The heat has well and truly come out of the Asia-Pacific hotel market with room rates and revenue on the slide in most parts of the region except for Southeast Asia. The regional balance has tipped with supply growing faster than demand.

This is a key takeout from the HICAP conference in Hong Kong since confirmed by updated September stats from STR Global showing year on year regional occupancy falling 0.3% to 67.5%; room rates dropping 3.8% and revenue per available room declining 4.1%.

“We have seen for the first time in three years that the equilibrium has shifted and supply is outpacing demand,” said Elizabeth Winkle, managing director of STR Global.

“Declining demand and increasing supply is negatively impacting all key performance indicators across the region with the exception of southeastern Asia, where ADR continues to be positive”.

Emblematic of the soft regional performance, which STR believes will continue, is the slowdown in Hong Kong and Singapore.

‘This constriction is a reflection of the general economic slowdown in China, a large source market, and is more profoundly impacting Hong Kong.

“This time last year, Hong Kong narrowly beat Singapore in the RevPAR race, but in year-to-date September 2013 Singapore (USD197.48) is leading Hong Kong (USD184.62)”.

Measured in USD, RevPAR in Central and South Asia fell -5.2%, Northeastern Asia -9.4%, Australia and Oceania -9.7%. In Southeast Asia, RevPAR increased 2.1%.

As the figures suggest, many of the bright spots can be found in SE Asia.

Vietnam has rebounded after a poor few years. Ho Chi Minh City led the occupancy increases with a 13% lift while Bali’s average room rate increased 16% and Jakarta was also strong.

Malayasia, too, has been performing well and there was positive talk at HICAP surrounding the Philippines.

On the hotel investment side, Mike Batchelor, Managing Director, Investment sales Asia, Jones Lang LaSalle, said 2013 has been a “transitional year” with a number of hotel-owning families exiting the space.

Hotel prices have also increased, especially in Singapore where properties are now selling for $S1 million a key, compared with $S700,000 to $S800,000 a year, 18 months ago.

Mr Batchelor says the increases have been due to weight of capital chasing investments, which has driven yields down from 6% last year to 5% this year.

The emergence of Singaporean hospitality-focussed Real Estate Investment Trusts has been an important factor in the price rises, although families still dominate.

And right now not many are prepared to sell, he said.

For example, “Jakarta is all but illiquid because the Indonesian families are not sellers”.

As a result, Mr Batchelor said he believes “things will slow next year due to limited supply” despite considerable buyer interest.

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