RevPAR, occupancy growing in key Chinese markets
RevPAR, occupancy growing in key Chinese markets
27 MAY 2020 7:50 AM

China’s hotels are showing clear signs of rebounds in occupancy and revenue per available room, including in markets that rely on steady business travel, according to STR data.

SINGAPORE—China continues to see signs of recovery as business travel comes back online and hotels begin to sustain higher occupancies.

As part of his weekly video series on Chinese hotel performance, Jesper Palmqvist, area director for the Asia/Pacific region at STR, said occupancy drove a small rebound in revenue per available room in April. (STR is the parent company of Hotel News Now.)

“RevPAR grew by 19 percentage points from February to April year over year, and occupancy (increased) by 31 percentage points—again, showing that it was all about demand and not really rates that was disappearing,” Palmqvist said.

Chinese markets saw a noticeable lift from the 1 May Labour Day holiday and nearly matched that performance the following week.

It’s possible those growth trends could continue, Palmqvist said.

“We expect that given all factors, which includes general growth trends, easing of restrictions, Beijing National Congress that actually started (21 May) … that we will see more growth this week (of 25 May) as well, quite possibly even reaching higher than Labour Day holiday,” he said. “Now remember, this is RevPAR, not occupancy.”

Market performance
Palmqvist divided his market analysis into the performance of first-tier cities—Beijing, Shanghai, Guangzhou and Shenzhen—along with leisure destinations and finally provincial capitals, including Zhengzhou. The first-tier cities have been slower to recover than the leisure destinations and provincial capitals, he said.

“The four first-tier cities remained flat for about three weeks, and it was only in the last two weeks it started moving as restrictions were loosening and business was returning,” Palmqvist said. “Now, leisure destinations were at similar levels. Notable difference one, being those Saturday spikes, and of course that big holiday jump up to 67%.”

China’s provincial capitals also reported similar occupancy gains by the second week of May, which shows regional business and government meetings activity is returning strong, Palmqvist said.

On the bright side, Shenzhen’s occupancy is outpacing Beijing, Shanghai and Guangzhou, he said.

“As we map out occupancy rates for Shenzhen against the other tier-one cities, the big shift is here around mid-April, where after we see Shenzhen gaining a five-point gap,” he said. “Now as Hubei province—this includes Wuhan—finally opened up, this meant that the big volume of the workforce who frequently work in Shenzhen were able to head back to this thriving city and get busy, increasing occupancies in the market.”

Within two weeks, Shenzhen’s hotel occupancy began recovering close to 2019 levels.

“It's interesting to find our bearings compared to 2019 for the city, and the main takeaway is that a month ago that occupancy gap was almost 60 percentage points, but it moved to just over 30 percentage points, and heading more in that direction as we move along, so clear progress there,” he said.

Zhengzhou’s hotel occupancy is also showing some signs of recovery, Palmqvist said.

“The provincial capital has over the last eight weeks grown occupancy from 25% to 60%,” he said. “And again, that's not isolation or quarantine guests, it's hotel guests, and it’s driven by that necessary business travel and much less leisure. And it's happened over a very short time span as restrictions have been removed.”

For more of Palmqvist’s insights into the China hotel industry performance data, watch the video below.

Editor’s note: The video included in this article was filmed by STR’s Jesper Palmqvist, on 21 May and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.

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