China’s hotels showed signs of recovery in occupancy rates in 2015，and demand for hotel accommodation will find support from tourism development in the next few years, Savills China reported in its China Hotel Market Report released on January 6.
The report indicated that five-star hotels in first-tier cities have consistently outperformed five-star hotels in lower tier cities. The average RevPAR in 2015 reached RMB538, or RMB562.2 after seasonality adjustment. Room revenues of five-star hotels in first tier cities have rallied 16% since bottoming out in the first quarter of 2013. However, room revenues for five-star hotels in second- and third-tier cities continued to slide in the same period.
Hotels in second-tier cities saw average occupancy plummeted from 60% in 2011 to 55% in the third quarter of 2015 due to weakening demand and oversupply. The average room price (ARP) for hotels in second-tier cities fell from RMB650 in late 2012 to RMB580 in Q3 2015. The hotels’ RevPAR also dropped from RMB400 to RMB330 in the same period.