Common Global and Local Drivers of RevPAR in Asian Cities

This study examines the common global and local factors that drive changes in revenue per available room (RevPAR) in eight major Asian cities. We find that RevPARs for these cities tended to move together until about 2009, after which the RevPARs began diverging significantly. The study tests economic variables that capture both local and global factors and which explain most of the changes in RevPAR in each city. One factor, the number of tourist arrivals, is always positively associated with RevPAR changes in the eight cities. Other factors that drive RevPAR in most of the eight cities are inflation, Chinese consumer confidence, U.S. consumer confidence, and Chinese real-estate development (as a proxy for China’s GDP). Most of these gateway cities are more heavily influenced by global factors than local factors. At one extreme, global factors explain over 90 percent of the changes in RevPAR in Seoul. At the other extreme, local factors explain 66 percent of the changes in RevPAR in Bangkok. These similarities and differences give hoteliers and investors a window into the factors that drive their properties’ revenues and allow a more accurate risk assessment