< PrevNext > Per Diems Rise in Asia/Pac Even as Hotel Rates Drop By JoAnn DeLuna / March 27, 2018 / Contact Reporter Share Combined hotel and food costs rose in 18 of the 22 Asia/Pacific cities in the Corporate Travel Index, while they decreased in Bangkok; Jakarta, Indonesia; and Tianjin, China. Tokyo once again topped the list of non-U.S. cities with the highest per diem. This year’s issue tracks a night’s stay in an upscale hotel room, three meals and the cost of a taxi from the airport to the city center. That added up to $579.63 for Tokyo, which tied Auckland, New Zealand, for the largest year-over-year hotel rate increase among Asia/Pac cities on the CTI, at 4.7 percent.ChinaChina’s 2017 year-over-year GDP growth of 6.9 percent surpassed analysts’ expectations, but the country’s economy has yet to climb back to the peak it reached in 2010, when GDP spiked 12 percent. In the Asia/Pacific region, China’s slowdown has offset India’s strong economy, according to BCD travel research consultancy Advito’s 2018 Industry Forecast, but individual markets are the key.The average daily rate for an upscale hotel decreased in four of the five Chinese cities on the CTI. Shanghai dropped 6.2 percent, Shenzhen 4.8 percent, Tianjin 2.6 percent and Guangzhou 2.5 percent. In Beijing, however, ADR increased 2.8 percent. “Five-star properties in very good locations or with excellent local reputations continue to command high prices,” according to Advito. Hotel companies continued to open properties throughout 2017, outpacing demand, the consultancy noted. “Demand will catch up with supply in the next few years, but for now, rate increases have slowed a little in China.”Food costs rose throughout China, in some cases dramatically. Three meals in Guangzhou cost 32.4 percent more in 2017 than in 2016, while the cost increased 23 percent in Shanghai, 16.7 percent in Shenzhen and 4 percent in Beijing. Hong Kong also increased 5 percent. Tianjin was the only Chinese city on the CTI in which food costs dropped, in this case by 7.2 percent.Advito expects hotel rates in China to increase by between 2 percent and 4 percent in 2018. “There is still enough new demand from both business and leisure travelers to keep rates moving upwards,” according to Advito’s report. Likewise, Carlson Wagonlit Travel Asia/Pacific director Richard Johnson expects China and India to have the largest ADR growth in 2018.ADR in Hong Kong, meanwhile, decreased a modest 0.3 percent from 2016 to 2017, according to the CTI. Advito attributed the relatively flat ADR to weak demand.India“India’s economy remains the healthiest of the major emerging Asia/Pacific markets with robust growth anticipated given pro-market economic reforms,” according to CWT’s Global Travel Forecast for 2018. While the country offers plenty of lower-priced properties, there are fewer high-end, branded hotels, which business travelers prefer, according to Advito. The country’s “critical shortage” of hotel rooms—supply was only two-thirds of demand—drove hotel rates up in 2017, Advito noted. Bangalore, meanwhile, had a “massive increase in new hotels,” which Advito said relieved rate pressure.According to the CTI, Bangalore ADR increased only 2.5 percent from 2016 to 2017, while hotel prices were stagnant in Mumbai, declining a minimal 0.2 percent and in New Delhi, where they dipped 0.3 percent.As in China, meals contributed significantly to India’s business travel costs, rising 18.6 percent in Mumbai, 10.8 percent in Bangalore and 7.2 percent in New Delhi.Australia & New ZealandCosts rose across Australia and New Zealand, led by Sydney, where combined food and hotel costs rose 7.2 percent. Hotel rates in Sydney rose 4.3 percent year over year, according to the CTI, lining up with the view of CWT’s Johnson, who said, “We’ve heard of Sydney as an incredibly capacity-strained city in the past year.”Melbourne combined food and hotel costs rose 5.7 percent from 2016 to 2017 and 2.1 percent in New Zealand’s capital city of Auckland. Johnson said tourism is driving Auckland’s hotel rate. A 4.1 percent decrease in food costs mitigated business travel costs in Auckland, while food costs surged in Australia, by 18.7 percent in Melbourne and 13.6 percent in Sydney. Other Markets to NoteFor Osaka-Kobe, combined hotel and food costs increased by 5.3 percent from 2016 to 2017. A 9 percent increase in food costs helped, while a 3.6 percent increase in ADR also contributed. “Osaka is surprising, as they have increased rooms in anticipation of the 2020 Olympics but demand isn’t expected to kick in until next year,” Johnson said.Combined hotel and food costs in Jakarta dropped dramatically from 2016 to 2017, by 13.6 percent, thanks to a 9.3 percent drop in ADR and a 21.9 percent decrease in food costs. Indonesia, however, is sensitive to oil demand and pricing trends, Johnson said, and he expects ADR to rise as oil prices recover in 2018. Singapore’s ADR dropped 6.1 percent, according to the CTI. “Singapore [hotel] demand hasn’t grown at the same pace as capacity,” Johnson said. “Although [it’s] a high-occupancy market, supply levels are also high, keeping prices soft."