RESEARCH 研究报告

GREATER HOTEL REPORT 2016 大中华酒店报告 2016 OVERVIEW In 2015, along with a further rise in the per-capita income of Chinese residents, domestic tourists continued to dominate China’s tourism sector. Domestic visitor arrivals grew 10.6% year on year (YoY), accounting for over 96.7% of total visitor Hotel development in China arrivals. The overall number of international visitors is set to benefit from the strong upsurge in domestic also rose, but by a more modest 4.1% YoY, reaching tourism in the medium 133.8 million, 56.9 million of them overnight visitors, to long term. Meanwhile, up 2.3% YoY. international operators are expected to launch aggressive expansion The uptrend continued in the first half with over 1,000. and Shanghai drives across China. of 2016 (1H 2016), with the number of were the most active in 1H 2016, adding international visitors to the over 900 rooms each. By mid-2016, DAVID JI growing 3.8% YoY, while overnight Beijing continued to have the largest Director, Head of Research & international visitors increased 4.3% stock of five-star hotel rooms among the Consultancy, Greater China YoY to 28.9 million, mainly as a result six cities, with over 38,000, followed by of efforts by the Chinese government Shanghai with over 28,000 and Macau in recent years to modernise transport with over 20,000. infrastructure and upgrade tourist sites. In 1H 2016, was the only Encouraged by the growing number of city that recorded positive Average tourists, international hotel operators Daily Rate (ADR) growth among the have continued to increase their foothold six cities, gaining 2% YoY, mainly in China. Among the six cities covered because of stable demand from the in this report, Macau led in terms of Canton Fair. The other major cities new supply in 2015, adding about saw downward pressure on the ADR 2,200 five-star hotel rooms, followed by of five-star hotels. Macau suffered Guangzhou with over 1,300 and Beijing from the largest decline in ADR, down

TABLE 1 Economic indicators

Period Beijing Shanghai Guangzhou Macau Taipei

GDP growth 0.8% (2016 -13.3% 2016 1H 6.7% 6.7% 8.0% 1.2% (year-on-year) Q1) (2016 Q1)

RMB103,100 HK$328,117 MOP574,790 GDP per capita 2016 1H RMB52,586 RMB134,000 TW$354,230 (2015) (2015) (2015)

MOP14.7 Retail sales value (billion) 2016 1H RMB497.63 RMB524.8 RMB420.4 HK$219.7 TW$2,012 (2016 Q1)

Retail sales value growth 2016 1H 3.8% 7.6% 8.4% -5.1% -11.2% 2.0% (year-on-year)

Foreign direct investment 2016 1H 1.8% 0.8% 20.6% 10.7% (2015) 15.5% (2014) 178.2% growth (year-on-year)

Unemployemnt rate 2016 1H 1.5% 4.0% 2.4% 3.4% 1.9% 3.9%

Inflation 2016 1H 1.2% 3.1% 2.6% 2.4% 3.2% 1.5%

Source: Local statistics departments / Knight Frank Research

2 GREATER CHINA HOTEL REPORT 2016 RESEARCH

12.3%, because of abundant supply and however, the number of short-haul and intense competition, followed by Hong long-haul overnight visitors improved, CHART 1 Kong where the ADR fell 5.3%, owing thanks to the government’s Matching International overnight visitor to fewer Mainland visitors. The ADR in Fund Scheme (MFTA) and Hong Kong arrivals (2016 forecast) Shanghai, Taipei and Beijing dropped Family Fun promotion. Given the limited Million people only 1-2%. However, Hong Kong’s ADR supply of five-star hotel rooms, both the 0 still remained the highest of the six cities, occupancy level and ADR of five-star reaching US$277, followed by Macau at hotels are expected to remain stable in US$212 and Taipei at US$153. the short term. 2

The slow global economic recovery With the continuing efforts of the Macau 20 led to a slight decline in international government and the industry to transform tourist arrivals in Beijing. However, the city from a gambling centre to a 1 the performance of Beijing’s five-star leisure and entertainment destination, hotels remained stable, thanks to the number of international overnight 10 stronger domestic spending as well as visitors has shown improvement starting increased demand for domestic business from 2H 2015. However, both the accommodation and conferences. occupancy rate and ADR of five-star The authorities are planning a series of hotels have fallen significantly because 0 policies to tackle unfavourable factors, of a surge in room supply, which has S G H T such as chronic air pollution and traffic intensified competition. In the medium congestion, which have a negative and long term, the synergistic effect Source: Knight Frank Research impact on tourism. These initiatives are of the completion of the Hong Kong- set to provide a better travel experience -Macau Bridge and the Macau for visitors, which will eventually result airport expansion as well as the effects of CHART 2 in increased demand for Beijing’s luxury industry transformation are expected to Five-star hotel stock hotels. benefit Macau’s hotel industry. (2016 forecast)

