Of all the North and Southeast Asian countries covered in Jones Lang LaSalle Hotels' recently released Digest, Macao was the star performer.

As expected, due to the high proportion of intra-regional tourism demand, most Asian markets were adversely affected by the regional outbreak of SARS during the first half of 2003. However, Macao defied the trend with arrivals increasing by 3.1% to reach an all time high of 11.9 million during 2003.

"Macao has enjoyed steady growth in its inbound tourism market since 1998, but the 2003 performance was almost entirely due to a surge in China mainland visitors resulting from an easing of travel limitations for mainland residents from selected cities in China," said Mr Scott Hetherington, Managing Director, Asia Jones Lang LaSalle Hotels.

The emergence of China as the key engine for tourism growth in the region is a trend which has become apparent in recent years. Although the Special Administration Regions of Hong Kong and Macao in particular stand to benefit from the continued growth in mainland Chinese visitors, the markets in Southeast Asia should also benefit.

"This trend is expected to continue into the near future with the continued urbanisation of China, increasing affluence of the Chinese population and improved access due to the relaxation of visa requirements," said Mr Hetherington.

India presents another significant market opportunity. "With the rapid industrialisation and development of the Indian economy in recent years, India could fast emerge to be another major source market for countries in the Asian region," said Mr Scott Hetherington. This is evidenced by the rapid growth in Indian visitors to Southeast Asian countries including Singapore, Malaysia and Thailand in years leading up to 2003.

Although most Asian tourism markets witnessed a decline in international tourists during the 12 months to December 2003, many countries showed signs of a strong recovery after the crisis peaked in May 2003. Pent up demand built up during the SARS outbreak period boosted the growth of international visitors during the last half of the year, particularly in Macao, Japan and Philippines.

Although the performance of four and five star hotel markets in major Asian destinations was affected by SARS and the weak economic conditions globally in the first half of the year, there were some exceptions.

"The five star markets of Jakarta, Hua Hin and Pattaya benefited from a strong domestic market, and in Jakarta's case, the temporary closing of the 365-room Regent Hotel," said Mr Hetherington. "And, as expected, given the tourism growth, Macao's five star market also posted positive growth in RevPAR," he continued.

Furthermore, the appreciation of the local currency against the US dollar during the year helped to boost the performance of Bangkok and the Japanese markets of Tokyo and Osaka.

Jones Lang LaSalle Hotels' Digest Asia 2004 Edition provides the latest analysis for 21 major hotel markets spread over 12 countries. The North Asia and Southeast Asia editions were released at the 7th Asia Pacific Hotel Investment Conference on May 20 in Singapore.