The southern Chinese city of Shenzhen is fastest growing market in mainland China, according to a report by Horwath HTL China and STR Global. In a study of hotel performance in 13 key Chinese markets, the majority were found to have experienced strong year-on-year growth in terms of occupancy, average daily rate (ADR) and revenue per available room (revPAR) in the first quarter of 2011.
Benefiting from the booming Pearl River Delta economies, Shenzhen in Guangdong province recorded 42% revPAR growth in the three-month period – the highest of all the studied cities. Both Xi’an in Shaanxi province, and the southern island province of Hainan also experienced strong increases in terms of occupancy, due to a lack of new supply in the former and a strong high season in the latter. ADR in the two markets also saw strong growth, rising 19 and 21% respectively. In Hainan, ADR reached in excess of CNY1,500 (US$232), largely driven by aggressive rate strategies of newly-opened upper-tier hotels on the island.
The only two key markets to record drops in occupancies are Shanghai and Hangzhou, Zhejiang province. Average occupancy in Shanghai remained at about 50%. ADR, however achieved year-on-year growth of 12%. Despite the rate growth, the majority of hoteliers in Shanghai were reported to have a cautious outlook due to the expected slower pace of growth in demand, compounded by supply pressure in the aftermath of the Shanghai Expo. Given its proximity to Shanghai, the ‘post-expo syndrome’ has also affected the hotel market in Hangzhou, which saw a 2% year-on-year drop in occupancy in Q1 2011. Like Shanghai however, Hangzhou saw an increase in ADR.