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New | No more empty prospects for China hotels

Opportunities for hotels to cash in as domestic tourism goes from strength to strength

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Photo shows the Baiyulan Plaza of Puxi in Shanghai, east China which is made up of the main building and hotel. Photo: Xinhua

Analysts are turning positive on China hotels as the country’s appetite for travel drives domestic tourism to new heights.

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It’s a welcome reversal after several tough years in which the sector became a victim of its own ambition, plagued by oversupply, while external forces like the national anti-corruption campaign helped to suppress demand for luxury accommodation.

Those factors have not yet disappeared. According to Fitch, four in 10 rooms still sit empty in China as a result of overexpansion by hotel chains.

But third quarter RevPAR – an industry measure of occupancy and daily room rates – grew 0.3 per cent year on year, the first positive result in four years. In Beijing, demand for high-end hotel accommodation is growing almost twice as fast as supply.

Although offshore travel is growing faster, domestic tourism still accounts for more than 80 per cent of China’s travel expenditure. Official figures show 1.65 trillion yuan was spent on domestic travel in the first half, up 14.5 per cent on last year.

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Fitch analysts forecast double digit growth to continue for the coming five years, as domestic destinations become more attractive and accessible and an increasing number of households acquire the financial means to travel.

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