HORWATH HTL NEWSLETTER CHINA EDITION 1, 2011 浩华中国资讯 2011 年第 1 期

Transcription

1 HORWATH HTL NEWSLETTER CHINA EDITION 1, 2011 浩华中国资讯 2011 年第 1 期

2 CHINA MARKET OVERVIEW SHENZHEN GENERAL MARKET REVIEW Shenzhen, being the first SEZ of China, has enjoyed a relatively high level of openness and foreign contact relative to other coastal Chinese cities. Being the closest neighbor to Hong Kong, it has also been one of the most convenient cities to satisfy foreigners early curiosity of China. However, as a newly developed city driven purely by economics, Shenzhen offers neither the natural environment nor the cultural and historical significance of other cities. It maintained an annual GDP growth rate of over 14 percent between 2002 and Tourist arrivals increased at a CAAG of 8 percent over the same period. SUPPLY, DEMAND & OCCUPANCY In general, the top-tier market s occupancy steadily decreased at a CAAG of 10 percent between 2005 and The more significant decreases in occupancy levels occurred in 2007 and 2009, during which there were more than 30 percent increases in room night supply. This indicates that the market has not readily absorbed the increase in hotel room supply. The upper-tier market-wide occupancy decreased at a CAAG of 5 percent over the same period. The reason for the less significant decrease in occupancy levels can be attributed to the opening of only 2 competitive hotels between 2005 and 2009 with this level of hotel positioning. RATE PERFORMANCE Between 2005 and 2009, the top-tier hotel market s ADR increased at an average rate of 4 percent and recorded at above RMB 1,000 in 2008 for the first time. The openings of new internationally branded hotels have raised the rate ceiling of the overall hotel market. However, the new rate ceiling did not seem to be sustainable for the market. To cope with a softening market in 2009, top-tier hotels have been offering opening room rates that are somewhat uncharacteristic of their brands. We believe that as the global economy recovers, rates should rise accordingly in the next few years. MARKET SEGMENTATION Corporate-driven demand (including corporate FIT and MICE guests) is traditionally the strongest and most stable amongst all demand segments. It will remain an important pillar in the By Xin Xin Loh, Consultant, Horwath HTL Shenzhen hotel market because of the city s position as a special economic zone in China. Leisure demand accounts for approximately 20 percent of total hotel demand, which is in line with the city s focus on commercial development, rather than its development as a leisure tourist destination. NEW SUPPLY It has been anticipated that, up until 2014, there will be more than 2,500 top-tier hotel rooms that will enter the Shenzhen hotel market, while approximately 1,000 upper-tier hotel rooms will be added, almost all of which will be internationally-branded. This large influx of new supply will add downward pressure on the existing market, potentially diluting market-wide occupancy levels. MARKET OUTLOOK The opening of Guangzhou-Shenzhen-Hong Kong High-speed Railway with a station at Futian is expected to further strengthen Futian CBD s function as the business centre of Shenzhen. We believe the city s corporate travel market has the potential to grow at a moderate to strong rate in future. For the MICE demand segment which mainly refers to room nights generated by in-house meetings and incentive trips, since this segment is closely tied with corporate demand, it is also expected to continue to grow at a strong to moderate rate. However, the conventions and exhibitions industry has become very competitive around the Pearl River Delta region. As such, Shenzhen will be competing with cities such as Guangzhou, Hong Kong, and Macau in bidding for international conferences and events. For the leisure market, Urban resorts success at attracting new leisure demand from Hong Kong for resort recreation purposes is encouraging. Meanwhile, the opening of the new internationally branded 5-star properties is anticipated to bring in new entertainment options to the Shenzhen leisure market with their in-house dining, spa, and recreation facilities. We believe that the leisure market has some growth potential. Overall, after several years of very large increases in supply plus the economic crisis, the market faces more moderate supply additions in the coming years. This, coupled with an eventual global economic recovery, should bring the market back to more healthy operating levels.

