China’s hotel industry recovers as occupancy and room rates return to pre-pandemic levels amid leisure travel boom
- Surge in pent-up demand drives rise in occupancy rates and room rates
- The proportion of midrange and prime hotels, which are more profitable, is up after budget brands took the brunt of pandemic closures, analysts say
The hotel industry in mainland China has seen a steady recovery over the past three quarters, thanks to a post-pandemic boom in leisure travel that fuelled demand for hotels and pushed up room rates.
The occupancy rate across the country reached 68.4 per cent in the first nine months of 2023, only 2 per cent short of 2019 levels, according to analysts at JLL, a real estate services company.
Occupancy even reached a record 83.1 per cent on October 2 during the eight-day “golden week" holiday, with most of the growth coming from lower-tier cities, which saw an influx of domestic tourists, according to a report published on October 19 by STR, a hotel analytics provider.
“The surge in occupancy was driven by the release of pent-up demand for leisure travel after the pandemic,” Flora Zhu, director of China Corporate Research at Fitch Ratings, wrote in a note. “There was also an uptick in business travel shortly after the Chinese new year, but it gradually phased out due to a slowing economy, which also made companies cut their budgets for business trips.”
Meanwhile, the average daily rate (ADR), a measure of revenue from occupied rooms, rose to 975.1 yuan (US$133.3) in the first nine months of 2023, a 6.4 per cent increase from 2019 levels, according to JLL data.
The improved occupancy rate and ADR, in turn, pushed up the revenue per available room (RevPAR) of hotels across the country by 4.3 per cent to 640.4 yuan in the first nine months, compared to 2019 levels. RevPAR equals the ADR times the occupancy rate.
