China’s hotel markets remain strong amidst US trade war

Guangzhou, China
Guangzhou, China

Global analytics and benchmarking company STR has reported that China’s hotel markets are projected to grow in 2020 despite a challenging macroeconomic environment. 

“China’s economy, and by extension its hospitality industry, remains strong even with concerns around the trade war with the US and an overall global economic slowdown,” said Christine Liu, STR’s regional manager for North Asia.

According to STR’s report, key hotel markets in Mainland China, notably Beijing, is expected to continue its growth trajectory with a forecasted increase of 3.7% in revenue per available room (RevPAR). The average daily rate (ADR) is expected to continue to grow (+1.8%) after a strong 2019 in the metric.

Liu added: “A decline in Chinese departures to other countries, combined with significant government investment in infrastructure is driving domestic demand in key markets. However, the country’s resiliency to difficult macroeconomic situations will be tested if the trade war continues to decelerate economic growth.”

“Demand growth is key for Beijing”

Chengdu, the country’s second-largest market, is also projected to grow at a rate of 2.8% with an estimated 18,000 rooms in development and an ADR growth of 1.4%.

Furthermore, demand will be boosted by China’s high-speed train system and subsequent meetings, incentives, conferences and exhibitions (MICE) business.

“Demand growth is key for Beijing as supply continues to increase at a healthy rate,” Liu said. “The newly opened Beijing Daxing International Airport, projected to be one of the busiest in the world; and Beijing preparing for the 2022 Winter Olympics, highlight potential growth for the tourism and hospitality sector.”

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