China’s Hotel Recovery Evaporated in 2 Weeks

China must weigh whether the economic pain is worth the price of such tough lockdown measures in response to outbreaks that pale in comparison to those seen in markets like the U.S.

13 August 2021

China, usually seen as the global leader in the hotel industry’s recovery from the pandemic, took a massive fall last week in its hospitality comeback due to the Delta variant. Prior industry optimism about the country’s ability to quickly rally after a setback doesn’t seem to apply this time around.

Average occupancy rates across Mainland China fell from 70 percent to just shy of 40 percent in a matter of two weeks, according to STR’s most recent data. Revenue per available room, the hotel industry’s key performance metric, is now at roughly half of 2019 levels.

The swift descent stems from the country’s tough crackdown policies and travel restrictions, which led economists to lower expectations on the country’s economic recovery trajectory. The hotel downturn is a brutal collapse for a country that saw at points last month mid-week occupancy rates — typically when business travel occurs — reach close to 80 percent, an outperformance of 2019 levels.

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