3

4 LEADING HOT SPRING HOTEL MARKET OVERVIEW CHINA By Linda Li, Senior Consultant, Horwath HTL INTRODUCTION With the robust growth of short-distance travel on weekends and leisure-oriented meeting activities, the hotel market in China has seen a wave of suburban resort developments, in which the hot spring themed resorts constitute an important category. For this analysis, we have made inspections of regions with the presence of naturally occurring, reputable hot springs. Leading hot spring hotels included into this analysis are: Longxi Hot Spring Resort Beijing, Huaqing Aegean Hot Spring Resort Xi an, Brilliant Resort & Spa Kunming, Bishuiwan Hot Spring Resort Guangzhou, Imperial Hot Spring Resort Zhuhai, Ocean Spring Resort Zhuhai, and Riyuegu Hot Spring Resort Xiamen. These properties generally feature outstanding hot spring facilities and are believed to be representative amongst the specific supply segment of hot spring resorts. OCCUPANCY AND RATE PERFORMANCE Most selected hot spring resorts achieved relatively stable market performance in the past few years. In 2009, the identified hot spring market achieved an average occupancy level of approximately 65 percent with the imperial Hot Spring Resort and Bishuiwan Hot Spring Resort leading the market. In terms of room rates, the market s average performance remained at a level of around RMB 670 and almost all the identified resorts are able to achieve room rate levels between RMB 500 and RMB 750. In comparison, the market average rate for nationwide domestically managed five-star hotels was RMB 538 in 2009, about 25 percent lower than that of the selected hot spring market. With that being said, the identified hot spring resorts generally achieved relatively favorable room rate performance, mainly attributable to their ability to focus on more lucrative leisure FIT and MICE markets. MAJOR RESORT CHARACTERISTICS In looking at the selected leading hot spring resorts, there are striking similarities in some of their characteristics, which are discussed in greater detail as follows: Domestic Branding & Independent Management None of listed comparables carry an international brand, whether it is for their hotel operations or hot spring facility. It is noted that some branded comparables like the Imperial Resort and Longxi Resort have indicated a desire to expand should the right opportunity arise. However, we believe the expansion of hot spring brands would not be easy to realize as most of comparables have not yet established a strong brand identity and the successful development of hot spring resorts rely on more factors than normal resorts with the quality of hot spring resource being the most significant. Varying Scale of Development The scale of development of the listed resorts varies considerably. Nevertheless, most comparable resorts are small to moderate in scale, consisting of less than 300 guestrooms. The scale of resort developments is in great relation with the strength of their potential demand source markets. For those properties located either within the Pearl River Delta region or in Greater Beijing, they tend to have larger room inventories. This is because these regions are the most developed areas in China and have the potential to generate a substantial amount of demand to support suburban resorts. Regional Domestic Demand The chart below illustrates the general nationality mix of the identified hot spring resorts: NATIONALITY MIX OF HOT SPRING RESORTS H.K/Macau/TW Japan/Korea 13% 1% Domestic 86% Demand for all the comparable properties is dominated by domestic guests, who in some cases accounted for as much as 99 percent of total demand. Additionally, such domestic

5 LEADING HOT SPRING HOTEL MARKET OVERVIEW CHINA By Linda Li, Senior Consultant, Horwath HTL demand is overwhelmingly generated from nearby major cities. This regional nature is largely due to the resorts remote locations, which is dictated by the location of hot springs. Where present, international demand tends to come from Asian countries and regions regardless of the resort s location, consisting largely of Hong Kong, Macau, Taiwan, Japan and Korea, as these regions and countries generally have a hot spring culture originating from Mainland China. Leisure-oriented Demand Focus The resorts tend to attract two main types of demand, namely leisure and leisure-oriented MICE demand, largely due to their remote locations from any major corporate and industrial concentrations. The following chart presents the general demand mix of the comparable hot spring resorts: DEMAND SEGMENTATION OF HOT SPRING RESORTS Corporate and Other 11% Leisure FIT 34% MICE 39% Leisure Group 16% Given the importance of leisure demand to the hot spring resorts, it is unsurprising that even within the week, demand is highly seasonal. Friday and Saturday nights form the peak weekend period while Tuesday and Wednesday nights experience the lowest occupancies. During the peak season, weekend occupancy levels are reported to be higher than 90 percent, if not full; however, weekday occupancy drops to between 40 and 60 percent during the low season. KEY HOT SPRING FEATURES The hot spring component at the selected comparables undoubtedly functions as a significant demand driver for the resorts and is considered one of the prominent revenue generators. The following points identify key features that are common amongst these comparable properties: Outstanding Hot Spring Offerings Each property has excellent hot spring offerings in both the quality of hot spring water and the hot spring facility. Almost all the comparables are located along the well-known hot spring belts and contain rich mineral elements with high water temperatures, claiming therapeutical uses for a certain diseases. Thus, they gain high popularity amongst the locals and are often favorite tourist destinations. Moreover, the hot spring facilities at the comparables are generally of high quality and tastefully designed. They are nestled in lush foliage, featuring well-designed landscaping. A wide variety of hot spring pools falling within diversified themed zones give guests multi-sensory enjoyment of the hot springs. Strong TCM Focus A strong TCM focus underlies the hot spring facility of each of the listed comparable resorts. In fact, it is noted that all of the resorts provide hot spring pools with different Chinese herbal additives. Even their spa services have a strong TCM focus by incorporating Chinese-based practices, such as cupping, tui-na and acupuncture. The Imperial and Longxi resorts even have resident TCM practitioners who are fully qualified to offer medical diagnosis.

