24 April 2009

Yields for everyone. NOT PRETTY!

It is clear that there is a slowing of the decline in occupancy, passengers and load factors. What is also clear is that yields are way off. They are literally falling off the cliff. Some recent numbers are quite astounding.

Singapore has just released its tourist numbers for March. I use this as an illustration.

Visitor arrivals to Singapore reached 790,000 in March 2009, registering a decline of 13.2% compared to Singapore's visitor arrivals in March 2008. Visitor days were estimated at 3 million days, a decrease of 11% in comparison with March 2008.

Indonesia (128,000), P.R. China (91,000), Malaysia (60,000), Australia (55,000), and UK (53,000) were Singapore’s top five visitor-generating markets. These markets accounted for 49% of total visitor arrivals for the month.

Among the top 15 markets, Malaysia (+5.6%), Germany (+4.7%) and Vietnam (+1.9%) registered growth. This can be attributed to the occurrence of school holidays in Malaysia, and ongoing promotions in Germany and Vietnam.

Visitor arrivals in 12 out of the top 15 markets decreased compared to the same month last year, a reflection of the impact of the current global economic slowdown on consumer sentiments and discretionary spending. Korea led the decline recording a mammoth 48% drop in arrivals. Hong Kong came in second place with a 21% drop. Arrivals from the UK fell 14%.

Singapore gazetted hotels were estimated to generate Sin$125 million in room revenue, representing a decrease of 33.3% versus March 2008.

The Average Occupancy Rate (AOR) was 74% for March 2009, a 13.1 percentage point decrease over March 2008.

The Average Room Rate (ARR) was estimated to be Sin$196, representing a decrease of 18.5% over March 2008.

Revenue Per Available Room (RevPAR) decreased by 30.9% to reach Sin$145 in March 2009.

Hotel room revenue was estimated to reach Sin$125 million in March 2009, a drop of 33.3% against March 2008.

In US airlines as another illustration the numbers are also not happy. This is a quote from CAPA's April Newsletter:

US domestic yields plunged 14% in Mar-2009, according to the Air Transport Association. It was the fifth worst monthly fall in yields this decade, behind the 17.5% fall in Oct-2001 in the immediate aftermath of September-11, a 15.8% fall in Sep-2001, a 14.8% reduction in Nov-2001 and a 14.7% fall in Jan-2002.
But the 14.4% reduction in yield last month on the Atlantic route was the worst this decade – outstripping even the deep falls around September-11.
Gary Kelly, CEO of the formerly bullet-proof Southwest Airlines warned, “we'll have to consider all available means to restore our profitability, or else we'll be bankrupt like so many other airlines have been”.

We are not seeing any recovery any time soon based on these numbers but I believe that we will see some stabilization on gross numbers by the end of August.


No comments: