• The longer-term prospects for Greater China hotel industry remain positive

    31 May 2021

    The COVID-19 pandemic has caused devastating disruption to the travel and hospitality industry across the world, leading to unprecedented economic and social consequences. In the face of the pandemic, most countries around the world imposed partial or complete border closures, with travel restrictions affecting the majority of the world’s population.

    China was the first country affected by the health crisis, so its hotel industry was the first to see the effect. With strict travel restrictions in various parts of Chinese mainland, the hotel business was badly shaken in the absence of inbound tourists in 2020. However, the impact among cities was uneven.

    Martin Wong, Director, Head of Research & Consultancy, Greater China, says, “The hotel sector globally is facing unprecedented challenges, as the travel restrictions and lockdown measures have resulted in a halt to international tourist arrivals. Nonetheless, on the back of the huge pent-up travel demand in the post-COVID era, coupled with the strong potential demand for both leisure and business travel generated by the Greater Bay Area initiative, the longer-term prospects for tourism in the Greater China region remain positive.”  


    The number of international visitor arrivals to Beijing plummeted by 91% YoY to 341,000 in 2020. As a result, the hotel industry was severely affected. In 2020, the average occupancy rate of five-star hotels in Beijing dropped significantly to 29.9%. The Average Daily Rate (ADR) plunged by 6.5% YoY to RMB850. On the whole, the hotel industry started to pick up in 2H 2020. Six luxury hotels were opened in Beijing in 2020.


    The number of international visitor arrivals decreased sharply to 1.3 million in 2020, a decline of 85.7% YoY. The average occupancy rate of five-star hotels in 2020 fell to the lowest level in the past 15 years, especially in February and March, with the figure dropping to single digits. It was also the first time in 15 years the ADR of five-star hotels dropped below RMB900. Despite the pandemic, seven luxury hotels opened in Shanghai in 2020. The local tourism market gradually rebounded in 2H 2020, boosting the recovery of the hotel sector.


    Guangzhou received 2.1 million international overnight visitor arrivals in 2020, plummeting by 76.7% YoY, and total revenue for the tourism industry dropped by 39.9% YoY to RMB267.9 billion. The ADR of five-star hotels in Guangzhou dropped by 21.3% YoY to RMB629 in 2020. The occupancy rate in 2020 dropped by 14 percentage points to 61.2%. Three luxury hotels were opened in Guangzhou in 2020. The domestic economy gradually recovered.  


    Shenzhen’s hotel industry was severely affected by the pandemic, with a massive drop in visitor arrivals. In 2020, the total number of international overnight visitors in Shenzhen fell by 90.1% YoY to 1.2 million. Despite the poor market, some luxury hotel brands maintained a positive long-term outlook. During the year, 13 new luxury hotels were opened in Shenzhen.

    Hong Kong

    Hong Kong’s inbound tourism collapsed in 2020 because of the pandemic. The city had only 1.4 million international overnight visitors, a significant plunge of 94.3% YoY. Amid the devastating market situation, some hotel operators in Hong Kong transformed their business models and accepted long-term rentals, while others considered converting their properties to other uses, such as coworking or residential space, to increase rental income. Given the poor market conditions, many hotel operators put their opening plans on hold.


    The city received only 2.8 million international overnight visitors in 2020, a sharp decrease of 84.9% YoY. The overall five-star hotel occupancy rate was only 25.1%, and the ADR for five-star hotels was MOP1,351, a 17.8% drop YoY. Macau’s overall market sentiment was weak in 1H 2020 because of the pandemic. But with the gradual relaxing of travel restrictions and removal of the mandatory quarantine requirement for Chinese tourists in 2H, Macau recorded a quarterly surge of 150.3% in visitor arrivals in Q4 2020.

    Taipei According to the Tourism Bureau of Taiwan, international visitor arrivals to Taipei dropped significantly to 1.4 million in 2020, down 88.4% YoY as a result of border controls. The average occupancy rate of Taipei international tourist hotels fell to 38%, and ADR was down 25% YoY to NT$3,464. In 2020, despite the pandemic, three new luxury hotels opened.


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