6 LEADING HOT SPRING HOTEL MARKET OVERVIEW CHINA Large Volume of Walk-in Guests In-house guests of the resorts naturally form captured demand for the hot spring facilities with many resorts reporting 100 percent capture rate of in-house guests. Moreover, given the high reputation of the resorts hot spring facilities in the local, walk-in guests contribute a very generous amount of hot spring demand for the resorts. It is reported that between 50 to 80 percent of the total hot spring demand is generated from walk-in guests. By Linda Li, Senior Consultant, Horwath HTL External Membership Almost all the comparables offer external membership for their spa facilities. Such membership usually takes the form of a fixed number of hot spring usages at a discounted price to be utilized within a certain time period. Often, these memberships offer additional discounts for a la carte spa services, room nights and food and beverage consumption. Providing such membership clearly helps to boost the utilization of the hot spring pools and encourage further consumption of spa services to generate additional revenue for the resorts. Significant Revenue Generating Capacity Clearly, the hot spring resorts are different from the usual hotel operations in that they have an additional revenue source from the operations of hot spring facilities. Our market research has indicated that revenues from the hot spring part alone could be responsible for between 25 to 50 percent of the resort s total revenue, thus reducing the emphasis on rooms and food and beverage revenue. It is noted that the hot spring revenue achieved by the resorts is largely in relation to their capacity of capturing walk-in hot spring guests given that the volume of in-house hot spring guests is determined by the amount of room nights sold and is comparatively stable.

7 KEY MARKETS UPDATE Q CHINA By Kevin Zhao, Research Analyst, Horwath HTL Julie Dai, Director, Horwath HTL KEY MARKETS PERFORMANCE UPDATE YOY GROWTH, Q VERSUS Q % 0% 10% 20% 30% 40% 50% Shanghai Guangzhou Shenzhen Hainan Beijing Tianjin Chengdu Suzhou Hangzhou KEY MARKETS PERFORMANCE UPDATE YOY GROWTH, 2010 VERSUS % 0% 10% 20% 30% 40% 50% 60% Guangzhou Shanghai Shenzhen Beijing Xian Qingdao Tianjin Hangzhou Dalian Chengdu Chongqing Qingdao Hainan Xian Suzhou Dalian OCC ADR RevPAR Chongqing Source: STR Global OCC ADR RevPAR Source: STR Global Based on the above performance data of the key markets in China provided by STR Global, Horwath HTL further provides brief comments for each market.

