China hotel occupancy plummets

With the deadly coronavirus outbreak
casting a pall over Chinese New Year travel,
hotels across mainland China saw occupancy plummet 75% from Jan. 14 to Jan. 26,
according to STR. 

“The Chinese New Year holiday week normally sees a
significant shift in travel patterns across the country with very specific
hotel occupancy movements,” said Jesper Palmqvist, STR’s area director for Asia
Pacific. “This is due to less business travel, school closings and many
individuals who return home to spend the holiday with family. At the same time,
it is normal to see ADR rise during the time of the holiday. What our
preliminary analysis shows this year is that performance changes were even
greater as coverage of the coronavirus outbreak has intensified.”

In recent years, mainland China’s occupancy has typically
hovered at around 55% during the week of Chinese New Year. Likewise, ADR
usually runs between $93 and $100 for the holiday week. 

On Jan. 14, mainland China’s occupancy was at 70%, but began
dropping rapidly each day thereafter. By Jan. 26, occupancy had fallen to just

The customary spike in ADR, meanwhile, became slightly more
pronounced over the two-week period. Mainland China’s ADR grew to $108 by Jan.
26, a 61% increase from just seven days prior. 

Meanwhile, Palmqvist emphasized that clear comparisons
between the current coronavirus epidemic and China’s 2002-03 SARS outbreak are
difficult to make.

“While it is understandable to look for comparisons with the
SARS outbreak that began in 2002, it is important to consider the significant
differences in the market over the last two decades,” Palmqvist said.
“Dependence on smartphone technology, the widespread use of social media,
significant differences in hotel inventory, greater volume in international
arrivals to mainland China and overall economic conditions make it difficult to
use that previous outbreak as an indicator this time around.”

Palmquist added that hotels in other markets around the
world will also see a more pronounced impact, given a greater dependence on
Chinese outbound travel in more recent years.

Tourism Economics, STR’s forecast partner, has projected a 28%
drop in visits to the U.S. from China for 2020, 
which would equal a loss of 4.6 million hotel room nights sold and $5.8 billion
in visitor spending.

California, New York, Nevada, Washington and Hawaii are
among the hotel markets expected to feel the biggest impact from the drop in
Chinese visitors, according to Tourism Economics.

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