Over the past year, tourist arrivals Taiwan’s hotel industry continued to Thousand rooms to Shanghai, both domestic and benefit in the past year from the opening 0 international, have grown steadily, as of its tourism market to Mainland visitors. Shanghai remains one of the most International overnight visitor arrivals, preferred local destinations for domestic excluding Mainlanders, also recorded 0 tourists. More tourists are anticipated strong growth. Occupancy rates and the following the opening of Shanghai ADR of five-star hotels are expected to 2 Haichang Polar Ocean Park in 2017 remain firm, thanks to the implementation and Ice World in Lingang, Pudong, of “New South Policy”, which has 20 in 2019, boosting demand for hotel simplified administrative procedures and 1 accommodation. However, with the surge offers visa exemptions to attract ASEAN in the supply of five-star hotel rooms in visitors. 10 the next few years, hotel operators are In recent years, China’s hotel market has expected to offer more discounts on faced increasing challenges, including room rates to lift occupancy, resulting in 0 slower domestic economic growth, S G H T a fall in the ADR of five-star hotels. on-going government policies to curb Given the launch of the Guangzhou consumption of luxury goods as well as Source: Knight Frank Research Nansha Free Trade Area and the strategic increasingly fierce competition among positioning of Guangzhou as a hub city in local and international hotel operators the Belt and Road initiative, Guangzhou resulting from increased room supply. CHART 3 continued to generate a steady stream of However, the hotel market in China is set Five-star hotel room rate business as well as Meeting, Incentive, to continue growing and to benefit from a (2016 forecast) Conference and Exhibition (MICE) visitors strong upsurge in domestic tourism in the in 1H 2016. A number of renowned medium to long term, with the domestic ARD (US$) global brands entered the Guangzhou economy becoming increasingly driven 00 market in the past year, including by domestic demand. International Park Hyatt Guangzhou and Hilton’s hotel operators have continued to show 20 Double Tree, and more are expected strong confidence in China’s hospitality to be completed in the next two years, market, pursuing aggressive expansion 200 including Marriot, Conrad and Sheraton plans in the country. For example, hotels. InterContinental Hotels Group, which 10 had 271 hotels in China in mid-2016, has In 1H 2016, the Hong Kong hotel industry 220 more in the pipeline, 180 of which slowed down, with the drop in overnight 100 are scheduled for completion over the visitors from the Mainland as a result of next five years. And Starwood Hotels & the appreciation of the Hong Kong dollar, 0 Resorts, which already has 292 hotels China’s ongoing anti-corruption policy across China, will add six new Sheraton and competition from neighbouring 0 hotels in 2017. S G H T destinations. Excluding Mainland visitors, Source: Knight Frank Research

3 BEIJING

CHART 4 International overnight visitor arrivals

Million people YOY growth (%) 10 100 International overnight visitors YOY growth 0

6 60

0

2 20 Overview Outlook 0 0 During the second half of 2015 Looking ahead, it is expected that (2H 2015) and the first half of 2016 three prime hotels, all located in 2 20 (1H 2016), as the global economic Chaoyang District, will be launched 0 200 200 2006 200 200 200 2010 2011 2012 201 201 201

recovery fell short of expectations, in 2H 2016, adding 644 new five- 2016E inbound tourism to Beijing declined star hotel rooms to the market. The Source: Beijing Tourism Bureau / slightly by 1.2% year on year (YoY). 303-room InterContinental Beijing Knight Frank Research According to the Beijing Municipal Sanlitun Hotel will open in 3Q 2016. The Bureau of Statistics, the capital 241-room Mandarin Oriental Beijing, received approximately 1.982 million which was set to open at the end of CHART 5 international overnight visitors in 1H 2015, has been postponed and will be Five-star hotel stock 2016. However, the dip was offset by launched in 4Q 2016. The 100-room a steady 3.8% YoY increase in the Beijing Zhonghong Edition Hotel will No of hotel rooms number of domestic overnight visitors, open in December 2016. Meanwhile, 0000 reaching 135 million. the opening of Sheraton Beijing West 000 Mountain Resort, previously scheduled 6000 Supply and at the end of 2015, will be postponed to 000 January 2018. demand 2000 As the global economy is still facing 0000 Because of softening demand for uncertainties in the short term, growth 2000 accommodations for inbound tourists in inbound tourism for both leisure and 26000 and the Beijing government’s policy of business, as well as length of stay, 2000 strictly controlling the number of new is likely to be limited. However, with hotels within the Fourth Ring Road, increasing domestic demand from the 22000 international hotel brands have adjusted business sector, including Meeting, 20000 2006 201 201 or postponed the openings of their Incentive, Conference and Exhibition 200 200 200 200 200 2010 2011 2012 201 hotels. Consequently, only one hotel, 2016E (MICE) activities, and from the leisure Source: Beijing Tourism Bureau / Tylfull Hotel, in Haidian District, was sector as a result of improving income Knight Frank Research launched in the July 2015 to June 2016 levels and the growing spending power period, providing 266 rooms. As at the of domestic travellers, the occupancy end of 1H 2016, the total stock of five- rate and ADR for five-star hotels are CHART 6 star hotel accommodations in Beijing expected to rebound moderately in 2H Five-star hotel performance amounted to 38,114 rooms. 2016. ADR (RMB) Occupancy rate (%) Although room demand from inbound In February 2016, the Beijing 1600 10 Average Daily Rate tourists continued to ease, the market government issued policies that Hotel occupancy rate performance of Beijing’s high-end will further promote the reform and 100 120 hotels remained stable, mainly because development of Beijing’s tourism of enhanced consumer spending industry to enhance the capital’s core power as well as increased demand for competitiveness and its international 1200 100 domestic business accommodations influence. The Beijing government

and conferences. During 1H 2016, has also stepped up efforts to combat 1000 0 the five-star hotel occupancy rate chronic air pollution, traffic congestion increased by 2.3 percentage points YoY and other unfavourable factors that 00 60 to 63%, while the Average Daily Rate have a negative impact on tourism, (ADR) dropped mildly by 0.8% YoY to in order to provide a better travel RMB805. experience for both domestic and 600 0

foreign visitors, which will indirectly 200 200 2006 200 200 200 2010 2011 2012 201 201 201 2016E benefit the performance of Beijing’s Source: Beijing Tourism Bureau / prime hotels. Knight Frank Research

4 GREATER CHINA HOTEL REPORT 2016 RESEARCH

SHANGHAI

CHART 7 International overnight visitor arrivals

Million people YOY growth (%) 10 100 International overnight visitors YOY growth 0

6 60

0

Overview Outlook 2 20 In the past year, tourist arrivals to Luxury hotels scheduled to open in 2H 0 0 Shanghai have grown steadily. In 2016 include Le Méridien Shanghai in 2015, Shanghai received 6.54 million Minhang, Melia Hotels International 2 20 200 200 2006 200 200 200 2010 2011 2012 201 201 201 international overnight tourists, an in the Hongqiao Transportation Hub, 2016E increase of 2.2% year on year (YoY). J Hotel of Shanghai Tower in Little Source: Shanghai Municipal Tourism In the first half of 2016 (1H 2016), the Lujiazui and Hua Luxe Hotel in Pudong, Administration / Knight Frank Research number of international overnight tourist pushing up the total number of arrivals reached approximately 3.2 Shanghai luxury hotel rooms to 29,500. million, a further increase of 2.5% YoY. This huge amount of future supply is set CHART 8 As Shanghai remains one of the most to create an oversupply situation in the Five-star hotel stock preferred local destinations for domestic market. We expect the ADR of five-star tourists, the number of domestic tourist hotels in Shanghai to drop 0.5% YoY to No of hotel rooms arrivals also continued to increase RMB965 and the average occupancy 0000 steadily, up 2.8% YoY to 276 million in rate to rise to 67.5% by the end of 2000 2015. 2016. 26000 In 2017, 8 to 10 international luxury 2000 Supply and hotels are scheduled to open in 22000 demand Shanghai, including Bulgari Hotel 20000 Shanghai (120 rooms) and St. Regis 1000 From July 2015 to June 2016, four Shanghai (480 rooms) in Jing’an as well 16000 luxury hotels opened in Shanghai, two as W Shanghai the Bund (338 rooms) 1000 in the downtown area and two in the and Bellagio Hotel Shanghai (200 suburbs, providing a total of 991 guest rooms) in the North Bund of Hongkou 12000 rooms. Wanda Reign Shanghai, with District. We expect the total number 10000

