Hotels around the world struggle desperately to fill empty rooms amid the pandemic. a second wave has forced the closure of recently reopened hotels from thailand to europe. some have resorted to divesting their properties. but for chinese groups, these times present an opportunity.
Chinas biggest hotel chains have recovered from earlier this year when lockdowns hit bookings. since then domestic travel has surged. in wuhan, the heart of the outbreak, air travel is back to last years levels.
Hotel room rentals have rebounded since august. last month average hotel booking prices were about a fifth higher year-on-year. the average hotel occupancy rate reached 80 per cent last week.
The week-long chinese public holiday that started on october 1 recorded more than 600m domestic travellers, according to official data. that amounts to nearly 80 per cent of last years holiday surge, well above expectations. tourists visiting large cities such as beijing were up nearly a tenth during the holidays compared with the previous year, as locals shunned overseas travel.
The outlook gets brighter yet. analysts expect chinas hospitality sector to post the largest growth in the world in the coming year. shares of nasdaq-listed huazhu group, the second-largest local hotelier, are up 9 per cent in the year to date even after a net loss in the first half. shanghai jin jiang international hotels, chinas largest hotel group, has performed even better, its dollar-based total return up by more than half.
But the nations smaller, independent operators have had a different journey. a large chunk of the nearly 500,000 local hotels, which lacked the scale and resources to weather the downturn, still struggle to fill rooms. they are weighed down by cashflow problems from high fixed costs. expect more consolidation there.
Finally, international travellers may return. china has started opening its borders again. foreigners holding permits have been allowed to enter for the past two weeks, bringing more hope to the industry. meanwhile, the largest hotel groups will be busy scooping up rivals at rock-bottom prices.
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