2012 Corporate Travel Index: Increased Demand Boosts Cost Of Asia/Pac Travel - Business Travel News

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2012 Corporate Travel Index: Increased Demand Boosts Cost Of Asia/Pac Travel

March 20, 2012 - 10:10 AM ET

By Mary Ann McNulty

Tokyo in 2011 again was the most expensive Asia/Pacific business travel destination and, for a third consecutive year, the third-most expensive non-U.S. business travel city in the world, according to the BTN 2012 Corporate Travel Index. The average cost of a hotel room, three meals and miscellaneous expenses was US$542, 5.3 percent higher than the previous year.

This occurred despite the fact that international inbound arrivals to Japan last April fell by 62 percent after a major earthquake and tsunami and subsequent nuclear reactor issues, according to the Japan Tourism Agency and World Travel & Tourism Council. "Domestic demand rebounded more quickly than anticipated, and had fully recovered by the second half of 2011," WTTC reported.

[Please click here to view the digital edition of the 2012 Corporate Travel Index, featuring all per diem listings, downloadable as a pdf.] 

Japan last year hosted 30 percent fewer international visitors than in 2010, due to the disaster and high value of the yen, according to tourism officials speaking during a briefing this month. "We hope we will get record-high foreign visitors this year to 8.6 million," up from 6.2 million in 2011, said Japan Tourism Agency international tourism promotion director Shuichi Kameyama.

Corporate travel—some due to recovery efforts—has been strong and is "95 percent back," according to Malcolm Thompson, general manager of The Peninsula Tokyo hotel. But occupancy for luxury hotels through February 2012 remained at "just over 50 percent," instead of the upper 60s of prior years.

Among 21 cities in the Asia/Pacific region, including India, listed in this year's CTI, six ranked among the 20 most expensive non-U.S. cities based on total per diems in U.S. dollars. Tokyo was followed by Hong Kong (with a daily cost of $504), Sydney ($497), Singapore and Osaka-Kobe (both $458) and Melbourne ($442). 

Nine of the region's cities had per diems that ranked among the 25 least expensive non-U.S. destinations. Kuala Lumpur had the lowest in the Asia/Pacific region at $250, followed by Hanoi ($256), Bangalore ($265), Guangzhou ($278), Mumbai ($293), Manila ($295), Bangkok ($304), Shenzhen ($306) and New Delhi ($308). 

The average Asia/Pacific per diem was $359, a 5.3 percent year-over-year increase, with average hotel and miscellaneous costs of $216 and an average cost for three meals of $142. Per diems rose by 5 percent or more in 12 cities and fell in eight, including a 12 percent decline in New Delhi and 5.3 percent in Shenzhen.

WTTC in a March report wrote that "South and Northeast Asia will be the fastest-growing regions in 2012 [in tourism contributions to GDP], growing by 6.7 percent, driven by countries such as India and China where rising incomes will generate an increase in domestic tourism spend and a sharp upturn in capital investment, and recovery in Japan."

STR Global noted that "despite the impact of natural disaster, Asia/Pacific reported the highest revenue per available room (US$94) and highest average room rate (US$140) in 2011 for the last seven years."

Egencia Asia Pacific said it tracked an average 8 percent year-over-year cost increase for daily hotel rates in 13 of the region's business travel cities—Bangkok, Beijing, Delhi, Hong Kong, Jakarta, Manila, Melbourne, Mumbai, Seoul, Shanghai, Sydney, Taipei and Tokyo. Buyers shouldn't expect any relief in 2012, according to Egencia, which projected a 7 percent increase this year in Asia/Pacific ADR.

In this year's Corporate Travel Index, Singapore had the most significant cost increase in the region as the 2011 daily cost for hotel plus miscellaneous items surged 67 percent from a year earlier to $266. Hotel costs there rose 76 percent to a nightly average of $250. 

Egencia said it found a 2011 ADR increase of about 16 percent in Singapore. "Costs are definitely on the increase for Singapore with increasing traffic to the region and limited hotel supply," said managing director Cecilia Routledge. "Occupancy rates are sitting at just under 90 percent. Corporate rates for hotel should be around S$280 for a five-star property, which often includes breakfast but not necessarily Internet."

The second-largest Asia/Pacific cost increase recorded in this year's CTI was in Seoul, where the average daily hotel rate rose nearly 47 percent to $229. Egencia predicted a 3 percent increase in this year's ADR for that market.

"Seoul is seeing increased demand from overseas travelers, in particular those originating from China, while hotel supply remains stagnant," Routledge said. "The Korean government plans to establish more hotels in Seoul so it is predicted that hotel costs would start to decrease in the next three to five years as these projects are completed."

Meanwhile, CTI per diem costs escalated nearly 10 percent in Beijing, Jakarta and Manila. Egencia forecasted a 6 percent decline in Manila's average daily rate for 2012, though actual bookings in 2011 rose 9 percent year over year. "High hotel taxes tacked onto rates is one of the contributing factors," Routledge said. "Competitive domestic airfares from low-cost carriers contributed to increased demand on the limited supply in Manila, forcing up hotel costs."

Costs Down In India 

Average hotel rates and occupancies declined from a year ago in New Delhi, where the average per diem dropped 12.4 percent from 2010. Bangalore and Mumbai also experienced lower average per diems, down 2.2 percent and 0.5 percent, respectively. Egencia forecasted a 1 percent drop in average hotel rates for New Delhi and Mumbai, and expected "occupancy rates to continue to decline in Mumbai," but "return to normal in Delhi after an increased demand spike during the 2010 Commonwealth Games."

Routledge noted the domestic business travel market in India has taken advantage of "increased automation of reservations and web distribution for independent hotel chains," along with guest houses and serviced apartments.

Nearly 1,500 hotels, totaling more than 350,000 rooms, are in the Asia/Pacific development pipeline, according to STR Global. China has the most new rooms in the queue (more than 141,000), followed by India (nearly 29,000). Hong Kong plans 9,000 new rooms by 2016, but none this year, according to the report.

This report originally appeared in the March 19, 2012, edition of Business Travel News. 

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