196 guest rooms, opened in June 2016 200 200 2006 200 200 200 2010 2011 2012 201 201 201

of five-star hotel rooms in Shanghai to 201E in the Bund Financial Belt in Huangpu reach about 32,000 in 2018. Source: Shanghai Municipal Tourism District. This is Wanda Reign’s first Administration / Knight Frank Research hotel in the Shanghai market. Hyatt Shanghai Disneyland, the world’s sixth Regency Shanghai, in Wujiaochang Disney Theme Park, officially opened in Yangpu District, made its debut in June 2016. It is expected to receive over 17 million visitors in 2016. Two CHART 9 in June. The 310-room hotel has the Five-star hotel performance highest star rating among hotels in the other theme parks, Shanghai Haichang area. Also opening during the period Polar Ocean Park and Ice World in ADR (RMB) Occupancy rate (%) Lingang in Pudong, will be launched in 100 120 were Courtyard Shanghai Fengxian in Average Daily Rate 2017 in 2019, respectively. The number Fengxian District, with 259 rooms, and Hotel occupancy rate Radisson Exhibition Centre Shanghai of domestic tourist arrivals is expected in Qingpu District, adding 226 rooms to to reach over 300 million in 2019, 1200 100 the market. which will boost the hotel industry in Shanghai. At the end of 1H 2016, Shanghai offered 1000 0 28,393 luxury hotel rooms, an increase of 3.6% YoY. Owing to the huge supply, hotels offered more discounts 00 60 on room rates, resulting in a 2.2% YoY drop in the Average Daily Rate (ADR) of five-star hotels to RMB954 600 0

and a 3.7-percentage-point rise in the 200 200 2006 200 200 200 2010 2011 2012 201 201 201 2016E average occupancy rate to 67.3%. Source: Shanghai Municipal Tourism Administration / Knight Frank Research

5 GUANGZHOU

CHART 10 International overnight visitor arrivals

Million people YOY growth (%) 12 60 International overnight visitors YOY growth 10 0

0

6 0

20 Overview percentage fall than at the national and provincial levels. Affected by weakening 2 10 In 2016, Guangzhou experienced steady demand for Chinese exports and global economic growth with a number of economic uncertainty, the number of 0 0 indicators performing slightly better participating merchants in 2016 Spring 2 10 200 200 2006 200 200 200 2010 2011 2012 201 201 201

than those at the national and provincial Fair edged up by just 0.43%. However, 2016E levels. Its GDP grew by 8% year on Guangzhou’s five-star hotel ADR and Source: Guangzhou Tourism Bureau / year (YoY) to RMB884.431 billion in the occupancy rate still rose modestly to Knight Frank Research first half of 2016 (1H 2016). Passenger RMB807 and 64% during 1H 2016, up 2% throughput at Baiyun International and 2 percentage points, respectively. Airport increased 5% YoY, with steadily rising visitor arrivals. In 1H 2016, Outlook CHART 11 Guangzhou received 26.67 million Five-star hotel stock Some 500 additional rooms could come overnight visitors, up 5.4% YoY, a online in 2H 2016. The ADR of five-star No of hotel rooms slightly slower growth rate than the same 1000 hotels is expected to increase slightly period last year. However, international to RMB810, with the occupancy rate overnight visitors reached 3.9 million in 1000 remaining at around 65% for 2016. A 1H 2016, up 6.3% YoY, representing a number of new five-star hotels in the modest recovery. 1000 pipeline are expected to be completed

in the next two years, including Marriott, 11000 Supply and Conrad, Kempinski, Rosewood and Sheraton hotels. In January 2016, Rofo demand 000 signed an agreement with Radisson to In recent years, renowned brands have introduce a Radisson RED hotel to its 000 continued to enter the Guangzhou hotel complex near the Guangzhou South market, resulting in a surge in the number Railway Station, which is scheduled to 000 of five-star hotel rooms. From 2H 2015 to