8 KEY MARKETS UPDATE Q CHINA BEIJING The market has seen a positive growth of 13 percent in occupancy for Q versus the last quarter of 2009 due to the strong growth of demand. In the meanwhile, the market wide ADR recorded a faster growth pace of 10 percent in Q versus The year-end market performance was exciting due to the limited supply growth of only 2 percent and strong demand recovery of 26 percent for the whole year of 2010 versus The overall market realized particularly strong growth of 23 percent in occupancy, and a moderate growth in ADR by 5 percent, resulting in an increase of closely 30 percent for the overall RevPAR performance. For 2011, we expected most hotels to be more aggressive in increasing their rates when renewing their contracts with key corporate accounts as the market wide occupancy was successfully increased to around 65 percent. The quick absorption of significant new supply just in a short period of 2 years demonstrates Beijing s position as one of the most mature and primary markets of China. SHANGHAI In Q4 2010, the Shanghai hotel market has seen a clear decline of about 18 percent in demand after the Shanghai Expo. Accordingly, the overall occupancy dropped from about 74 percent in Q3 to around 60 percent in Q4, but still achieved a growth of 8 percent versus the last quarter of Market wide ADR continued its strong performance and recorded a growth of 25 percent versus Q Accordingly, market wide RevPAR improved by 34 percent during the same quarter. In general, year 2010 was a prosperous year for the Shanghai hotel market mainly because of the significant benefits from the success of the 2010 Shanghai Expo. The year-end market performance in 2010 has seen greater growth than the other major markets in China. For year-end 2010, market wide occupancy, ADR and RevPAR increased significantly by 28 percent, 20 percent, and 54 percent respectively over Looking forward, we expect the hotels with location advantages should have less concerns while the hotels with less attractive locations might have to take occupancy driven strategies. With a bright economic outlook for China, we estimate the Shanghai market should not experience any significant downturns with expected strong demand growth By Kevin Zhao, Research Analyst, Horwath HTL Julie Dai, Director, Horwath HTL from the business sector maintaining market-wide occupancy and room rates at a stable level. SHENZHEN In Q4 2010, the Shenzhen hotel market achieved the best performance among the past four quarters. Market demand recorded a strong increase of 20 percent versus Q Market wide occupancy went up by 13 percent pushing it over 70 percent for the first time. Overall ADR improved by 16 percent during the same quarter. The strong improvement in occupancy and ADR resulted in a significant increase of over 30 percent in market-wide RevPAR in comparison with Q For the whole year of 2010, the Shenzhen hotel market achieved increases of 16 percent, 12 percent, and 30 percent respectively for market wide occupancy, ADR, and RevPAR versus Just following Shanghai and Guangzhou, its RevPAR growth ranked the 3 rd among all the 13 markets we analyzed. The strong growth of demand, limited new additions, and the rate driven strategies mainly implemented by high-quality hotels contributed to the outstanding performance of the market for year HANGZHOU The Hangzhou hotel market has experienced positive growth for Q Although market wide occupancy dropped by one percent versus Q3 2010, it still maintained at above 60 percent, which reflected an increase of 6 percent over Q ADR has seen a positive growth of 9 percent versus the last quarter of Accordingly, RevPAR improved by 16 percent and increased to above RMB 400. In comparison with the other major cities in China, the Hangzhou hotel market in 2010 presented a relatively slower pace of growth, which recorded increases of 10 percent, 8 percent, and 19 percent respectively for occupancy, ADR, and RevPAR versus SUZHOU The last quarter is typically the high season for the Suzhou hotel market, with the strongest performance for the year. Market-wide occupancy improved from 53 percent for Q3 to 56 percent for Q4 2010, recording an increase of 9 percent versus the last quarter of In comparison with Q4 2009, the overall ADR for Q improved by 7 percent. RevPAR

