Hotels turn the corner in China in Q3
Operators employ an unprecedented level of automation and digital services
While the COVID- 19 outbreak came as a terrible blow to the hospitality industry, it has since seen a marked recovery in China especially in the third quarter of 2020.
Data showed the revenue per available room, or RevPAR for short, fell off a cliff at three major Chinese hotel groups — Jin Jiang, Huazhu and Beijing Tourism Group — during the first two quarters of the year, said Zhang Rungang, vice- president of the China Tourism Association, at a forum in Shanghai on Wednesday.
RevPAR is a key gauge measuring hotel operation. Some Chinese hotels reported a sharp drop, up to around 50 percent, in RevPAR in the first quarter, Zhang said.
The country’s accommodation businesses incurred losses exceeding more than 200 billion yuan ($ 30.43 billion) from January to May, Han Ming, president of the China Hospitality Association, told a forum on bed- and- breakfast and hotel businesses in Shaoxing, Zhejiang province in September.
However, the RevPAR data has picked up starting from the third quarter, with the pandemic brought well under control in the country.
Hainan, a popular tourist destination, is the best recovered in terms of accommodation businesses among Chinese cities, Zhang said. The RevPAR in the southern island province during the first nine months has outgrown that of the same period in 2019 by 11 percent, ranking top in China.
Chengdu in Southwest China’s Sichuan province is another city that reported a year- on- year increase in RevPAR during the same period, up some 5 percent, he added.
The hotel industry in Beijing, Shanghai, Shenzhen and Guangzhou is experiencing a recovery, but at slower pace, he said.
Amid the economic rebound and rising demand for domestic travel, hoteliers are seeking expansion in their business landscape, with a focus on medium to high- end hotel markets, observers said.
BTG Homeinns added 90 medium to high- end hotels in the first half of this year, accounting for 36 percent of its new openings during the period. Huazhu announced its major medium hotel brand Ji Hotel has reached 1,000 properties in the Guangxi Zhuang autonomous region alone. Atour is also eyeing the medium and high- end markets, with room rates to increase from 400 yuan to 1,000 yuan in the future, The Beijing News reported.
Urbanization expansion and improved infrastructure such as high- speed rail and flight services have enabled more convenient business and leisure travel, thus boosting the recovery in tourism and hospitality sectors.
The country’s third and fourthtier cities, which have reported a quicker economic recovery, are becoming emerging markets for hoteliers.
In addition, affected by the pandemic and e- commerce, rents on commercial buildings have fallen. That means lower costs for hotel operators. All this has contributed to the hospitality industry’s recovery, the newspaper quoted industry insiders as saying.
Wei Xiang, a professor with the business school at the University of Chinese Academy of Social Sciences, suggested hotel groups shift their focus from channel and brand expansion to upgrading facilities and services to improve management models, The Beijing News reported.
“Facing a market shrinkage and a change in guest sources, hotels need to put their attention onto digital management and quality improvement based on hygiene and health safety,” Wei said.
The use of robots has become a standard service for so- called intelligent hotels and the health crisis has given a further boost to such services.
During the pandemic, delivery robots have turned out to be a major force for hotels, making more than 100 deliveries a day in some hotels during peak times, the newspaper cited an executive at a domestic hotel chain as saying.
To reduce infection risks and save labor costs, hotels are advancing digitalization in the country.
Huazhu has promoted non- contact services at more than 5,700 hotels, including automatic checkin and delivery service by robots.
BTG Homeinns employs blockchain technology and an upgraded robot delivery service and equips its guest rooms with a mini disinfection cabinet. The company’s spending on research and development surged 43.29 percent yearon- year in the third quarter of 2020.
Huazhu, BTG Homeinns and GreenTree Hospitality Group have all invested in a service robot company in Shenzhen, Guangdong province, according to The Beijing News.
The move indicates the application of intelligent equipment and technology in the hotels has matured and shown a trend in mass use, industry insiders said.
Wei said the pandemic has spurred new growth spots in the hospitality industry and hoteliers have made great strides in advancing digitalization and encouraging the use of intelligent equipment and technology.
At the same time, competition in hygiene and health safety is becoming increasingly fierce, he noted. “Safety and hygiene should come as a priority in hotels’ move toward becoming intelligent.”
Facing a market shrinkage and a change in guest sources, hotels need to put their attention onto digital management and quality improvement based on hygiene and health safety.”
Wei Xiang, a professor with the business school at the University of Chinese Academy of Social Sciences