China hotel performance could recover quickly: STR

Amid the current outbreak of coronavirus (COVID-19), leading market research firm STR analysed historical data for China and found that the country’s hotel performance recovered quickly following the containment of SARS in 2003. Recovery around the current outbreak situation of 2020 could follow a similar timeline.

“Significant market, economic and social changes over the past two decades render a direct comparison of coronavirus to SARS rather complex when it comes to hotel performance,” said Jesper Palmqvist, area director for the Asia Pacific region in STR. “However, we felt it important to analyse hotel performance and recovery in China during the early part of the millennium in order to derive possible projections for 2020.”

“Domestic market to rebound.”

“In the scenario where there is a slowing in new coronavirus cases reported by the end of February, we can then project the recovery trajectory with both historic and current signs that China will rebound quickly, particularly in the domestic market. Regardless, there are questions to be answered around eventual readiness of those hotels that are currently closed in China and how outbound travel will develop,” Palmqvist added.

For Mainland China, the lowest occupancy month during the SARS outbreak was May 2003 at 18%. At the same time, average daily rate (ADR) was CNY 518 (USD 74.1). Then by August, after containment, occupancy was back up to 67% and ADR was at CNY552 (USD 78.9). From an ADR perspective, Mainland China reported just three months of declines in April, May and June of 2003.

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