US hotels come from China as COVID slows amid travel boom | Tech US News

[ad_1]

US hotel operators are expecting more pain from China’s strict COVID-19 lockdowns that have halted construction on some luxury properties and prevented travel to one of the world’s top tourist markets.

Growth in China has stuttered at a time when companies are rushing to open hotels and capitalize on pent-up travel demand, with construction of new properties accelerating in the United States after the pandemic halted expansion plans.

A recovery in travel elsewhere in the world has boosted results for major hotel chains this year, but President Xi Jinping’s measures to contain COVID in China have pressured room growth and hospitality revenue in the country.

Women stand at the entrance of a hotel during the lockdown, amid the coronavirus disease (COVID-19) pandemic, in Shanghai, China, May 1, 2022. (Reuters/Aly Song)

SHANGHAI DISNEYLAND VISITORS WERE STRIPPED IN THE PARK FOR HOURS BECAUSE OF A SINGLE CASE OF COVID

Ticker security last change % change
MAR MARRIOTT INTERNATIONAL INC. 163.78 +5.80 +3.67%
H HYATT HOTELS CORP. 96.06 +1.93 +2.04%

“These serial lockouts have cost us significantly,” Hyatt Chief Executive Mark Samuel Hoplamazian said earlier this month.

A large portion of hotel operators’ RevPAR, or revenue per available room, comes from China, and companies have worked to expand their presence in the country, but sharp COVID restrictions have prevented the movement of labor and materials.

“I think it’s easier in more rural areas, they can open the hotels, but in the big cities, if there’s kind of a continuous lockdown, it’s being very difficult,” Bernstein analyst Richard Clarke said.

Marriott International, Inc.

Marriott International’s new global headquarters in Bethesda, Maryland. (Marriott International, Inc.)

NO EASY FIX FOR CHINA AS ECONOMY SLOWS MORE THAN EXPECTED

Greater China Marriott International Inc’s RevPAR for the first nine months of this year, when lockdowns in the country have affected several US companies, was $52.09, the lowest among all key regions, and less than a year earlier. Conversely, RevPAR jumped in all other Marriott regions.

The hotel chain’s Greater China RevPAR in the comparable period last year, when margins were less stringent, was $64.10.

“The market in China is definitely where we’re seeing the most challenges,” Marriott Chief Executive Anthony Capuano said during the third-quarter post-earnings call.

Marriott, whose portfolio of projects in China comprises about 60% of the luxury and luxury segment, was forced to lower its gross room growth forecast for 2022.

“There is a lot of opacity regarding how China is going to evolve this year, let’s face it. China has had a very, very, very difficult year,” Hyatt’s Hoplamazian added.

China eased some quarantine-related COVID rules on Friday, but several experts warned that the measures were incremental and that the reopening was likely a long way off.

CLICK HERE TO GET THE FOX BUSINESS APP

The delayed recovery of outbound travel from China is another headache, especially for online travel companies.

“Not a lot of people are leaving the country right now,” Airbnb Inc said earlier this month, after the vacation rental company forecast weak revenue for the holiday quarter.

Ticker security last change % change
ABNB AIRBNB INC. 109.57 +7.17 + 7.00%

The prospect of a recession also looms over the travel industry, which has been largely shielded by household savings built up during the pandemic, with some analysts worried that travel demand will finally take a hit, although signs of that have been few and far between. .

[ad_2]

Source link

Please disable your adblocker or whitelist this site!