Q1 2020 figures report a decrease in overall room occupancy by 42.1% and a decrease in the average daily rate (ADR) by USD 97.86. Subsequently, revenue per available room dropped by 40% year-on-year – a substantial decline that can be, in part, attributed to forex trends.
Beijing, Hong Kong, Sanya, Shanghai and Taiwan were among the five cities most badly affected by the pandemic, as measured by room occupancy rates. However, most APAC markets experienced a year-on-year decline in occupancy that was greater than 20%, with the exception of Auckland, Sydney, Melbourne, Jakarta, Mumbai and New Delhi.
“Due to the imposition of travel restrictions, lockdowns and border closures by governments across the world in response to the novel coronavirus (COVID-19) outbreak, hotels across the Asia Pacific had lacklustre performance in Q1 2020,” said Executive Director Govinda Singh. “Our global economic outlook, as well as our outlook for the hospitality industry in the region, is expected to remain muted in the near term given the ongoing uncertainty.” The World Tourism Organisation (UNWTO) also anticipates a 20 to 30% year-on-year decline in international tourism arrivals in 2020, which could amount to a staggering loss of USD 300 to 450 billion.
In the longer term, however, Singh is more optimistic, stating that, “We expect the robust government stimulus packages, policies and strong economic fundamentals to provide some cushioning to short-term impacts and to place the hospitality industry in a strong position for when the eventual recovery occurs.”
The industry has started to experience a gentle uptick in hotel room occupancy in some mainland Chinese cities, such as Beijing, Shanghai and Sanya, in March 2020, as lockdowns have been lifted and businesses have returned to a new normal. However, the use of hotels as quarantine facilities may also have contributed to this increase.
Although an eventual rebound for the hotel industry in the Asia Pacific is expected, the report suggests that there may be a dramatic shift in the needs and expectations of travellers as the effects of the pandemic wear off. In order to instil and maintain confidence amongst travellers and stakeholders, hotels should adopt a proactive approach towards communication and place greater emphasis on health, hygiene and safety.
The COVID-19 pandemic has had a far greater impact on the broader hotel industry in comparison to SARS, given China is now the world’s largest tourism outbound source market. Since 2003, China has grown from being the world’s 6th largest economy to the 2nd largest economy, ranking just behind the United States with a GDP of USD 12.238 trillion.