The hotels and lodging industry shaped up pretty well in 2011 thanks to the gradual global economic recovery, and seems to be poised for long-term growth. With the return of business as well as leisure travelers coupled with decelerating supply growth, pricing power remained steady in the year.
Improvement in the U.S. economy and the consequent rise in operating metrics helped most of the hoteliers report strong quarterly results. Group bookings appear to be gaining momentum and the companies registered strong advance bookings and pricing for 2012 and beyond. Booking windows are also lengthening. However, macro headwinds can partially restrain the booking momentum in 2012.
International Growth
Owing to the saturation in the U.S market, major hoteliers are exploring growth opportunities abroad. Some international markets offer greater potential based on the prevailing higher pace of economic growth. The operating environment in those markets enabled hoteliers to grab a bigger share of the overseas pie.
A number of U.S.-based companies are targeting fast-growing emerging economies, with Starwood Hotels and Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) eyeing the Asia-Pacific and Latin American regions.
The stellar performance from the Asia-Pacific region is expected to continue in the near future. Hotels in the Asia-Pacific region have been registering significant upside across all three key performance metrics, according to Smith Travel Research.
The region's Occupancy, ADR and RevPar increased a respective 2.1%, 6.9% and 21.3% to 71.9%, $143.08 and $102.89 in November 2011. Major growth markets within Asia-Pacific, China and India, remained more or less unaffected by the global economic turmoil and are enjoying rising economic growth rates. The availability of local capital is another positive factor.
China is set to bring about a recovery in global tourism, and by 2020, is expected to be the world's largest travel destination. Both Starwood and Marriott derive their second largest revenue chunks from that country.
In the past, hotels in China were mainly occupied by Western travelers, but today, more than 50% of the guests are Chinese. This is indicative of China's fast growing domestic travel market. Moreover, according to an analysis on the enrollment and travel trends of Starwood Preferred Guest members, around 100 million outbound travelers are expected to visit China by 2015 but the country has only a fraction of high-end hotels ready to serve them.
Apart from China, India is another hot spot for the western hoteliers. India has a compelling investment proposition with its rising importance as a global business hub, where the demand for moderate-tier as well as upscale branded hotels will considerably outpace the supply for the next three to four years. Moreover, western hoteliers also find the built-cost to operating returns favorable. All these factors testify to the longest development pipeline that the hotel companies have in India.
No comments:
Post a Comment