Asia Pacific Quarterly Update Volume 3 Spotlight

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Hotel, Tourism and Leisure
Asia Pacific
Quarterly Update
Volume 3
Spotlight: Malaysia
ASIA PACIFIC QUARTERLY UPDATE VOL.3
ASIA PACIFIC HOTEL REVIEW
HOTEL OPENINGS
Source: Horwath HTL
• Total hotel openings by international hotel
management companies increased by 51% in Q2
2014 in Asia Pacific, as compared to the same
period in 2013. The 53 openings this quarter,
combined with 42 openings witnessed last
quarter, brings the year to date total to 95 hotels,
an increase of 36% when compared to H1 2013.
HOTEL OPENING BY COUNTRY
• With regards to the number of rooms, year to
date performance shows a 24% increase in
openings, from 16,968 hotel rooms opened H1
2013 to 21,015 rooms in H1 2014.
• Continuing the trend witnessed in the first quarter
of 2014, the majority of hotels (81%) are opening
under management agreements, with only 19%of
hotels opening under a franchise agreement.
• Recent trends show that new hotel openings in
Asia are predominately new build hotels and the
same is true this quarter, with almost three quarters
(74%) of the hotels considered new builds.
• China continued to dominate as the most popular
location for new hotel openings, accounting for
30% of all hotels openings, while the number of
openings in Australia decreased by 11% when
compared to the same quarter in 2013.
Source: Horwath HTL
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• This quarter also saw an opening in Fiji, the first
hotel opening seen in this location for some time.
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
DEAL SIGNING
• Deal signings decreased by 6% in the second
quarter of 2014 when compared to Q2 2013. With
a decrease also witnessed in Q1 2014, there has
been an overall decrease of 4% for H1 2014 when
Source: Horwath HTL
DEAL SIGNING BY COUNTRY
compared to H1 2013.
• In terms of the number of rooms, Q2 saw a
decrease of 2% when compared to the same period
in 2013. Taking into account the 12%decrease in
rooms recorded in Q1 2014, the number of rooms
signed in H1 2014 has decreased by 7% when
compared to H1 2013.
• More than half (55%) of the deal signings in Q2
2014 were for hotels located in China. Indonesia
continued to prove a popular location accounting
for 13% of all new signings, only showing a
marginal decrease when compared to the 15%seen
in Q2 2013.
Source: Horwath HTL
Note: Deal signing refers to management and
franchise agreements signed by the international
hotel management companies.
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• Notably, there was signing activity in Singapore,
with two hotel deals. The most recent Singapore
deals signed prior to these were back in 2011.
• The majority of signings are management
agreements with only 20% of deals as franchise
agreements. The franchise model proves to be
most popular in the South Korea and India markets.
• The type of property, in terms of conversion or new
build was more varied in Q2 2014, where 60% of
new deals signed were for new build properties
compared to the 90% for new build signings seen in
Q2 2013.
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
ASIA PACIFIC HOTEL PERFORMANCE
• Philippines (+3.2%), China (+3.0%) and Australia
(+2.7%) experienced the strongest increase in
occupancy June 2014 YTD within the region,
while Thailand (-17.2%), Vietnam (-2.9%) and
French Polynesia (-1.7%) declined in this
measure.
• Maldives showed the strongest growth in average
daily rate (ADR, +13.6%), measured in local
currency, resulting in the strongest growth in
revenue per available room (RevPAR, +13.5%) of
all countries within this region compared to June
2013 YTD.
• Indonesia (+10.5%) and Japan (+8.6%) came
second and third in terms of ADR growth, while
China (-3.5%) and India (-3.4%) were the only
countries within the region posting declines in this
measure.
• Delhi-NCR (-6.2%) and Mumbai (-4.3) have
experienced the biggest drop in ADR within the
region, measured in the respective local currency.
• Bangkok (-26.4%) continued to report the most
significant decline in hotel performance of all
markets, solely driven by a drop in occupancy due
to on-going political unrest, while Osaka (+18.7%)
and Bali (+15.5%) were the top markets in terms
of RevPAR growth.
ASIA PACIFIC - HOTEL PERFORMANCE
ACROSS SELECTED MARKETS
Source: STR Global
ASIA PACIFIC ACTIVE ROOM PIPELINE
• China (+290k rooms) remains the country with
the strongest under contract room pipeline,
followed by India (+58k rooms) and Indonesia
(+54k rooms).
