Olympics Watch: Hotels Hoping for Boost from Games

The Chinese hotel industry, which was gearing up for a big boost this year from the Olympics, instead saw nationwide declines in revenue per available room (RevPAR) during the first half of the year, according to a report from STR Global.

Several major markets also saw occupancy rates drop as new hotel openings have stretched demand.

Overall, occupancy at China’s hotels fell 6.9 points in the first half of 2008, to 60.8 percent. The average daily rate increased 2.3 percent, to $133.31. These metrics led to a 4.8 percent decline in RevPAR.

In Beijing, new hotel openings and lighter-than-expected pre-Olympic demand have caused occupancy to drop 10.7 points, to 61.8 percent. However, a 7.6 percent boost in rates has helped offset this. The year-to-date average daily rate is $137.51, and RevPAR is down 3.9 percent.

In Shanghai, occupancy has fallen 8.5 points, to 59.1 percent. Rates have also fallen slightly, by 1.6 percent. The year-to-date average daily rate in Shanghai is $145.91. Shanghai showed the biggest drop in RevPAR among major Chinese cities, at 10 percent.

Performance in Hong Kong was flat. Occupancy was down 0.8 points, to 80.6 percent, the highest occupancy rate in STR Global’s survey. Rates increased 1.5 percent, to $209.27. RevPAR increased marginally, by 0.7 percent.

The May 12 earthquake in Chengdu rattled the hotel industry there. Year-to-date, occupancy is down 22.6 points, to 52 percent. Rates increased by a substantial 22.5 percent to cover the gap. Average daily rate reached $87.08; RevPAR decreased 5.2 percent.