China’s hotel industry sprouts green shoots

Mainland China’s hotel industry is starting to bounce back from the scourge of the coronavirus, showing early signs of performance recovery that points towards the beginning of the return to normalcy.

Daily hotel occupancy in mainland China reached an absolute level of 31.8 per cent on March 28, up from a low of 7.4 per cent during the first week of February, according to preliminary data from STR. Additionally, opening rates have been significant in key markets across the region.

China’s hotel sector shows early signs of recovery; Shanghai skyline pictured

“We’re seeing green shoots in hotel occupancy figures, but we must stress that these are only early signs of a recovery that is likely to develop slowly,” said Christine Liu, STR’s regional manager for North Asia.

“Some of the demand stems from corporate travel, primarily within the same province, as well as small-scale meetings. Additionally, hotels are seeing business from those travellers quarantined after returning to China from other countries as well as those returning to cities for work. Overall, we’re seeing limited leisure business in city centres but a bit more recovery in that segment in surrounding suburbs.”

In Beijing, daily occupancy sat around 10 per cent for most of the first week of March, but climbed to as high as 21.6 per cent on March 28. Shanghai was as low as 11 per cent on March 1, but reached 28.6 per cent on March 28.

Among the key STR-defined markets for mainland China, the highest absolute occupancy levels have been seen in Xi’an (35.9 per cent on March 28) and Chengdu (35.6 per cent on March 28).

“Xi’an captured business from South Korea because of Samsung’s manufacturing factory in the tech zone – expatriates were able to relocate their families to Xi’an when the outbreak hit South Korea. Additionally, Xi’an is one of the redirect destinations for inbound flights scheduled to land in Beijing,” Liu said.

The occupancy trend line in Wuhan has taken a much different path. Occupancy in the city fell to as low as 7.5 per cent on January 23, jumped to a high of 72.7 per cent on March 7, and has since trended downward to 62.4 per cent on March 28.

“Wuhan saw an influx of hotel demand as medical workers entered the market, but some of that demand has tailed off as the situation becomes more stable,” Liu said.

In another positive sign for the industry, STR data showed that 87 per cent of the hotels in its mainland China sample are now open, after many had closed over the last two months.

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