P R E S S R E L E A S E CB Richard Ellis (Pte) Ltd

6 Battery Road #32-01

Singapore 049909
T 65 6224 8181
F 65 6221 2232
www.cbre.com.sg

Co. Reg. No.: 197701161R

FOR IMMEDIATE RELEASE – Monday 13 April 2009

For further information:
Robert McIntosh
Executive Director
CBRE Hotels Asia Pacific
CB Richard Ellis
T 6326 1200
Geraldine Cheong
Manager
Corporate Communications
CB Richard Ellis
T 6326 1246/ 9691 6449

Over 23,000 new four and five star hotel rooms expected in key Asian cities by
2012

CBRE Hotels, working with the extensive network of other CB Richard Ellis offices,
has been researching supply changes in the cities of Singapore, Bangkok, Hanoi,
Ho Chi Minh and Kuala Lumpur. Over 23,000 four and five star hotel rooms are
expected to enter these markets by the end of 2012.

Much has been written on the falls in tourism demand due to the current global
economic crisis. “The nature of demand for hotels is notoriously volatile, with
factors impacting demand as varied as they are unpredictable” said Robert
McIntosh, Executive Director, CBRE Hotels, Asia Pacific. “Conversely, forecasting
market supply is somewhat easier, despite some uncertainty in construction
timeframes.”

“Despite the likelihood that some projects will be delayed or even cancelled, a
significant number of hotel properties will open across the region in the next two to
three years. The timing of hotels due to open in three to four years is less certain
than those which are partially complete. The additional supply, combined with
declining demand, will present a challenging period for hotels in the short to
medium term” McIntosh added.

The graph below shows the percentage changes in supply for each city on an
annual basis.
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Page 2

Potential annual supply increases in 4 and 5 star hotels between 2008 and 2012
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2009 2010 2011 2012

Bangkok Hanoi Ho Chi Minh City Kuala Lumpur Singapore

This indicates that Singapore has the largest increase in the next 12 months and
that the increase in Hanoi is several years away.

The total percentage increases are shown below.

Potential supply increases in 4 and 5 star hotels between 2009 and 2012
80%

70%

60%

50%

40%

30%

20%

10%

0%
Bangkok Hanoi Ho Chi Minh City Kuala Lumpur Singapore

Although the increase in Hanoi is high in percentage terms, it is not substantial in

terms of the total number of additional rooms. The actual number of rooms to be
added is greatest in Singapore, as indicated in the graph below:
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Potential supply increases in 4 and 5 star hotels between 2008 and 2012
12,000

10,000

8,000
No of rooms

6,000

4,000

2,000

0
Bangkok Hanoi Ho Chi Minh City Kuala Lumpur Singapore

Singapore will experience the largest number of additional hotel rooms of the five
cities, with nearly 10,000 four and five star rooms expected to open by the end of
2012. Assuming all projects proceed, this represents a 39 percent increase in
supply over a relatively short period of time. Alison Poore, Senior Consultant, CBRE
Hotels – Southeast Asia said “Until recently, there was general consensus that
Singapore could not only absorb the increase in supply, but that additional rooms
were essential to accommodate the future growth in visitor arrivals. With occupancy
levels in Singapore reaching above 90 percent during some months in 2007 and at
80 percent or above for nine months in 2008, it is likely that on some occasions
business was turned away due to lack of availability. However, with declining
occupancy and RevPAR levels already apparent, the addition of new supply will
likely result in a further softening of the market in the short term.”

CBRE Hotels believes Singapore’s strategic outlook will hold strong in the long
term. According to Poore, “Singapore’s underlying market fundamentals remain
strong. The ongoing success of branding and destination marketing initiatives
combined with excellent infrastructure and a steady stream of attractions will ensure
Singapore can respond quickly when the economy shows signs of recovery”.

Hotel supply in Bangkok is also expected to increase significantly, with over 6,000
four and five star hotel rooms set to enter the market by the end of 2012. This
represents an increase of 26 percent, bringing the total supply of four and five star
hotels in the city to over 31,000 rooms.

Supply has increased substantially over the past two years, and the addition of
further supply in the future is a cause of concern. The performance of hotels in
Bangkok will be further impacted by declining demand driven by the economic
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crisis and recent political unrest. On the other hand, Thailand’s tourism tends to be
resilient and increased supply of new hotels will tend to attract visitors, particularly
when the current economic and political situations settle down.

In Vietnam, the existing supply of four and five star hotels in key cities is relatively
small compared to other markets.

In Hanoi, new four and five star hotel supply is expected to total nearly 3,000
rooms representing an increase of 75 percent. Whilst this appears high, the market
is growing from a relatively small base of just under 4,000 rooms (Singapore and
Bangkok have over 25,000 four and five star rooms each).

In Ho Chi Minh City, the existing supply of four and five star hotel rooms is
expected to increase by 38 percent to reach a total supply of over 7,000 rooms by
the end of 2012.

The addition of new supply to these cities is essential in promoting further

development of the tourism industry and to ensure capacity exists to accommodate
future growth of visitor arrivals. This is particularly important in Ho Chi Minh City
which currently suffers from having a small supply of international hotels.

Finally, the hotel market in Kuala Lumpur will experience a modest increase in
hotel rooms to the end of 2012, with the market set to increase by just ten percent
to reach 20,400 hotel rooms. While average room rates and occupancy levels are
less than those in Singapore, the relatively small increase in supply is unlikely to
pose a significant challenge to the market in the next couple of years but it should
help boost total tourism revenues.

McIntosh said “It is widely accepted that increasing the supply of hotel rooms tends
to lead to greater demand. This occurs for a number of reasons such as additional
marketing by individual hotels, increased capacity in the market (particularly
important when demand has been at high levels), reduced prices due to increased
competition and new hotels catering for different demand segments.”

“The result is an increase in total tourism expenditure compared to the position if

the supply had remained static. This has positive implications for employment,
demand for airline seats and expenditure in restaurants and other tourism
attractions. However, extra supply does have a negative impact on the performance
of existing hotels as occupancy levels and room rates tend to fall leading to
decreased profitability.”

The extent to which the additional supply will affect hotel performance will vary
from market to market. “While additional supply combined with the current
economic climate will likely lead to weaker occupancy levels in most markets in the
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Page 5

short term, the increase in capacity will benefit some markets in the long term”
McIntosh said.

Additional supply is favourable for tourism arrivals as visitors are offered a wider
variety of hotels to choose from with a greater range in price. Furthermore,
increased supply enables markets to diversify the attraction of different market
segments such as MICE groups (Meeting, Incentives, Conferences and Exhibitions),
further boosting visitor arrivals and tourism revenues.

“It is crucial that investors are fully informed of current market conditions,
particularly in the uncertain financial environment. Understanding the dynamics
operating within each market is essential, enabling investors to make sensible
decisions based on robust and insightful market data” McIntosh added.

END

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