9 KEY MARKETS UPDATE Q CHINA has seen an increase of 12 percent. For the year-end market performance of 2010, the overall market experienced increases of 14 percent, 5 percent, and 20 percent respectively for occupancy, ADR, and RevPAR over In general, the market has been still suffering with the pressure of new supply additions. Looking forward, until the occupancy levels recover to a more healthy level (currently around 50 percent), we don t expect the market-wide ADR to grow aggressively. DALIAN Compared with Q3 2010, market wide occupancy experienced a clear drop in Q4 of about 26 percent due to the decline in demand as Dalian is a summer holiday destination. However, it still improved by 7 percent over the last quarter of Market wide ADR maintained at around RMB 550, which was 8 percent increase versus Q In combination, RevPAR recorded an increase of 16 percent over Q For year-end 2010 versus 2009, the market recorded increases of 12 percent, 3 percent, and 16 percent respectively for occupancy, ADR, and RevPAR. In comparison with the other markets we analyzed, the Dalian market realized moderate growth in demand but its ADR growth was the lowest for 2010 versus For 2011, we have a cautious outlook for this market due to its current low occupancy level (around 55 percent) and the large amount of new supply expected to enter into the market in 2011 and beyond. CHENGDU For the last quarter of 2010, the Chengdu hotel market has seen a similar growth trend as seen in Q3. Market wide occupancy went up from 67 percent for Q3 to 69 percent for Q4 2010, recording an increase of 4 percent versus Q Market wide ADR has seen a greater growth rate than occupancy, pushing it close to RMB 650, which was an increase of 11 percent versus Q The positive growth of occupancy and ADR resulted in a growth of 15 percent in RevPAR for Q versus the same quarter of The year-end performance data were also positive with growth rates of 11 percent, 9 percent, and 21 percent respectively in occupancy, ADR, and RevPAR versus Looking forward, the market performance is expected to continue with a positive growth considering the bright economic outlook and By Kevin Zhao, Research Analyst, Horwath HTL Julie Dai, Director, Horwath HTL increasingly active investment activities; however, it might have to suffer the pressure from new supply additions in 2011 and beyond, which to some extent might slow down the growth of occupancy performance. XI AN The Xi an hotel market continued experiencing a positive growth in demand. The market recorded a similar occupancy level of 61 percent for Q4 as that for Q3 2010, recording a 10 percent increase over the last quarter of Market wide ADR also achieved an improvement of 12 percent versus Q In combination, RevPAR has improved by more than 20 percent during the same time period. For the year-end market performance of 2010, market wide occupancy increased by 9 percent, while market wide ADR increased by 8 percent, which resulted in a significant increase of 18 percent for the year-end RevPAR performance over We expect the hotels performance levels in Xi an might be further subject to their respective locations. The lucrative demand generators concentrated in the Xi an Development Zone might further benefit the hotels located in this area to achieve better performance than the hotels located in the traditional tourism area. TIANJIN In regards to the performance levels, the Tianjin hotel market in Q4 did not change significantly in comparison with Q Market wide occupancy maintained as the same level as Q3 at around 50 percent, which recorded an increase of 5 percent over Q ADR achieved at closely RMB 530, improving by 10 percent over Q Given the positive growth of occupancy and ADR, market wide RevPAR improved by 16 percent versus the last quarter of The year-end market performance in 2010 also indicated a positive growth of 13 percent, 7 percent, and 21 percent respectively for occupancy, ADR, and RevPAR. Compared with the other major cities in China, the Tianjin hotel market has experienced a relatively slower pace of growth in performance. The pressure from the large flux of new supply in 2010 could be one of the causes. The market should continue to improve its performance in 2011 if the economic development in Tianjin keeps improving. However, the fundamental challenge with the market should be

10 KEY MARKETS UPDATE Q CHINA the ability of retaining high-end travellers who can easily return back to Beijing on the 30-minute-journey via high-speed train. By Kevin Zhao, Research Analyst, Horwath HTL Julie Dai, Director, Horwath HTL achieved an increase of 11 percent, 6 percent, and 18 percent respectively over last year. CHONGQING The Chongqing hotel market has experienced strong growth in occupancy for Q4 versus Q Market wide occupancy improved from 57 percent for Q3 to 67 percent for Q4 due to the strong growth in demand, which represented an increase of 10 percent over the last quarter of Market-wide ADR presented an improvement of 4 percent versus the same quarter of 2009 and recorded at closely RMB 430. Accordingly, RevPAR increased by 14 percent in comparison with Q For the year-end market performance, overall occupancy increased by only 1 percent over last year; however, ADR has seen a clear improvement of 10 percent but was still below RMB 450. Accordingly, RevPAR increased by 10 percent in comparison with A large amount of new hotel additions is expected to enter the Chongqing market in the next few years. The opening of new upscale hotels in 2011 is expected to increase the market wide rate ceiling; however, these new market additions will also add downward pressure to the overall occupancy performance. QINGDAO The Qingdao hotel market turned into its low season in Q In comparison with Q3, demand showed a clear decline. Market-wide occupancy dropped by 25 percent over Q and recorded only 55 percent in Q4; however, it still achieved a positive growth of 8 percent versus the last quarter of The decrease has also been seen in market wide ADR, which dropped to closely RMB 600 as the same level as Q In comparison with Q4 2009, quarterly ADR for Q improved by 8 percent. Accordingly, RevPAR recorded at RMB 330, which recorded a recovery of 16 percent versus the last quarter of For the whole year 2010, the market has seen a positive recovery. Market wide occupancy, ADR, and RevPAR GUANGZHOU The Guangzhou hotel market experienced strong growth in market performance in Q benefiting from the holding of the 16th Asian Games. Market wide occupancy improved to above 70 percent in Q4 2010, which was the highest level during the year. In comparison with the same quarter of 2009, it increased by over 10 percent. Market wide ADR has managed to record above RMB 1,000, which increased by around 30 percent versus Q The strong growth in occupancy and ADR resulted in a significant improvement in market wide RevPAR, which increased by 43 percent versus the last quarter of The outstanding performance achieved in the last quarter contributed to the year-end performance. Year-end occupancy, ADR, and RevPAR significantly increased by 17 percent, 17 percent, and 36 percent respectively over HAINAN The last quarter during the year is always the high season for the Hainan hotel market. In comparison with Q4 2009, demand dropped by 1 percent in Q due to the negative impact of the floods. Market wide occupancy went down by 4 percent versus Q However, ADR has seen a clear improvement and increased by closely 20 percent. Accordingly, quarterly RevPAR experienced a positive growth of 13 percent. For the year-end 2010 market performance, occupancy recorded a positive growth of 6 percent over 2009, while ADR experienced a much faster pace of growth with an increase of 22 percent. Accordingly, market wide RevPAR improved by 30 percent versus The significant growth of ADR indicated that the hoteliers were full of confidence on the market demand development and successfully implemented yield management strategies in order to maximize revenues.

