Global Expat

Global hoteliers expect a tough year ahead for 2009

Hoteliers throughout the world are unanimously expecting declines in business performance for 2009 according to the Horwath HTL Global Hotel Market Sentiment Survey.

In the face of the global economic downturn, it is not surprising the results of Horwath HTL's survey indicate a tough year ahead in 2009. The survey ranked the global economic situation as the number one factor negatively influencing the market, followed by global stock market trends, and local economic trends.

Mr. Damien Little, a Director for Horwath HTL based in Asia says the timing of the first global sentiment survey was a little unfortunate given the current economic crisis.

"The results are not unexpected and generally there are little differences across regions, however, the survey does highlight a few differences," said Mr Little.

"However, I do think it sets up a good base of results for us to now compare the improvement in market outlook in the subsequent surveys we will be conducting."

General market sentiment was on the pessimistic side, with a global average score of negative 34.2. The only region to achieve a positive average sentiment score is South America, registering a score of 9.7. On the other hand, hoteliers in North America, which include markets hugely affected by the global economic downturn such as the USA and Canada, expected a relatively bleak outlook in 2009 as the region registered a sentiment score of negative 41. Asian hoteliers held the most pessimistic outlook for the year with an overall average sentiment score of negative 41.2 with Japan (-74.1), Singapore (-64.3) and Hong Kong (-52.7) the most pessimistic in the region.

The top five countries (with a sufficient response rate) with the highest sentiment scores were Indonesia (-4.3), South Korea (-7.2), Norway (-20.3), South Africa (-20.9) and Mexico (-24.5). Japan (-74.1), Slovakia (-68.4), Singapore (-64.3), Russia (-58.9) and the USA (-54.8) rounded up the bottom five.

Mr. Robert Hecker, Chairman of the Horwath HTL Global Committee says: "A global sentiment score of negative 34.2 clearly indicates that hoteliers across the globe are expecting declines in performance in 2009. On average, hoteliers across the globe expect room occupancy and average room rates to decline somewhere in the order of five percent, resulting in an average ten percent decline in RevPAR".

Survey results where not all negative, as hoteliers in Indonesia on average expected improvements in room occupancy and average room rates, which based on survey results should lead to RevPAR gains of somewhere around five percent for 2009. Indonesian hoteliers foresee this as key cities such as Jakarta - which has been experiencing low average room rates in recent years - currently experiencing a positive rate correction. The key resort market of Bali expects the strong performance levels recorded in 2008 will continue through into 2009, particularly in regards to room rate growth.

Hungarian hoteliers were amongst the most positive in Europe, while Mexican hoteliers had the most positive outlook in North America, with both of these countries expecting, on average, increases to be recorded in room occupancy, average room rates and total revenues in 2009. South American hoteliers also expected improvements in all three performance measures.

Josue Salcedo from Horwath HTL Mexico believe that while Mexican hoteliers have estimated some growth in performance for 2009, growth rates should decline from that recorded in previous years. "This positive behavior is influenced by the fact that Mexico is a non-expensive destination (getting cheaper with the actual depreciation of the Mexican peso against US dollar) along with the good tourism infrastructure in place" said Mr. Salcedo.

The corporate demand segment achieved the lowest sentiment rating of the four key segments surveyed (corporate FIT, Leisure FIT, Leisure Group and MICE) with a global sentiment index score of negative 45.7. The corporate market is anticipated to record the worst performance in 2009 across all regions except for Australia/Pacific and North America. Hoteliers in Australia expect the MICE (Meetings, Incentive, Conference & Exhibition) segment to be the worst performing demand segment in 2008, while North American hoteliers on average expect the Leisure Group segment to be the worst performing.

"Such a negative outlook on the corporate demand segment is not surprising in the current economic environment," said Mr Little.

"Most hotel markets around the world have already seen a considerable decline in corporate business, particularly at the 5-star level, over the last five months. The results of the survey show that hoteliers generally expect all demand segments to be negatively impacted in 2009. Indonesia and South Africa were the only countries with a neutral view on the corporate demand outlook for 2009".

The Horwath HTL Global Hotel Market Sentiment Survey Report will be available in 18 different languages and more than 25 regional, country or city specific reports will be released.

"I believe that this clearly demonstrates Horwath HTL's global reach, yet local connection with the hotel industry in all parts of the world" said Mr Hecker.


About the survey

Horwath HTL is the world oldest and most global hotel consulting firm, with offices in 50 cities and 30 countries. Horwath HTL has been involved in thousands of tourism and hospitality projects in all phases of the property lifecycle for clients ranging from individually owned businesses to the world's most prominent hotel companies, developers, lenders, investors and industrial corporations.

The Horwath HTL Global Hotel Market Sentiment Survey was conducted across 46 countries in 18 languages and received a total of 2,705 responses. European hoteliers accounted for 43 percent of total responses, Asian hoteliers 26 percent, while North America, South America, Australia/Pacific and Africa accounted for 13 percent, 6 percent, 6 percent and 5 percent of total responses respectively.

The survey was designed to provide the global hotel industry a quick assessment of the market outlook for the coming 12 months. The survey focuses on the outlook for occupancy, average room rates and total revenue. Hoteliers were asked to assess the impact of key factors that drive room night demand growth as well as rate the outlook for each major demand segment.

As a way to measure and compare the results across regions and countries, an index was created to formulate an overall average sentiment score from all survey questions. Points were assigned to each corresponding response and compounded accordingly. The index utilized a scale of negative 150 to positive 150 in which a score of negative 150 denotes a sentiment of absolute pessimism; a zero score indicates a neutral outlook, whereas a positive 150 signifies a very optimistic outlook.