< PrevNext > Tokyo Tops Non-U.S. Cities By Chris Davis / March 26, 2017 / Contact Reporter Share Boosted by generally strong demand and stable economic situations, per diems in most Asia/Pacific cities increased in 2016. While significant increases in supply in recent years have kept corporate hotel rates roughly static or even pushed them down a bit in some areas, other areas noted sharp year-over-year gains.The Corporate Travel Index includes 22 cities in Asia, Australia and Oceania, and all but four showed increases in per diems. Tokyo topped all cities outside the U.S. High taxi rates helped push the per diem above $489 in U.S. dollars. The next Asia/Pacific city, Hong Kong, hit just $416.88.Tokyo’s per diem rose 8 percent higher than it was in 2015, but that’s not the highest year-over-year increase in the Asia/Pac region, or even in Japan. Osaka-Kobe rose more than 20 percent to $398.14.The heightened per diems in Japan reflect the confluence of a few factors. The yen hit historic lows against the U.S. dollar in 2016, and though it had strengthened by December, it still was very low, spurring an increase in international travel demand. Additionally, according to Advito, that demand was met with almost no new hotel supply, forcing rates skyward. That trend should continue in 2017, per Advito, with corporate rates rising 3 to 5 percent, though principal and VP Bob Brindley said demand may be a bit softer than originally forecasted. ChinaHong Kong may have had the second-highest per diem in the Asia/Pac region, but it also had the sharpest decline, at nearly 12 percent. Only three other Asia/Pacific cities declined from 2015, and one is the Chinese capital, Beijing, which dropped more than 5 percent to $280.64.In fact, hotel costs declined in four of the six Chinese cities in this index: Hong Kong, Beijing, Shenzhen and Tianjin. Hotel costs rose 2 percent in Shanghai and 1 percent in Guangzhou.According to Advito, China presents the opposite of Japan’s situation: a significant hotel buildup, particularly in the midprice tier. “Rates have risen only modestly in China [in 2016] because of rapid supply expansion,” Advito wrote in its 2017 global business travel forecast. It’s a situation that should persist this year. “In China, rates will continue to climb in high-demand Shanghai and in other Tier 1 cities, but will be much softer elsewhere. So on average, rates in China will be essentially flat.” IndiaThe only Asia/Pacific city in which per diems declined by anywhere near Hong Kong levels was New Delhi, where it dropped nearly 10 percent to $212.34. New Delhi’s hotel costs dropped more than 20 percent, the sharpest decline by percentage in the region.The two other Indian cities in the index did not replicate that decrease. Bangalore rose 6.1 percent, and Mumbai increased 4.6 percent. Hotel costs in both cities increased, as well.India’s economy continues to hum. It estimated 7 percent GDP growth for 2016, and the country has embarked on a spate of hotel construction. According to Advito, business travelers will fill them. “In India, demand finally seems to be catching up with supply, with occupancy displaying a steady improvement,” according to Advito. “This is helping to push up rates.” Advito projects 2017 negotiated rates to increase 1 to 3 percent from 2016 levels.AustraliaThe second-largest change in per diems was Sydney, where costs rose 13 percent to $360.75. Sydney’s hotel costs rose 16.4 percent, tying it with Auckland for the sharpest such increase. In Melbourne, the total per diem rose 6 percent, boosted by an 11 percent increase in hotel costs. The Australian dollar had strengthened slightly against the U.S. dollar by December 2016, but Advito attributed the hotel rate increases to limited supply. “Supply remains tight, with Australia adding just 1.5 percent more new supply in 2016,” according to Advito. “Demand varies across the market.” Advito projects negotiated rates in Australia to increase 2 to 4 percent in 2017.