open in 2018 with 160 rooms. 200 200 2006 200 200 200 2010 2011 2012 201 201 201 1H 2016, more than 1,000 new high-end 2016E hotel rooms were added to the market. In the medium to long term, although Source: Guangzhou Tourism Bureau / Knight Frank Research International five-star hotels in Guangzhou China’s exports and imports could are concentrated in northern Tianhe and continue to slow down, the country’s New City, where the 208-room economic restructuring should open the Park Hyatt Guangzhou opened at the end door to new business opportunities for CHART 12 of 2015. While established local five-star Guangzhou. Capitalising on the pilot Five-star hotel performance hotels are located mainly in , launch of the Nansha Free Trade Area, an increasing number of new five-star as well as the strategic positioning of ADR (RMB) Occupancy rate (%) Guangzhou as a hub city in the Belt 1100 100 hotels are being launched in new urban Average Daily Rate and Road Initiative, international trade areas, including Hilton’s Double Tree in Hotel occupancy rate Science City, which opened in August and shipping logistics activities are 0 2015, providing 314 rooms. White Swan set to become increasingly robust 00 Hotel in Shamian reopened in July in the future. With the launch of new 0 2015 after three years’ renovation, offering infrastructure and office buildings, 520 rooms. demand should remain steady from 00 0 both the business and the Meeting, The Average Daily Rate (ADR) and Incentive, Conference and Exhibition 60 occupancy level of Guangzhou’s five-star (MICE) sectors. Meanwhile, the 00 hotels are strongly influenced by the development of new shopping and 0 Canton Fair, subject to seasonal volatility. entertainment facilities as well as new In 1H 2016, the total value of Guangzhou’s hotel resorts in Guangzhou is expected 00 0

exports and imports fell 0.5% YoY, to 200 200 2006 200 200 200 2010 2011 2012 201 201 201

to attract more leisure visitors to the 2016E RMB389.62 billion, a slightly lower city. Source: Knight Frank Research

6 GREATER CHINA HOTEL REPORT 2016 RESEARCH

HONG KONG

CHART 13 International overnight visitor arrivals

Million people YOY growth (%) 6 60 International overnight visitors YOY growth 0 0

2 0

1 0

12 20 Overview The total stock of five-star hotel rooms remained stable at 18,065, as no new 6 10 During the first half of 2016 (1H 2016), five-star hotels have opened since Hong Kong’s hotel industry slowed for 2012. The “High Tariff” hotel supply will 0 0 the second straight year. According continue to be limited in the near future. 6 10 200 200 2006 200 200 200 2010 2011 2012 201 201 201 to the Hong Kong Tourism Board, Only one such hotel will be completed 2016E the number of international overnight in 2H 2016 – the 599-room Kerry Source: Hong Kong Tourism Board / visitors totalled 12.4 million, falling 2.1% Hotel in Hung Hom, which will open Knight Frank Research year on year (YoY). Mainland Chinese in September 2016. In mid-2017, the visitors accounted for about 8 million 600-room Rosewood Hotel will open in of the total, down 6.7% YoY, amidst Tsim Sha Tsui and the 495-room Hong CHART 14 Kong Ocean Park Marriott Hotel will the appreciation of the Hong Kong Five-star hotel stock dollar, China’s ongoing anti-corruption open at Ocean Park. In late-2017, the drive and strong competition from redevelopment of the Murray Building in No of hotel rooms neighbouring destinations. Central will add 336 rooms. 1000 1000 The number of Mainland Chinese overnight visitors continued to decline Outlook 1000 overall, but excluding Mainland The occupancy level and ADR of 16000 visitors, there was a 10.1% increase five-star hotels are expected to remain 1000 in the number of short-haul overnight stable this year, given the limited supply. 1000 visitors in 1H 2016, reaching 2.8 Looking ahead, despite the continued 1000 million, and a 3.0% increase in the expected decline in the number of 12000 number of long-haul visitors to 1.6 Mainland visitors to Hong Kong, the million on a YoY basis. This was due number of short and long-haul visitor 11000 in part to the establishment of the arrivals is expected to continue to rise, 10000 government’s Matching Fund Scheme given various government support 000