• In the coming years, more than 2,300 hotels with
+520k rooms are expected to enter the region
• The Upscale class currently is expected to grow the
fastest, followed by Upper Upscale and Luxury.
• YTD 2014, room supply for the Luxury class grew
strongest (+5.0%), followed by Midscale and
Economy class (+4.3%) and Upscale class (+3.6%).
ASIA PACIFIC ACTIVE ROOM PIPELINE BY COUNTRY
• The constant growing supply continued to impact
the ADR performance for China and India. Albeit
demand is up, resulting in a positive occupancy
trend for both countries.
Source: STR Global
ASIA PACIFIC - HOTEL OCCUPANCY AND ADR
ASIA PACIFIC ACTIVE ROOM PIPELINE BY
SCALE
Source: STR Global
Source: STR Global
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
MALAYSIA HOTEL MARKET REVIEW
HOTEL OPENINGS
• The Malaysian Market is a steady market, with at
least one new opening and signing each quarter.
• After a slow start to 2014, hotel openings
doubled in Q2 2014 with the opening of two
hotels compared to only one hotel in Q2 2013.
This corresponds to an increase of 35% in the
number of rooms over the same period.
• Comparing the hotel opening performance year
to date, H1 2014 recorded a 50% increase in
openings compared to H1 2013, however the
number of rooms opened has fallen by 29%. The
average number of rooms per property has
decreased from 414 rooms in H1 2013 to 195 in
H2 2013.
• With the opening of the second bridge
connecting the peninsula and Penang Island, and
the re-emergence of George Town as an
international destination, market expectations are
for an increase openings and signings of new
hotels in the coming years.
• In Johor, the continuing development of
Nusajaya, Medini and Danga Bay, as well as the
Desaru coast in eastern Johor, is attracting plenty
of attention from hotel developers and more
announcements are expected in the coming
years.
• The focus seems to have shifted somewhat from
the capital of Kuala Lumpur to regional
destinations such as Johor (Iskandar), Penang,
Langkawi, Melaka and Kota Kinabalu.
• The issue of land titles continues to hamper hotel
development in Langkawi that is experiencing
pent-up demand for mid-tier and top-tier hotels.
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Source: Horwath HTL
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
DEAL SIGNINGS
OVERALL HOTEL PERFORMANCE
• 2013 was a good year for hotel signings, 16
deals comprising of 3,499 rooms› were signed
across Malaysia.
• June 2014 YTD, Malaysia reported a positive
trend in occupancy and ADR, resulting in a
double digit RevPAR growth to MYR264.85
(+10.2%), mainly driven by the growth in rate.
• After a promising start to 2014, signing activity
slowed in the second quarter of 2014. The
number of hotels deals signed declined by 80%,
when compared to Q2 2013 and looking
performance over the first half of the year, the
number of deals signed has dropped by 38%,
from 8 deals seen in H1 2013 to only five deals in
H1 2014.
• June (-3.9%) experienced the first decline in hotel
performance of all months in 2014, as declining
demand lead to notable falls in occupancy, which
mainly was driving the decrease in RevPAR.
• As a result of only one new signing the number
of new rooms dropped by 75% during the same
period. Despite the significant number of rooms
signed during the first quarter of the year, the
year to date performance is down by 20% when
compared to H1 2013.
Source: STR Global
• The new deal signing for Q2 2014 is for a 300
room hotel in the once popular resort of Desaru
Beach. The resort area is currently being
regenerated and we expect to see more hotel
opening and signing activity in this area in the
future. The planned massive Pengerang Oil & Gas
complex and enclave south of Desaru is expected
to induce more hotel openings post 2018.
OVERALL HOTEL PERFORMANCE
Source: STR Global
Source: Horwath HTL
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
HOTEL PERFORMANCE BY CLASS
HOTEL PERFORMANCE BY MARKET
• The Upscale class in Malaysia experienced the
strongest increase in ADR (+9.8%) of all classes,
as well as the most significant growth in
occupancy (+6.5%).
• All markets in Malaysia experienced an increase in
occupancy and ADR. Sarawak/ Sabah reported the
strongest increase of all markets in both occupancy
(+3.0%) and rate (+12.8%).
• The Upper Midscale class was the only class
reporting declines in ADR (-0.7%) and occupancy
(-1.2%) of all segments, while Upper Upscale class
only declined in occupancy (-1.8%).
• Langkawi managed to maintain the highest rates
of all markets and reported an increase of this
measure by +8.0%.
