China’s secondary cities – those with fewer than ten million inhabitants – experienced higher revPAR growth than the national average of 2.8% for the year-to-November 2011, according to STR Global. The study observed that revPAR increased by 30.8% in the city of Xiamen, and by 20.3% in Chengdu due to limited new supply and strong demand growth.
Wuhan experienced a 4.1% shortfall in occupancy, while ADR increased by 18.2%, contributing to a revPAR growth of 13.4%. Hangzhou saw occupancy decline by 8% for the year-to-November compared with the previous year, due to a 5.6% rise in room supply and a 10.4% ADR increase. Similarly, in Suzhou occupancy fell by 4%, while ADR and room supply grew by 2% and 5.5%, respectively.
The report forecasts that supply growth will increase across all of China’s secondary cities, led by Sanya with a 50.1% boost and Xiamen with a 25.9% increase. Suzhou, Xian and Hangzhou will experience lower growth rates of 11.3%, 12% and 9%, respectively, but will remain strong markets for new hotel openings as brands continue to explore destinations outside the country’s main hubs.
STR Global managing director Elizabeth Randall said that hotel development by international and regional hotel chains over recent years has focused more on secondary cities across China, which reflects the growing importance of these markets as economic centres and demand generators for inbound and outbound visitors. In ten out of 15 cities, demand grew at higher rates than supply.