(MFTA) and Hong Kong Family Fun schemes, which help local attractions 200 200 2006 200 200 200 2010 2011 2012 201 201 201 2016E promotion, which boosted arrivals by diversify their sources of tourism. Source: Hong Kong Tourism Board / providing attractive offers to visitors Moreover, various infrastructure Knight Frank Research and strengthening the promotion of projects, such as the Hong Kong- Hong Kong as a premier destination for Zhuhai-Macau Bridge and Guangzhou- families in major target markets. -Hong Kong Express Rail CHART 15 Link, are set to enhance the city’s Five-star hotel performance Supply and connectivity with the Greater , which will boost cross-border ADR (HK$) Occupancy rate (%) 200 100 demand traffic flow, thus increasing hotel room Average Daily Rate demand. Therefore, we remain positive Amid the slowdown in visitor arrivals 200 Hotel occupancy rate in 1H 2016, the average occupancy on the long-term outlook for the Hong 0 200 rate of “High Tariff A” hotels dropped Kong hotel sector. to 81%, compared to 82% in 1H 200 0 2015. The relatively minor drop was 2100 attributable largely to the efforts 0 of hotels, which launched various 100 promotional programmes and lowered 100 their room rates in response to the 60 declining number of visitors. As a result, 100 the Average Daily Rate (ADR) of “High 100 0 Tariff A” hotels in Hong Kong declined 200 200 2006 200 200 200 2010 2011 2012 201 201 201 by 5.3% YoY to HK$2,149. 2016E Source: Hong Kong Tourism Board / Knight Frank Research

7 MACAU

CHART 16 International overnight visitor arrivals

Million people YOY growth (%) 2 0 International overnight visitors

20 YOY growth 0

1 0

10 20

10

period last year. However, the average 0 0 Overview occupancy rate of five-star hotels 10 In 2015, the combination of a slowdown edged down 2.8 percentage points in China’s economy, a surge in new YoY to 78.7%, while the Average Daily 10 20 hotel supply and a change in tourist Rate (ADR) dropped 12.3% YoY to 1 0 200 200 2006 200 200 200 2010 2011 2012 201 201 201

spending habits towards the mid-end of MOP$1,690. 2016E the market negatively affected tourism Source: Macau Statistics and Census Service and five-star hotel market performance Outlook / Knight Frank Research in Macau. The number of international Looking ahead, the city will continue to overnight visitors dropped 2% year see more hotel openings between now on year (YoY) to 14.3 million in 2015, and 2020, most on the Strip, which CHART 17 according to the Macau Statistics and will bring the total number of five-star Five-star hotel stock Census Service. hotel rooms to over 35,000 by then. In No of hotel rooms However, the number started to 2H 2016, Parisian Macau and Wynn 2000 improve in the second half of 2015 Palace opened, providing 3,000 and (2H 2015) as a result of the joint efforts 700 hotel rooms, respectively. In 2017, 2000 of the government and the industry MGM Cotai and Grand Lisboa Palace 21000 to transform the city from a gambling will add 1,500 and 2,000 hotel rooms 1000 centre to an entertainment and to the market, respectively. Against this leisure destination. Around 7.2 million backdrop, the ADR and occupancy rate 1000 international overnight tourists visited of five-star hotels in Macau are projected 12000 Macau in 1H 2016, an increase of 8.3% to decline further in the short run. YoY. Among them, over 4.6 million 000 However, the medium and long-term visitors were from the Mainland, an outlook for the hotel industry in Macau, 6000 increase of 8.2% compared with that of China’s only casino city, remains a year earlier. Meanwhile, the gaming 000 optimistic. The launch of new hotel and

industry has also shown improvement, 200 200 2006 200 200 200 2010 2011 2012 201 201 201 resort projects, with different themes, 2016E as casino operators turned their focus Source: Macau Statistics and Census Service / shopping malls, gaming capacity and to mass-market gamblers amid China’s Knight Frank Research other entertainment facilities, should anti-graft campaign. help increase the critical mass of Macau’s tourism industry. Meanwhile, Supply and infrastructure projects, such as the CHART 18 demand Hong Kong-Zhuhai-Macau Bridge, the Five-star hotel performance new , the Macau In 2H 2015 and 1H 2016, there were ADR (MOP) Occupancy rate (%) airport expansion and the light rail 2200 100 two five-star hotel openings in Macau: system, are expected to improve the Average Daily Rate St. Regis Hotel on the and connectivity between Macau and other Hotel occupancy rate Crowne Plaza in the , cities and further accelerate Macau’s 100 0 offering 600 rooms combined. The transformation into a world-class leisure total number of five-star hotel rooms in tourism hub. 1600 0 Macau increased 4.6% YoY to around 20,500 in June 2016. 100 0 The increase in room supply intensified competition among hotel operators 1000 60 in spite of the rebound in overnight visitor arrivals. According to the Macau Hotel Association, five-star hotels in 00 0 200 200 2006 200 200 200 2010 2011 2012 201 201 201

