China’s Hotel Performance in 2009

Dramatic declines in China's hotel performance during 2009, underscored by RevPAR falling 26.2% compared with a year ago-contrast strongly with the continuing good performance of the Chinese economy. An 8.7% year-on-year increase in GDP (Source: National Bureau of Statistics of China) for 2009 has experts predicting China's economy will overtake Japan's in 2010 and become the world's second-biggest economy after the United States.

 Data from STR Global shows the decline in RevPAR was largely due to ADR falling 21% with further impetus from declines in occupancy of 6.5%. The fall off in occupancy came amid significant increases in hotel supply during the last few years. STR Global's Census database shows a 5% increase in available rooms across the country for 2009 compared to the prior year.

The nationwide downturn in hotel performance nevertheless reflects the impact of the global financial crisis of late 2008 and 2009. The dramatic fall in RevPAR for Beijing of 43.2% also reflects the impact of the 2008 Olympics, whilst Hong Kong and Shanghai also suffered but not to the same extent.

 Hong Kong was the only Chinese destination to see an increase in arrivals in 2009, albeit only 0.5%, whilst arrivals for the country as whole were down 6% year-on-year. Domestic travel is expected to remain strong in the coming year, undoubtedly making a significant contribution towards the 70 million visitors expected at Expo 2010 Shanghai between May and October. The 16th Asian Games hosted by Guangzhou in November also will boost performance in what is already a relatively strong market.

"We are delighted with the continued growth of our sample size across China, making us the 'go to' resource when it comes to understanding the country's hotel market," said Elizabeth Randall, managing director of STR Global.

 STR Global's office in Beijing collates data from more than 220,000 guestrooms across China.

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