TOURIST arrivals and US consumer confidence levels are two factors identified as always having a positive effect on a city’s RevPAR, though global trends exert a high influence on RevPAR rather than local ones.
These were some of the findings in the recently-published Common Global and Local Drivers of RevPAR in Asian Cities by Cornell University’s Center for Hospitality Research, which studied a host of global and local economic factors and their effects on RevPAR in eight Asian cities, namely Bangkok, Beijing, Hong Kong, Shanghai, Singapore, Taipei, Tokyo and Seoul.
According to the study, growth in US consumer confidence or tourist arrivals in any of these cities would produce corresponding growth in RevPAR.
Nevertheless, global factors such as the MSCI Asia stock index (used as a proxy for expected changes in the Asian economy), Chinese and US consumer confidence, the China-US exchange rate, Chinese real estate development and event-dummy variables representing major events such as the Beijing Olympics, were observed to play a bigger role in determining RevPAR than local factors.
Local factors under study were: international tourist arrivals, trade balance and inflation.
However, the extent of influence also varied between cities. In Seoul, global factors account for 93 per cent of RevPAR and local factors, seven per cent. At the other end of the spectrum, Bangkok’s RevPAR was 66 per cent influenced by local trends and 34 per cent by global movements.
The Cornell study said findings indicated that although investors took the alleged risk-minimising approach by buying assets in different cities within one region, cities were linked by global forces and would, therefore, rise and fall with the tide.
Hotel executives, it advised, could monitor the factors listed in the study and treat them as early warning indicators for a feel of how much RevPAR is likely to be affected in the present economic climate.
