BEIJINGLOGO200x150The Chinese hotel industry, which was gearing up for a big boost this year from the Olympics, instead saw nationwide declines in revenue per available room (RevPAR) during the first half of the year, according to a report from STR Global.

Several major markets also saw occupancy rates drop as new hotel openings have stretched demand.

Overall, occupancy at China’s hotels fell 6.9 points in the first half of 2008, to 60.8%. The average daily rate increased 2.3%, to $133.31. These metrics led to a 4.8% decline in RevPAR.

"The Chinese hotel industry has thus far faced a year of significant challenges ranging from natural disaster to an uncertain global economy," said James Chappell, managing director of STR Global. "However, with the 29th Olympiad in Beijing only days away, the Chinese hotel industry will be looking to the event to provide the profits in 2008."

"Many of the new hotels in northern China were developed specifically to meet the needs of the Olympics," added Chappell. "It will be interesting to see if Chinese markets can adapt to the new supply levels when the Games move on.”

In Beijing, new hotel openings and lighter-than-expected pre-Olympic demand have caused occupancy to drop 10.7 points, to 61.8%. However, a 7.6%  boost in rates has helped offset this. The year-to-date average daily rate is $137.51, and RevPAR is down 3.9%.

In Shanghai, occupancy has fallen 8.5 points, to 59.1%. Rates have also fallen slightly, by 1.6%. The year-to-date average daily rate in Shanghai is $145.91.  Shanghai showed the biggest drop in RevPAR among major Chinese cities, at 10%.

Performance in Hong Kong was flat. Occupancy was down 0.8 points, to 80.6%, the highest occupancy rate in STR Global's survey. Rates increased 1.5%, to $209.27. RevPAR increased marginally, by 0.7%.

The May 12 earthquake in Chengdu rattled the hotel industry there. Year-to-date, occupancy is down 22.6 points, to 52%. Rates increased by a substantial 22.5% to cover the gap. Average daily rate reached $87.08; RevPAR decreased 5.2%.


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