Macau housed about 3 million guests 2016E in 1H 2016, 5.7% more than the same Source: Macau Hotel Association / Knight Frank Research

8 GREATER CHINA HOTEL REPORT 2016 RESEARCH

TAIPEI

CHART 19 International overnight visitor arrivals

Million people YOY growth (%) 12 60 International overnight visitors YOY growth 10 0

0

6 0 Overview while the Average Daily Rate (ADR) 20 decreased 1.1% to TW$4,835, because 2 10 Taiwan has seen a rising number of of additional supply. tourist arrivals since the opening of its 0 0 tourism market to Mainland Chinese Outlook 200 200 2006 200 200 200 2010 2011 2012 201 201 201 visitors in 2008. According to Taiwan’s 2 2016E 10 Taiwan has seen an increasing number Tourism Bureau, international overnight of individual travellers from Hong Source: Tourism Bureau, Taiwan / visitor arrivals to Taiwan in 2015 Knight Frank Research Kong, Macau, Japan and Korea, while increased 5.3% year on year (YoY) to domestic travel is also very popular 10.44 million, with 34% repeat visitors. among Taiwanese. As there will be The average length of stay was 6.6 no new supply until 2017, when the CHART 20 days, slightly longer than that for other 199-room Qingcheng Howard Hotel is Five-star hotel stock major cities in the Greater China region. scheduled to open, hotel occupancy is In the first half of 2016 (1H 2016), expected to remain firm. No of hotel rooms 00 international overnight visitor arrivals The Taiwan government started to Taiwan totalled 5.4 million, up 8.9% developing an allowance plan for group YoY, leading to strong demand for 000 tours in April. It is also actively driving hotels. Most were from the “New South Policy” to attract (2.1 million or 38.8% of the total); ASEAN visitors to Taiwan by simplifying 00 followed by Japan (880,000 or 18.0%) administrative procedures and providing as well as Hong Kong and Macau subsidies for accommodation expenses. 000 (752,000 or 13.8%). The number of Thai A visa exemption for 30-day stays has visitors was up 39.5%, the strongest been granted to visitors from YoY growth among all countries of 00 and Brunei, with full exemption for origin. There was also continued rapid all Southeast Asian countries under growth in the number of Korean visitors, consideration. This is expected to 000 up 25.7% YoY. 200 200 2006 200 200 200 2010 2011 2012 201 201 201

consistently boost hotel occupancy rate. 2016E Source: Tourism Bureau, Taiwan / Supply and The government is also actively Knight Frank Research integrating tourism resources. It opened demand three new High Speed Rail stations Taiwan’s tourism boom in recent years in Houlong in Miaoli, Tianzhong in Changhua and Huwei in Yunlin in CHART 21 has attracted new hotel projects by Five-star hotel performance international operators. Examples December 2015, and launched Nangang include Taipei Marriott Hotel, near Station in Taipei in 2016, which is set ADR (TW$) Occupancy rate (%) 000 100 Dazhi Station in District, to spur the occupancy rates and ADR Average Daily Rate and Courtyard by Marriott Taipei, in of Taipei Marriott Hotel and Courtyard Hotel occupancy rate Nangang District, both opened in 2H by Marriott Taipei. In addition, system 600 0 2015, offering 709 luxury rooms in total. integration has been completed for The 146-room Grand Mayfull Taipei EasyCard in Taipei and I Pass in 200 0 Hotel, also near Dazhi Station, opened Kaohsiung to provide comprehensive in 1H 2016. At the end of Q2 2016, transport services, which is expected to there were 28 international tourist hotels boost the development of the individual 00 0 in Taipei, providing 9,258 rooms. travel market. The average occupancy rate of 00 60 international tourist hotels has remained stable in the past decade at over 70%. 000 0

In 1H 2016, the rate averaged 70%, 200 200 2006 200 200 200 2010 2011 2012 201 201 201 2016E down four percentage points YoY, Source: Tourism Bureau, Taiwan / Knight Frank Research

9