11 KEY MARKETS UPDATE Q CHINA By Kevin Zhao, Research Analyst, Horwath HTL Julie Dai, Director, Horwath HTL The following table summarizes the number of participating hotels included in our analysis for each identified key market: PARTICIPATED HOTELS FOR KEY MARKETS, 2010 Participated Hotel Count by Class Key Market Total Participated Hotels Count Economy Class Midscale w/o F&B Midscale w/f&b Class Upscale Class Upper Upscale Class Luxury Class Beijing Shanghai Dalian Suzhou Guangzhou Shenzhen Chengdu Hangzhou Xi an Tianjin Chongqing Qingdao Hainan Total Source: STR Global

12 HHTL UPDATE NEWS 7 TH ANNUAL CHINA HOTEL DEVELOPMENT & FINANCING CONFERENCE The upcoming 7 th annual China Hotel Development & Financing Conference will again be held at the Crowne Plaza Sun Palace Beijing from Wednesday 23 rd March to Friday 25 th March, You may visit the website to get update conference program and know more about the invited speakers. For more information on sponsorship and registration, please contact Michelle Xie on mxie@horwathhtl.com. ABOUT HORWATH HTL Horwath HTL (Asia Pacific) is the regional arm of Horwath International s Hotel, Tourism and Leisure Group. As a Crowe Horwath International member, we are part of a professional association of accounting and management consulting firms originated in New York in 1915 and currently ranked among the top ten international professional service groups with offices in 387 cities in 82 countries and an annual combined turnover in excess of US$1.5 billion. The major services provided by Horwath HTL include: CHINA HOTEL INDUSTRY STUDY SURVEY For the 9 th consecutive year, the China Tourist Hotels Association (CTHA) and Horwath HTL have again jointly launched the 2011 China Hotel Industry Study Survey. Again great support has been received from about 34 international and domestic hotel management companies. The Survey has been sent out to about 4,500 hotels. Market & Financial Feasibility Studies Hotel Operator Selection & Contract Negotiation Destination and Large scale Project Masterplanning Asset Management Strategic Management and Planning Due Diligence HAINAN TOURISM AND HOTEL DEVELOPMENT OVERVIEW YEAR 2010 Horwath HTL, jointly working with Hainan Provincial Tourism Development Commission, successfully published Hainan Tourism And Hotel Development Overview Year It is an important publication for hotel operators, investors, and government planners to understand the development dynamics of the tourism and hotel industry in Hainan. Mr. Lu Zhiyuan, Assistant Governor of Hainan Province & Director-General of Hainan Provincial Tourism Development Commission, and Mr. Nigel Summers, Director of Horwath HTL wrote forewords for this publication. For detailed information of this publication, please contact with Ms. Vicky Wu on vwu@horwathhtl.com. CONTACT INFORMATION Beijing Tel: (86 10) Beijing@horwathhtl.com Shanghai Tel: (86 21) Shanghai@horwathhtl.com Hong Kong Tel: (852) Hongkong@horwathhtl.com Singapore Tel: (65) Singapore@horwathhtl.com

