Southeast Asia is becoming a ‘place to be’ in Asia for hotel development, according to the 250 mostly Asia-based hotel leaders who took BHN’s Hotel Industry Survey in July 2012.
We asked the question about which direction the respondents thought the economy in various locations (US, Europe, India and China) would be trending in January 2013. The choices were a simple – Up, Down or Flat. Suffice it to say, that the optimism of past years (even in China and India) is tempered today.
Each of these locations represents large and important economies/countries – all of which are in periods of adjustment. GDP growth expectations have been lowered in India and China throughout 2012, the US recovery is wobbly, and Europe is still in the grips of working through various national debt crisis problems. Interestingly, in none of these four important economies did the majority of respondents expect upward economic trends in January 2013. India ranked the most positive, with 44 percent believing the economy will be trending upward. For Europe, not surprisingly, this number was only 10%. China ranked the second most positive (38%) while the US followed at 33%. Almost half the respondents expected the economic trend to be ‘flat’ in the US in January 2013.
Is the Hotel Industry More or Less Lucrative Today?
This question measures how people feel about our business today when compared to the past. Is it a better place to be (i.e. more lucrative) than it was in the past. China, Southeast Asia and India all scored very well as being more ‘lucrative’ then in the past, at approximately 60% each, with China leading the way. All the destinations, except Japan, reported ‘As Lucrative’ and ‘More Lucrative’ scores combined of 80% or more – indicative of the optimism about our industry throughout Asia/Pacific.
With Japan, nearly 50% of the respondents believed the business opportunities were less lucrative today then 10 years ago. This is no doubt due to the fact that Japan is a large and mature hotel market, the economic growth has been sluggish when compared to its Asian neighbors, and there are often high barriers to entry with new product.
No surprise that RevPAR growth is expected to the strongest in SE Asia, with 82% expecting growth, and more than half of this expecting it to exceed 5% in 2012. Korea is expected to outpace (72% positive RevPAR) both China and India. Australia/New Zealand, China, India and Japan followed SE Asia and Korea in that order. India had the most divergent views, with the largest amount of negative RevPAR growth expectations (20%). Over half the respondents expected Japan RevPAR to be flat or negative in 2012 – consistent with the views expressed about Japan.
Where is the New Construction Money for Hotels?
Construction money availability appears to be following RevPAR expectations. This is a GOOD thing if it turns out to be true, as the opposite (new hotels in downward trending markets) can be problematic, putting it mildly. SE Asia leads the pack with the 82% believing more money will be provided this year, as compared to last year. India, Korea and China follow in that order – roughly similar to the RevPAR expectations.
Interestingly, Australia/New Zealand, while showing good RevPAR expectations for the year, is lagging considerably with regards to the expectations of increased money’s being provided for new development. This reality in Australia is, no doubt, a part of Tourism Australia’s recently announced efforts to raise awareness of the opportunities to invest ‘down under’.
Two other things of interest
We asked respondents to ‘write in’ a HOT SPOT city for investment in 2013. Jakarta barely edged out Singapore and Yangon as the top three spots. More positive news for Southeast Asia.
We also asked “How Important” various regions were for the respondent’s company growth plans. The markets ranked as follows with respect to being viewed as VERY IMPORTANT:
- China 70%
- SE Asia 63%
- India 47%
- Japan 27%
- Korea 25%
- Australia/New Zealand 25%