Hotel Market Begins Rebound in China Following COVID-19

by | March 24, 2020

With so much uncertainty in North America as COVID-19 counts rise and more states issue Stay In Place orders, American business owners are wondering about the longterm impact this virus will have on our economy. The hospitality industry has already seen significant drops in RevPAR and occupancy, and hotel owners and operators are working around the clock to keep their businesses running smoothly despite the lost revenue.

In order to forecast, it makes sense to look at the Chinese hotel market which was impacted by the coronavirus first and analyze the occupancy trends there. Granted, there are a few key differences in the way the United States and China have handled the crisis which may impact the travel trends. For instance, the Chinese government implemented mandatory quarantines and travel restrictions early on, and the U.S. government has yet to implement these nationally. STR reported last week that occupancy rates in China had hit their lowest point and already started to rebound. Now, data from Shiji Distribution Solutions shows the booked room rates in China have continued to rise. According to the graph below, the rise in booked rooms coincided around the time China hit a peak number of active cases. This is significant because it means that the U.S. hotel industry may be able to begin its recovery before the spread of the virus is truly done.

China Room Nights Booked Index

Source: Shiji Distribution Solutions

 

Further insight from China via STR is related to the future intentions of Chinese travelers. According to a survey of people in China who have traveled internationally within the past year, 50% of those surveyed plan to travel even more internationally than they did in previous years. This optimism regarding international travel is a good sign for hoteliers in the U.S. who are nervous about a drop in occupancy in 2020. Based on the travel trends we’re seeing in China, hoteliers should proceed with cautious optimism that demand will increase sooner than we fear, and we can return to serving our guests.

 

Consumer Optimism Stat

Source: STR 2020 © Costar Realty Information, Inc.

With uncertainty on the rise in North America, we look to Chinese market to get a glimpse at the future for the hotel industry stateside.

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