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STR: Mainland China hotel industry shows early signs of performance recovery

April 3, 2020 Hotel Trends No Comments
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Mainland China’s daily hotel occupancy reached an absolute level of 31.8% on 28 March, up from a low of 7.4% during the first week of February, according to preliminary data from STR. Additionally, opening rates have been significant in key markets across the region.

“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 travelers 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 centers but a bit more recovery in that segment in surrounding suburbs.”

In Beijing, daily occupancy sat around 10% for most of the first week of March, but climbed to as high as 21.6% on 28 March. Shanghai was as low as 11.0% on 1 March but reached 28.6% on 28 March. Among the key STR-defined markets for Mainland China, the highest absolute occupancy levels have been seen in Xi’an (35.9% on 28 March) and Chengdu (35.6% on 28 March).

“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,” Liu said. “Additionally, Xi’an is one of the redirect destinations for inbound flights scheduled to land in Beijing.”

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

“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.

Another positive for the industry, STR shows that 87% of the hotels in its Mainland China sample are now open after many had closed over the last two months.

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