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Coronavirus pandemic
Opinion
Nicholas Spiro
Nicholas Spiro

In a coronavirus-ravaged hotel landscape, China is outperforming the rest of the world

  • While the promise of a Covid-19 vaccine has boosted some hotel stocks, the industry continues to struggle worldwide. China, however, seems to be bucking the trend

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Chinese tourists relax at Dadonghai Bay, in Sanya, China, on August 30. The hotel occupancy rate in Sanya has stood significantly above the average for mainland China since July. Photo: Steven Ribet
Nicholas Spiro
For the first time since the Covid-19 pandemic erupted, an end to the deadly disease is in sight. The announcement on November 9 by Pfizer and its German partner BioNTech that their vaccine candidate was 90 per cent effective in preventing the illness has unleashed a wave of optimism at a time when the virus is spreading rampantly across Europe and the United States.
In equity markets, a rotation out of “stay-at-home” stocks and into shares that have suffered due to lockdowns and social distancing has gained momentum. Hotels, the hardest hit property sector along with the retail industry, have been given a new lease of life. Last week, the share price of Marriott International, the world’s largest hotel group, surged 15.5 per cent, having been volatile since hitting a low in early April.
As I argued previously, there are reasons to be wary of the promise of a vaccine, especially given doubts about its efficacy, the daunting logistics of mass vaccination and the significant risk that uptake will be too low to provide sufficient protection. Yet, for the virus-ravaged hotel industry, the breakthrough cannot come soon enough.
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According to hospitality data provider STR, the average occupancy rate in Europe in September stood at just 39 per cent, a 52 per cent fall year on year. In the US, where the data is more recent, average occupancy in early November stood at 44 per cent, a 36 per cent decline, while revenue per available room – the industry’s preferred performance measure – was down 56 per cent.

Tourists sit outside at a cafe in St Mark’s Square in Venice on June 14. A resurgence of Covid-19 cases across Europe has dimmed prospects for the continent’s hotel industry. Photo: Reuters
Tourists sit outside at a cafe in St Mark’s Square in Venice on June 14. A resurgence of Covid-19 cases across Europe has dimmed prospects for the continent’s hotel industry. Photo: Reuters
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Even in the Asia-Pacific region – where most economies have reopened much faster due to more effective virus containment policies – average occupancy was barely above 50 per cent in August, with revenue per available room down 50 per cent.

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