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China’s hotel recovery falls off rails amid new coronavirus flare-ups

01/25/2021| 2:18:14 PM|

Executives at companies like Accor, IHG, and Hyatt were similarly optimistic about the recovery outlook in China.

The hotel industry’s geographic revenue bright spot during the pandemic is grappling with second surge setbacks.

For the last two weeks, China’s hotel industry recovery veered majorly off course from a path that had companies like Marriott predicting a full recovery there by some point later this year. Revenue per room — the hotel industry’s key performance metric — was down roughly 40% in China for each of the first two full weeks of 2021, according to STR.

It was only down by nearly 4% for the week ending January 2. The sharp decline is due to flare-ups of the virus in provinces around Beijing and further north. 

China has had prior setbacks in its recovery, like a Beijing flare-up last summer. But the government typically responded with relatively quick, targeted lockdowns that were lifted after a couple of weeks.

The current surge is the worst flare-up seen in China since early last year and is a stark shift for a country widely seen as having best handled controlling the spread of the virus due to strong command from the central government.

“You see in China’s response something of the advantage of a powerful central government that can by itself set the rules and by and large get 100% compliance,” Marriott CEO Arne Sorenson said last summer. “They move quickly to implement the kind of restrictions that have, as far as we can tell, a profound impact on the spread of this virus.”

Executives at companies like Accor, IHG, and Hyatt were similarly optimistic about the recovery outlook in China. Marriott won’t provide any update to its forecast until its fourth-quarter investor call, a company spokesman told Skift.

China’s surge may be its worst in months, but the country’s 1,269 new cases in the last week are lower than the nearly 1.4 million in the U.S. and nearly 295,000 in the UK, according to Johns Hopkins University & Medicine.

There is still optimism surrounding a Chinese hotel recovery sometime this year compared to the U.S., where the American Hotel & Lodging Association doesn’t expect revenue drivers like business travel to fully recover until 2024.

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TAGS: China | US | hotels | Marriott
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