China’s strict Covid-19 curbs a roadblock for growing investment in hotels sector
- A record high construction of hotel rooms seen in the first quarter of this year is unlikely to continue, JLL executive says
- China’s zero-Covid policy has largely decreased business activity, Knight Frank executive says
In the January to March period, China’s total hotel construction pipeline stood at 3,711 hotel projects and 704,101 rooms, higher by 8 per cent and 7 per cent, respectively, from a year ago, according to data provider Lodging Econometrics’ latest report.
This was despite Beijing’s strict Covid-19 containment measures, such as routine lockdowns and strict quarantine requirements for international visitors, hobbling a full recovery in the tourism sector.
“The current Covid-19 measures have exerted some impact on business and investment … The first quarter of 2022 showed a record high construction of hotel rooms in China, but it is unlikely for this trend to continue, as some of the new projects were actually planned in pre Covid-19 times,” said Tao Zhou, managing director and head of JLL hotels and hospitality in Greater China. “We are likely to see a slowdown in new developments for hotels over the next two to three years.”
Even in a market that is mainly supported by domestic demand – only 145 million were international arrivals compared with 6 billion local tourists in 2019 – hotels on the mainland have seen revenues and occupancy decline during the pandemic. In the January to April period this year, hotel occupancy was at 42.8 per cent, lower than the 51.9 per cent seen a year ago, according to hotel data-tracking firm STR. The average daily rate of hotel rooms was down 3.2 per cent to 395 yuan (US$59), while revenue per available room fell by about a fifth to 169 yuan in the same period.
