Europe and the Middle East lead global hotel performance
Major cities in Europe and the Middle East lead global hotel performance, taking seven spots each in the world’s top 20 revenue per available room (revPAR) rankings, revealed in a report produced annually by Deloitte Touche Tohmatsu.
The global tourism industry saw a significant slowdown in most world regions in 2008, particularly in the final quarter, as the economic meltdown trickled through and impacted leisure and business travellers. Despite this slowdown, many cities across the world achieved strong hotel performance. Six cities secured places on all three top 20 ranking tables (occupancy, average room rate and revPAR) including New York, Abu Dhabi, London, Dubai, Paris, and Tel Aviv.
Hotel performance was a tale of two halves. During the first half of 2008, most world regions had reported double-digit growth in U.S. dollars as hoteliers seemed to be surviving the global economic crisis. However, from the summer onwards, consumer confidence dropped and tourism started to suffer. The final quarter of 2008 saw revPAR in many regions fall into negative territory. At year-end 2008, Central and South America and the Middle East were the only regions to turn double-digit revPAR growth, up 14.5 percent and 18.3 percent respectively, while Asia Pacific and Europe saw revPAR growth of less than 2 percent in U.S. dollars. At the back of the pack was North America, with a 1.6 percent decline.
Commenting, Marvin Rust, Managing Partner for Hospitality at Deloitte said: “The global economy hit turbulent times in 2008, and as expected the tourism sector has been impacted by the economic slowdown around the world.
“In particular, financial market turmoil helped create a crisis in confidence in the final quarter of the year, with both individuals and corporations cutting back spending on travel and leisure. Looking ahead, however, the threat of deflation may become the greater concern, as the sharp slowdown in global economic activity has brought numerous commodity prices down from their lofty highs and business and consumer expectations shift to lower future prices of a wide range of consumables including hotel nights.”
Europe stole the show with 10 spots out of the top 20 on the average room rate table and seven places in the revPAR top 20. Despite this strong showing on the ranking tables, hotel performance across Europe did slow as the economic crises worsened and ended the year in negative territory, down 5.1 percent to €70.
Paris was the only city in the Euro Zone to appear in the top 20 of all three ranking tables. The French capital achieved 6th place in the revPAR rankings, up 4.8 percent to €141, while an average room rate of €181 gave Paris the 9th highest room rates in the world. Despite a marginal decrease in occupancy to 77.8 percent, this was strong enough to take 14th place in the occupancy top 20.
London continued to report growth in its hotel performance and appeared in all three ranking tables. Occupancy grew 0.8 percent to an impressive 81.1 percent, giving the city the 5th highest occupancy in the world. Average room rates increased 4.4 percent to £117 achieving the 17th most expensive average room rates and 9th in the revPAR top 20 at £93. As a consequence of the current recession in the UK, it was the budget sector that buoyed performance while, at the opposite end of the market, boutique hotels pulled the average down and experienced much slower growth, confirming that both leisure travellers and business clients are choosing more affordable accommodation while in London.
Hotel performance in Berlin was not strong enough to make the ranking tables but did remain in positive territory. While average room rates increased 6.2 percent, occupancy fell 2.3 percent, resulting in revPAR growth of 3.7 percent to €61. According to Berlin’s Tourism Organisation, the number of domestic visitors fell for the first time since 2003. This was due to declining consumer confidence, high inflation and the lack of major attractions to pull in the crowds. Domestic tourism remains an important element in Berlin’s tourism mix, and accounts for more than 60 percent of all business. Both domestic and international visitors will have plenty to celebrate this year, as the city marks the 20th anniversary of the fall of the Berlin wall and the 60th anniversary of the formation of the Federal Republic of Germany. Berlin will also host the World Athletics Championships during August 2009.
Looking ahead to 2009 Alex Kyriakidis, Deloitte Global Managing Partner of Tourism, Hospitality & Leisure said: “The strategy for the tourism industry this year is one of survival. Hotels in particular will need to focus on providing value for money for customers and concentrating on what they do best. The hospitality basics will be key as hotels compete for room nights.
“It is important for countries to invest in tourism infrastructure developments, including airport expansions and hotel developments once credit becomes available again, as this is needed for the industries long-term growth and sustainability.”
According to the World Tourism Organisation, the first half of 2008 saw international tourist arrivals rise 5 percent. However, growth moved into negative territory in the second half of the year (down 1 percent), resulting in overall growth of 2 percent for the year. Despite growth being slower than the 7 percent achieved in 2007, an extra 16 million people travelled around the world and a new record was set of 924 million worldwide tourist arrivals.
Top 20 world cities ranked by revPAR 2008
|City||Ranking||RevPAR (USD)||% change to 2007|
|Hong Kong SAR||20||151||3.4%|
Source: STR Global
Note: All analysis in U.S. dollars.
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