded hotel openings in the Ukrainian capital, and this shows that the investors trust that the bottom of the economic cycle has been reached, the stability settled in, and that it only looks up from here,” said Tatiana Veller, head of hotels and hospitality for Russia and CIS at JLL’s Hotels & Hospitality Group.

After several years in which supply outpaced demand, India’s hotel industry is beginning to see a reversal, HNN contributor Chitra Balasubramaniam reported in January. The improved performance can be credited in large part to efforts by India’s government to promote tourism.

“In the recent years, the Indian government has taken several steps to boost travel and tourism, which has benefited the hotel industry in the country. Also, the entry of multinationals and Indian hotel chains expanding internationally only reinforces the segment’s untapped business potential,” said Alok Chakravarty, director of sales and marketing for New Delhi-based Shangri-La Hotels & Resorts.

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