Hotels in China’s tier one cities saw strong growth in average daily rates (ADR) in the first quarter of 2011. In data supplied exclusively to Travel Daily by STR Global, hotels in Shanghai (+12.5% to US$119), Beijing (+13.3% to US$99), Guangzhou (+13.4% to US$113) and Tianjin (+13.3% to US$81) all experienced double-digit ADR growth in the first three months of the year. The central metropolis of Chongqing meanwhile, saw a ADR climb 7.4% to US$64.
Occupancy levels in large Chinese cities have continued to struggle however, as an increasing amount of supply enters the markets, diluting demand. Of the five studied cities, only Guangzhou recorded occupancy in excess of 60% during the quarter. The southern hub’s 66.5% occupancy was 13.1% higher than in Q1 2010. Shanghai’s first quarter occupancy meanwhile, declined 3.9% year-on-year to just 47.8%, with the month of March alone seeing a 7.1% year-on-year drop. In Tianjin, occupancy fell 1.2% to 40.0% during the quarter, while Beijing and Chongqing both saw slight increases, to 58.2% and 50.4% respectively.
Despite the struggling occupancy, the rising rates have boosted revenue per available room (revPAR) in all five cities. This was led by Guangzhou, which saw revPAR surge 28.3% from US$59 in Q1 2010 to US$75 in the past three months. Beijing experience a 21.6% rise in revPAR to US$58, while in Tianjin revPAR levels increased 11.9% to US$32 – the same as in Chongqing. Despite its declining occupancy, Shanghai’s revPAR rose 8.1% to US$57.
Shanghai’s hotels are likely to continue to struggle in terms of year-on-year comparisons this year, following the soaring rates and occupancy levels achieved in 2010 when it hosted the World Expo. China currently has a development pipeline totaling 160,799 rooms – 57% of the total number of rooms expected to open in Asia Pacific – and this influx of supply is likely to hit performance in the short-term. In the longer term however, a strong rise in demand, especially from a surging number of domestic visitors, is expected to fill the extra rooms.
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