Increased room supply in Tianjin push RevPAR levels down

Updated: 2012-03-27
Share this news?...Click box   Bookmark and Share

The influx of new bedrooms over the last four years in China’s key destinations has continued to impact negatively on operating performance according to Horwath HTL, the world oldest and largest hospitality consulting network, during a presentation at the 8th annual China Hotel Development and Financing Conference in Beijing.

Three of the top four markets, Chongqing, Tianjin and Suzhou have had larger increases in supply than demand, although not necessarily significantly larger. However, these three markets are the poorest performing markets in regards to RevPAR performance in 2011, and have been for a few years now. While the massive supply growth that they have experienced in the last 4 years has also enabled massive demand growth, it has continued to suppress performance levels of individual hotels in these markets and kept RevPAR levels well below that required to provide for sufficient returns on investment.

Qingdao, Shanghai and Hangzhou have all recorded supply growth levels well in excess of demand over the last 4 years, resulting in these three markets recording the largest declines in RevPAR performance during that time. 

 

  

Chengdu, Guangzhou, Xiamen and Shenzhen have all recorded higher annual average growth levels in demand compared to supply and the result has been positive RevPAR growth. Sanya, on the other hand, has actually recorded a significantly larger growth level in supply, yet has managed to record the strongest RevPAR growth of all markets over the last 4 years, in both percentage growth and as an actual amount. This clearly underlies the impressive development in Sanya over the last decade.

Damien Little Director of Horwath HTL China said “I am only stating the obvious to everyone in the room that the reason for the RevPAR trends we have just seen has been excess market supply. Looking at the compound annual average growth in both supply and demand over the last 4 years, generally, supply growth has exceeded demand growth during this period. In fact, it is difficult to determine how much of the demand growth has been supply induced and how much is underlying growth in the market. Analyzing the Chinese market over the last 10 years, we can see that there is certainly a correlation between growth spurts in supply and growth spurts in demand. So certainly the introduction of new supply has been a positive factor in driving demand growth, however, in many markets we can see that the gap is too much.”

 

SOURCE: www.hospitalitynet.org 

Editorial Message
This site contains materials from other clearly stated media sources for the purpose of discussion stimulation and content enrichment among our members only.
whatsontianjin.com does not necessarily endorse their views or the accuracy of their content.
For copyright infringement issues please contact editor@whatsontianjin.com
Share this news?...Click box   Bookmark and Share
Comments Area ( Total Comments: 0 )
  

Find a flight in China

One way Round trip
Leaving from
Going to
Departing
Returning

Most Popular

Tianjin Photo Gallery

  • Tianjin Taohuadi Park
  • Tianjin Changhong Park
  • Tianjin Renmin Park
  • Tianjin Xigu Park
  • Tianjin Beining Park
  • Tianjin Ancient Culture Street