13 Sustainable Buildings 可持续建筑 2010 Energy Benchmarking Survey Draft Summary of Findings Background In December 2009, ICF International ( with funding support from the US Agency for International Development (USAID) US-China Sustainable Buildings Program (SBP), a US- China bilateral initiative aimed at promoting sustained and achievable reductions in building energy use and associated greenhouse gas (GHG) emissions throughout China, in collaboration with Horwath HTL, conducted the first Energy Benchmarking Survey, as part of the 2010 China Hotel Industry Survey, co-implemented by China Tourist Hotel Association (CTHA) and Horwath. The purpose of survey was to obtain data to support development of an innovative new tool for the China hospitality industry a National Hotel Energy Performance Benchmarking Tool. Such a tool would provide hotels with a general understanding of how energy-efficient they were compared to other similar hotels, taking into account factors that can influence overall energy consumption, such as climate, weather, and occupancy rate, but may not affect a hotel s actual energy performance (once those characteristics are accounted for). The hotel benchmarking tool will be modeled after the US Environmental Protection Agency s (EPA s) ENERGY STAR Benchmarking Tool ( which has been used by more than 140,000 buildings in the US to rate energy performance and is a component of the US Green Building Council s Leadership in Energy and Environmental Design (LEED TM ) certification. In 2009, the US EPA ENERGY STAR program, supported by the EPA Benchmarking Tool, assisted US businesses and consumers to save up to $17 billion on their energy bills and avoid up to 45 million metric tons of carbon dioxide equivalent approximately the emissions from 30 million vehicles, and scope for similar savings is available in China. Analysis Process ICF analyzed the sample response to better understand the energy use and operating characteristics of Chinese hotels and how those hotels compare to similar hotels in the US in terms of energy and cost performance. Since ICF s analysis does not take into account climate, weather, occupancy, and other factors that may affect a building s overall energy performance, this is just a general comparison, looking at basic energy usage and costs per square meter and per room. A total of 630 hotel sites responded to the Energy Benchmarking Survey, including Star hotels, Star hotels, and 77 3-Star hotels. Total site area for these hotels was 16.5 million square meters, and included more than 190,000 guest rooms. In the results summary that follows, only sites within one standard deviation from average performance, in terms of energy intensity, were included. Hotels with energy performance beyond this standard deviation were eliminated, creating a statistically significant sample, with a 95% certainty rate, from which to draw conclusions regarding average energy performance for hotels in the portfolio. By eliminating the extreme points, we get more realistic and representative data for analysis. A total of 17 sites were removed from the data set prior to analysis for this reason. 1

14 Summary of Findings Huge Spread in Performance among All Star Categories Among all classes of hotels (5-Star to 3-Star), there is a huge spread in terms of energy use and cost intensity. The energy intensity spread (GJ/SM) is 684,667%, and the energy cost intensity spread (RMB/SM) is 1,561,200%. What this tells us is that there is significant difference in how hotels are managed across the portfolio. Further investigation could be conducted to understand why hotels are top performers, and what lessons could be shared with belowaverage performers to improve energy performance. Table 1.0 Energy and Cost Intensity Performance Spread Summary Entire Portfolio 5- Star Portfolio 4-Star Portfolio 3-Star Portfolio Energy Intensity Spread between bottom and top performers (GJ/SM) 684,667% 27,662% 684,667% 25,948% Cost Intensity Spread between bottom and top performers (RMB/SM) 1,561,200% 640,300% 1,561,200% 388,000% What is Top Energy Performance? Among the hotels surveyed, ICF has identified the following as top energy performance, meaning performance in the top quartile (or top 25% of those hotels surveyed) in terms of energy performance and cost performance per square meter and per room, across the portfolio and for each of the three classes surveyed (5-Star, 4-Star, and 3-Star). Table 2.0 Top Performance (Top 25%) Entire Portfolio 5-Star 4-Star 3-Star Number of Sites in Top Quartile Top Quartile Average Energy Intensity (GJ/SM) Top Quartile Average Energy Intensity (GJ/Room) Top Quartile Average Cost Intensity (RMB/SM) Top Quartile Average Cost Intensity (RMB/Room) 8,705 13,785 8,877 3,453 2

