US hotels struggle from China COVID amid tourism boom According to Reuters

© Reuters. FILE PHOTO: Women stand at the entrance of a hotel during lockdown, amid the coronavirus disease (COVID-19) pandemic, in Shanghai, China, May 1, 2022. REUTERS/Aly Song

By Priyamvada C

(Reuters) – U.S. hotel operators are expected to take additional pain from China’s strict COVID-19 lockdown, which has stalled construction of some luxury properties and hampered travel to one of the world’s key tourism markets.

Growth in China is stagnating at a time when companies are rushing to open hotels and take advantage of pent-up tourism demand, with the pace of construction of new properties in the United States after the pandemic halted. expansion plan.

A tourism recovery in other parts of the world has boosted major hotel chains’ results this year, but President Xi Jinping’s COVID-19 containment measures in China have put pressure on rising prices. Head of hotel and hotel revenue in this country.

“These mass lockdowns have really cost us a lot,” Hyatt CEO Mark Samuel Hoplamazian said earlier this month.

A large portion of hotel operators’ RevPAR, or revenue per room availability, comes from China and companies are working to expand their presence in the country, but with sudden COVID restrictions hindered the movement of labor and material.

“I think it’s easier in rural areas where they can open a hotel, but in big cities, if there’s roller shutters, it’s very difficult,” said Bernstein analyst Richard Clarke. towel”.

Marriott International (NASDAQ:) Inc’s RevPAR from Greater China for the first nine months of this year, when outages in the country occurred for several US companies, was $52.09, the lowest of any. all key regions and down from a year earlier. By contrast, RevPAR jumped into all other Marriott areas.

Greater China hotel chain RevPAR for the same period last year, when curbs were less stringent, was $64.10.

Marriott’s revenue per room

“The market in China is definitely where we’re most challenged,” Marriott CEO Anthony Capuano said on the call after third-quarter earnings.

Marriott, about 60% of which has a pipeline of Chinese projects covering the high-end and luxury segments, was forced to lower its gross room growth forecast for 2022.

Hyatt’s Hoplamazian added: “There’s a lot of uncertainty regarding how China will develop this year, let’s face it. China has had a very, very, very difficult year.”

China on Friday relaxed some quarantine-related COVID rules but some experts have warned that these measures are gradually increasing and reopening is probably far from possible. .

The delayed recovery for outbound travel from China is another headache, especially for online travel agencies.

“Not many people are leaving the country right now,” Airbnb Inc said earlier this month, after the vacation rental company forecast weak holiday quarter revenue.

The prospect of a recession also looms large for the travel industry, which has been largely protected by household savings accumulated during the pandemic, with some analysts worried about travel demand. Tourism has ultimately been affected, though signs of that have been scarce.

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