• Upper Upscale (+6.3%) and Upscale (+2.8%) saw
the strongest supply growth of all classes, while
demand for Luxury grew by +5.6%, and for
Midscale and Economy +3.1%.
OCCUPANCY & ADR LEVELS BY CLASS
• Kuala Lumpur was the only market reporting
occupancy levels above 70% (+2.8%),
however, ADR increased by only +4.2%, the
lowest growth in this measure of all markets.
OCCUPANCY & ADR LEVELS BY MARKET
Source: STR Global
Source: STR Global
REVPAR LEVELS BY MARKET
Source: STR Global
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
SPOTLIGHT: KUALA LUMPUR
KUALA LUMPUR PERFORMANCE BY CLASS
KUALA LUMPUR HOTEL PERFORMANCE
• Upscale class reported the strongest increase in
occupancy (+7.8%) as well as ADR (+6.2%) of all
classes June 2014 YTD, resulting in a double digit
RevPAR growth to MYR293.85 (+14.5%).
• Kuala Lumpur showed positive growth for both
occupancy (+2.8%) and ADR (+4.2%) June
2014 YTD, resulting in the highest RevPAR
levels (MYR295.07) for this time period since
1994, when STR Global began collecting hotel
performance for the country.
• Demand growth for the Malaysian capital slowed
in May (+4.8%) relative to previous months, and
declined in June (-3.3%), also impacted by the bad
publicity around Malaysia airlines, with its key role
connecting major destinations around the world
with Kuala Lumpur International Airport.
• Occupancy for the Upper Upscale segment
declined by -3.4% to 68.5%, the lowest level of all
classes, impacted by the strong supply growth for
the class (+10.1%), while demand is up 6.3% June
2014 YTD.
OCCUPANCY & ADR LEVELS BY CLASS
KUALA LUMPUR HOTEL PERFORMANCE
BY MONTH
Source: STR Global
Source: STR Global
SPOTLIGHT: REGIONAL MALAYSIA
(EXCLUDING LANGKAWI)
REGIONAL MALAYSIA HOTEL PERFORMANCE
BY MONTH
REIGONAL MALAYSIA HOTEL PERFORMANCE
• Occupancy and ADR reported positive growth on
average June 2014 YTD, while ADR (+11.0%) clearly
was the driving force behind double digit RevPAR
growth to MYR213.91 (+12.7%), the highest levels
since 1994, when STR Global began tracking hotel
performance for the country.
• Similar to the capital, demand growth slowed in
May (+3.7%) compared to previous months, and
declined in June (-6.9%), indicating that recent
events not only impact hotel performance within
Kuala Lumpur.
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Source: STR Global
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
REGIONAL MALAYSIA HOTEL PERFORMANCE
BY CLASS
MALAYSIA UNDER CONTRACT* PIPELINE
• Upscale class showed the strongest increase in both
ADR (+15.0%) and occupancy (+7.3%), indicating a
strong double digit RevPAR growth to MYR200.24
(+23.3%).
• Malaysia currently has 500+ hotels with 115k+
rooms and experienced an increase in supply by
+4.1% in June 2014 YTD.
• Upper Upscale reported the second strongest increase
in ADR (+9.7%) of all classes. But at the expense of
occupancy, which declined by -1.6% to 62.2%.
OCCUPANCY & ADR LEVELS BY CLASS
Source: STR Global
• In particular the classes Upper Upscale (+6.3%)
and Upscale (+2.8%) showed the largest growth.
• With an under contract rooms pipeline of +18.0%
on top of the existing supply, Malaysia has the
fourth largest pipeline within APAC after China,
India, and Indonesia.
MALAYSIA UNDER CONTRACT* HOTEL PIPELINE
BY PROJECT PHASE
IN
FINAL
CONSTRUCTION PLANNING PLANNING
14
MALAYSIA
34
39
KUALA LUMPUR
7
6
7
MALAYSIA
23
4
23
PENINSULAR AREA
SARAWAK/ SABAH
8
3
4
OTHER
2
0
0
Source: STR Global
*”Under Contract” includes projects currently under
construction, in final planning or planning phase
MALAYSIA UNDER CONTRACT* ROOM
PIPELINE BY CHAIN SCALE
Source: STR Global
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content includes analysis and commentary that are the sole opinions of our research teams and are not to be construed as investment advice. The opinions
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ASIA PACIFIC QUARTERLY UPDATE VOL.3
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