Chinese hotel revenue is soaring, with four key Chinese cities posting room revenue growth of more than 30% in 2011, according to consultancy firm Horwath HTL.
During a presentation at the 8th annual China Hotel Development & Financing Conference in Beijing last week, Horwath revealed that Xiamen, Xi’an, Chongqing and Chengdu all achieved revenue growth of 30% or more, with Chengdu having the highest growth at 37%.
A further six hotel markets – Sanya, Guangzhou, Tianjin, Qingdao, Suzhou and Beijing – recorded growth of between 20% and 30% in terms of room revenue in 2011. Shanghai was the only market to record a decline in room revenue in 2011, mainly due to unfavourable comparisons with 2010 when the city hosted the World Expo.
The next four lowest performing markets – Shenzhen, Nanjing, Hangzhou and Dalian – all recorded in excess of 10% growth in room revenue, with Shenzhen and Nanjing recording close to 20% growth.
Damien Little Director of Horwath HTL China said; “The growth numbers we have seen are truly impressive and indicative of an emerging market in a significant growth phase. However, as many of us are aware, this has not necessarily translated into improved performance at the individual hotel level. The issues of wage inflation, supply concerns are all significant challenges to overcome, but having a strong top line performance will give confidence that these can be addressed.”
On the issue of oversupply, Horwath said that the huge influx of new hotel rooms in Chinese cities is continuing to outstrip demand. Three of the top revenue performing markets – Chongqing, Tianjin and Suzhou – all saw supply grow faster than demand last year, keeping revenue per available room (revPAR) levels down.
Qingdao, Shanghai and Hangzhou have all recorded supply growth levels well in excess of demand over the last four years, which, according to Horwath, has resulted in these three markets recording the largest declines in revPAR performance during that time.