The global hotel industry is once again thriving with the gradual recovery of many economies, but room rates in Asia continue to lag their western counterparts for a variety of reasons, including the impact on travel of political unrest in Thailand.
While room rates are rising in every other region of the world for the fifth year in a row, no movement at all was seen in Asia Pacific in the first half of 2014, according to the latest Hotel Price Index (HPI) report from Hotels.com.
The HPI started in 2004 and was set at 100. It tracks all bookings among all star ratings from one- to five-star hotels, comparing worldwide prices without the distortion of foreign-exchange fluctuations. The global index now stands at 115, only four points off its peak of 119 set in the first half of 2007.
"The average price paid for a hotel room around the world rose by 4% during the first six months of 2014 from the same period in 2013, as the overall economic recovery gathered greater momentum, particularly in Europe, and consumers became more confident in raising their travel spending," the report stated.
The highest rise in the first six months of 2014 took place in the Carribean with a 6% increase from the same period a year earlier. In Europe and the Middle East, rates rose by 5%, the best since 2007. North America matched those results and slightly smaller rises were seen in Latin America.
However, there were no changes in the Asia Pacific Hotel Price Index. The last time rates rose in Asia was in the first half of 2012. Standing at 105, the index is now only 5 points higher than it was in 2004.
"From a consumer perspective, the good news is that Asia continued to represent the best-value region globally for accommodation," wrote Abhiram Chowdhry, the vice-president of the Asia Pacific branch of Hotels.com.
Asia Pacific hotel prices peaked in 2007 at 137, then the highest in the world. The regional index today is the lowest, five points below that of Europe and the Middle East.
While travel is booming in Asia with millions of Chinese swelling tourist numbers, weak growth in hotel prices is a reflection of many factors. In some markets heavy competition keeps rates down, while in others an oversupply has forced owners to cut rates.
Decreasing traveller numbers because of political instability or unrest were a factor in some markets, notably Thailand and Vietnam, in the first half of 2014. In Thailand, Chinese visitor arrivals in the first half were down 25% because of concerns about protracted political unrest prior to the May 22 military coup. Chinese travel to Vietnam also plunged after anti-Chinese riots broke out in response to provocative actionss by Beijing in the South China Sea.
According to Mr Chowdhry, the political problems in Thailand also affected surrounding countries. "In particular, popular destinations like Singapore and Cambodia, often part of a multi-stop holiday for long-haul travellers, were adversely affected."
Travellers who were interested trips around Asia often cancelled their whole trip because of the political situation in Thailand, he said.
The most severe price decline worldwide was experienced by Hua Hin, with a drop of 24%. In Bangkok, travellers paid 19% less than in the same period in 2013. Bangkok is the cheapest "party city" listed in the report and the only Asian city among the top 10 destinations with the best-value five-star hotels.
Among the 10 countries with the biggest decrease in hotel prices, there were seven Asien countries, led by Vietnam (down 18%). Eight of the 10 lowest prices paid in the HPI were in Asian destinations. Cambodia fell 15%, India 10% and Malaysia 9%. Japan had the highest increase in the region of 7% and China also recorded a good performance, up 6%.
However, hotel prices are expected to increase again in the region with the return of travellers in the coming months, especially in the Christmas season, as stability returns to Thailand and Bangkok in particular.
Also keeping Asian hoteliers in a good mood is the growing middle class in China. The increasing number of low-cost carriers and relaxed visa requirements enable more and more Chinese middle-class families to spend their holidays in nearby Asian countries such as Thailand, the Philippines or Taiwan.
On average, travellers from abroad pay almost twice as much for a hotel room in Thailand as local residents. In Singapore, however, local residents pay about 10% more than foreigners, the report noted.
While some blame a general oversupply of hotel rooms in Asia for hiolding down room rates, a senior executive of the world's biggest hotel chains disagrees.
"The size of the market in Asia Pacific is lagging by three-fourths the size of the market in America, so it will be growing. The scalability is visible and the demand is there," Sebastien Bazin, the CEO of Accor SA, the owner of the Sofitel and Ibis hotel brands, said in an interview with Bloomberg.
All in all, the prospects for hoteliers in Asia are not bad, Mr Chowdhry concluded. "The region is well placed to attract travellers from around the globe with the offer of value-for-money accommodation. The availability of competitive and easily accessible airfares from low-cost carriers throughout Asia Pacific will see demand for travel to the region accelerate as the burgeoning Chinese traveller market underpins the region's growth."