Asia-Pacific tourism won’t recover until 2024 in absence of mainland Chinese visitors, say analysts

Even now that Asia-Pacific countries have scrapped most of their travel curbs, the lack of Chinese tourists continues to weigh on hotel occupancy
Before the pandemic, they accounted for 40 per cent of tourists within Asia-Pacific, according to property consultancy JLL.

International Property

Cheryl Arcibal

Published: 6:42pm, 29 Sep, 2022

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Tourism in Asia-Pacific will not see a recovery until 2024 as China’s borders remain closed, keeping an estimated 140 million visitors from travelling within the region, according to analysts.

In 2019, before the Covid-19 outbreak, 154.6 million mainland Chinese travelled outside the country, according to the World Bank. They accounted for 40 per cent of tourists within Asia-Pacific before the pandemic, according to property consultancy JLL.

“ Recovery in the hospitality region is being delayed due to tight border controls in China,” said Koichiro Obu, head of real estate research, Asia-Pacific, of DWS, a German asset management company.

“I understand that 90 per cent of outbound tourists in China used to travel within the Asia-Pacific region and the number of outbound tourists from mainland China had been increasing by at least 10 million people a year, so we can see that they are a major driver of growth.

“We do not see a full recovery next year, I think the earliest recovery will be in 2024.”

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Even now that Asia-Pacific countries have scrapped most of their travel curbs, the absence of Chinese tourists continues to weigh on hotel occupancy and rates.

Beijing has stuck to a zero-Covid policy which effectively bars travel outside the country. Arrivals are required to undergo a strict quarantine regime and the number of international flights is severely limited.

It has not helped that the biggest tourist markets in the region, including Japan and South Korea, had implemented tough rules for international visitors, although most of these have been eased and will be rolled back in the coming weeks.

The absence of Chinese tourists in the region has been keenly felt by the hotel industry.

In the four weeks ending August 20, average daily rates in hotels in European countries such as France, Italy, Greece and Croatia were above US$250, while those in Asia-Pacific stood at about US$50, according to the latest data from STR, which tracks the performance of hotels.

This has forced many hotel owners to let go of their assets, Obu said.

In Japan for example, Seibu Holdings sold a portfolio of its hotels to Singapore wealth fund GIC for about 150 billion yen (US$1.4 billion) in February. Japanese developer and transport firm Odakyu Electric Railway is selling its Hyatt Regency Tokyo hotel, located in the hip district of Shinjuku, for about 100 billion yen.

“These are not fire sales, but what I can say is that you never encounter these types of opportunities in normal circumstances,” Obu said. “This can only happen when the market is shaken up or is in a downturn.”

In Hong Kong, the same scenario is likely. Before the anti-government protests of 2019 and the pandemic that started the following year, 51 million of 65.1 million visitors in Hong Kong were mainland Chinese, according to the Tourism Board.

“The Hong Kong tourism sector is heavily reliant on the mainland Chinese market,” said Jonathan Law, vice-president of JLL hotels and hospitality group. “Until that market reopens, business for Hong Kong hotels will only be a fraction of pre-Covid levels.

“There are still opportunities for hotel investors in Hong Kong. However, some owners are seeing the light at the end of the tunnel and are not as eager as before to dispose.”

Law said the full recovery of the Hong Kong hospitality industry is likely to take two to three years. The easing of travel curbs is also expected to weigh on occupancy rates of hotels because the staycation market, which caters to locals, is likely to take a hit as residents opt to spend their holidays overseas instead.

“Upscale hotels will fare better, with business travellers coming to Hong Kong.” he said.