Six international chains operating in China during the second quarter all registered a year-on-year decrease in revenue per available room (RevPAR) and average daily rate – two important metrics for hotel profitability – with China the only major market reporting negative trends for both figures.
Among the chains, Wyndham saw the largest decline in RevPAR with a drop of 17 per cent, while IHG saw a 7 per cent decline. Hilton, Marriott, and Hyatt all recorded drops ranging from 3 to 5 per cent, with Accor also logging negative growth.
In terms of average daily rate, Marriott, IHG and Hyatt each reported decreases of around 5 per cent.
Executives from Marriott, Hyatt and Accor attributed the decline in performance to a slowing Chinese economy and more tepid consumer spending on their respective earnings calls.
“RevPAR in Greater China declined as macroeconomic pressures led to softer domestic demand. The region was also impacted by an increase in outbound high-end travellers,” said Marriott CEO Anthony Capuano on the company’s July 31 earnings call.
Following a spike in 2023 driven by the lifting of Covid-19 restrictions, demand for international hotel chains in China has slackened this year, as has the domestic hospitality sector as a whole, Zhou said.
“During past holiday seasons, hotel prices in China typically experienced sharp increases. This year, however, prices remained relatively stable.”
Despite these setbacks, most international hotel brands still consider China an important market, with many seeking to expand their business by establishing a presence in areas off the beaten path.
Of the 31 hotels in IHG’s development pipeline, only five are located in traditional first-tier cities. The remaining projects are concentrated in “new first-tier cities” and second-or-third-tier cities. Hyatt has a similar focus, with around 80 per cent of its pipeline devoted to properties outside the first tier.
“Our experience has been that there are highs and lows, there are ebbs and flows, but that the trend line is actually upwards in China,” Maalouf said.
“In the past, international hotel chains served as a catalyst for real estate development. The presence of a high-end hotel could elevate a neighbourhood’s perceived status. However, this dynamic is no longer as prevalent,” Zhou said.
“International hotel chains will continue to invest in China, due to the fact that they generally adopt an asset-light model. However, the days of their rapid expansion in China may be over.”
Qatar Airways will launch three non-stop flights a week to Toronto Pearson International Airport (YYZ) from Doha, starting December 11. Operated by a Boeing 777
Polish head of mission in Doha Tomasz Sadzinski in conversation with Gulf Times.
GCC Updates is back with big trending news from the region. From Hollywood A-listers visiting the UAE to new airlines introduced in the Gulf, w