15 Savings Potential for Top Performers On average, top performing hotels in the 2010 China Hotel Industry Survey use approximately 0.40 GJ/SM or 47 GJ/RM. This is approximately 58% less energy intensive and 45% less cost intensive than average performing hotels, on a per square meter basis. These hotels are also 44% less energy intensive and 30% less cost intensive on a per room basis. For top performing hotels, ICF experience indicates between 3 to 5% annual energy savings are possible through more careful operation and management of hotel equipment, such as heatingventilating and air-conditioning (HVAC) equipment, lighting, management of indoor and outdoor air. Top performing hotels are also exemplary models of energy performance and present opportunities for sharing best-practices and lessons learned among other hotels surveyed or with the greater China hotel industry. What is Average Performance? Table 3.0 Average Performance Entire 5-Star 4-Star 3-Star Portfolio Energy Intensity (GJ/SM) Energy Intensity (GJ/Room) Cost Intensity (RMB/SM) Cost Intensity (RMB/Room) 12,318 14,017 11,437 3,704 On average, 5-Star hotels are more energy and cost intensive than 4-Star, which are more energy and cost intensive than 3-Star. This shows that hotels operating in the top tier for luxury and comfort may have the most opportunity to save and reduce on their energy bills. As with top performing hotels, significant savings can be achieved through simple no-cost and low-cost O&M measures, such as better management of the HVAC and lighting systems, and more efficient use of indoor/outdoor air. Typically, these hotels can save up to 10% in annual energy consumption, which can result in significant cost savings. In 2009, ICF Sustainable Buildings Partner, and China s first carbon neutral hotel, URBN Hotel Shanghai, reduced its annual energy costs by 27%, reducing operating costs by 226,765 RMB annually. This was more than four times the cost to offset the hotel s annual carbon emissions from electricity and natural gas consumption through the purchase of offsets. These savings were achieved through simple no-cost and low-cost O&M measures requiring no new purchase of equipment or hiring of staff. For more information on URBN s success, visit How Chinese Hotels Compare to those in the US On average, hotels surveyed in China use approximately 35% less energy per square meter than large hotels operating in the US and 15% less energy intensive than small hotels, when compared to those surveyed by the US Department of Energy in its quadrennial Commercial Building Energy Consumption Survey (CBECS) survey. On average, US CBECS large hotels use an 3

16 average of 1.45 GJ/SM, and small hotels use an average of 1.10 GJ/SM, compared to an average of GJ/SM for Chinese hotels. Table 4.0 Chinese Hotels surveyed Compared to US Hotels Entire Portfolio 5-Star 4-Star 3-Star Chinese Hotels Average Portfolio Energy Intensity (GJ/SM) CBECS Small Hotel Energy Intensity 1.10 n/a n/a n/a CBECS Large Hotel Energy Intensity 1.45 n/a n/a n/a *Note: Data provided by CBECS is from the 2003 buildings survey industry data will be available shortly. Although hotels surveyed in China, are, on average, larger than US CBECS hotels (26,233 SM for Chinese hotels, compared to 4,104 SM and 11,345 SM for US CBECS large and small hotels, respectively), this should not affect the summary results, which show hotels surveyed in China to be less energy intensive. To verify this, ICF compared hotel energy intensity to size. In general, the data did not show larger hotels to be more energy intensive than smaller hotels, in other words, size did not seem to be a factor contributing to energy performance. Large hotels tend to perform on par with average and small size hotels in terms of energy intensity. Concluding Remarks 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Total Number of Sites Total Site Area (SM) Total Number of Rooms Total Electricity Use (GJ) Total Natural Gas Use (GJ) Total Energy Use (GJ) Total Electricity Cost (RMB) Total Natural Gas Cost (RMB) Total Energy Cost (RMB) 3-Star Portfolio 4-Star Portfolio 5- Star Portfolio The bar chart above summarizes many of the key findings from the 2010 Hotel Benchmarking Survey. Most notable among the findings is that, overall, 5-Star Hotels in China tend to show the greatest opportunities for energy and cost savings. These hotels account for 50% of the sites analyzed, 60% of the site area, 60% of the room numbers, but account for over 70% of the electricity usage and costs. Typically, these hotels can achieve significant energy and cost savings through simple no-cost and low-cost O&M adjustments. This document is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are not the responsibility of USAID and do not necessarily reflect the views of USAID or the United States Government. 4