It was a depressing start to the HICAP conference in Singapore last month. But then things got happier. Yeoh Siew Hoon reports.
The depressing lunch that I had (View: SHY Thoughts: The age of happiness) reminded me of the feeling I got at the opening of the HICAP South-east Asia Update Conference in Singapore last month.
Economist Richard Duncan was talking about "The Economy: What Lies Ahead?" and if I heard him correctly, the answer is not much.
The US economy is on life support, he said. The danger? This will lead to protectionism, which will be catastrophic for China. The US needs to spend its money wisely, unlike the Japanese "which built roads to nowhere and paved the country with cement."
China, he said, cannot grow independently of the US no matter how many people would like to think otherwise. This is because "Chinese people working in the manufacturing industry do not make enough money to buy the things they are producing."
He had some good news in the end, saying that despite his gloomy message, "the US can continue to support the global economy for the next 15 years with no difficulty."
Governments, he said, referring to the Greek crisis, were learning to fix problems faster. "It’s always better to die tomorrow than die today."
So even in death, procrastinate.
Thank goodness, the conference got happier after that. Jonas Ogren, area director-Asia of STR Global, had charts that actually went upwards. "Things are going in the right direction," he said.
While Asia suffered the biggest drop in RevPAR in 2009, relative to the US, Europe, Middle East and Africa, it is making the strongest recovery. Sharing year to date April figures he said Asia was showing a 24.1% increase in RevPAR compared with 0.4% for the US, 4.9% for Europe and -0.7% for the Middle East & Africa.
In the first quarter of 2010 the top four cities by RevPAR growth were Tokyo, Hong Kong, New Delhi and Singapore. The bottom three were Bangkok, Shanghai and Beijing.
"Demand is coming back and Asia is leading the way. Occupancies are up region-wide and while supply is still high, the growth rate is slowing down. Rates are still down but are likely to rise provided demand continues and stabilises," said Ogren.
He called 2010 "a year of recovery amid uncertain times."
And the good news continued. Mike Batchelor, managing director, Jones Lang LaSalle Hotels, said that global investment volumes were back to 2001 levels – reaching US$13 billion in 2010.
The buyers are back and most of them are from Asia, which accounted for 73% of investment flows. The main investors? Asian families and companies which accounted for 25% of the investments in 2009.
And according to Batchelor, it’s good news all round for sellers and buyers. One, Asia Pacific hotels are back in favour. Two, hotels are priced 15-20% below market price in 2007.
Man, I am feeling so happy now I could go out and buy a hotel.
