Hotels in China are coming back online, with 87% open as compared to January 2020 levels, according to STR. Credit: Getty Images
SINGAPORE - Even as hotels around the world continue to reel from low occupancy numbers and temporary closures, analysts see a recovery trend in Wuhan, previously the epicentre of the pandemic.
Analysts from hotel research company STR shared data over a webinar session on Thursday (26 March) that showed the main Chinese market to recover quickly was Wuhan.
When the virus took hold in January, hotel occupancy in mainland China took a huge plunge in the middle of the month. Occupancy has "gently" started to come back in the last few weeks, explained Mr Jesper Palmqvist, area director Asia Pacific of STR.
One of the main reasons was that the outbreak in Wuhan had also brought in an influx of demand from volunteers and military and medical aid workers to stay.
As China gradually began relaxing its travel curbs and demand is gradually coming back, this has brought the percentage of hotels open to 87% of January 2020 levels, shared Mr Palmqvist. This is a promising sign that life in China is returning to normal as compared to the grave situation in the past weeks that have forced some 2,600 hotels to shut temporarily.
Also of note is the variance in the rate of hotels opening among the other cities. Beijing and Shanghai, the country's cities with the most hotels, have reached 63.7% and 89% respectively.
While China's development shows promise, it may be too soon to draw any conclusions or lessons. The current impact of COVID-19 outstrips previous crises in history, according to STR analysts who pulled out historical occupancy data from the 2003 SARS epidemic and 2009 global financial crisis.
In 2003, hotel performance in China saw a rebound to reach pre-crisis levels just three months after the travel restrictions were lifted. While recovery of a similar timeline from the current pandemic is "unlikely to occur", China's current glimmer of recovery shows that it is possible.
In 2009, hotels in the US and Europe took an average of 2.5 to 3.5 years to recover their original occupancy rates before the crisis.
Outlook in Asia Pacific
Elsewhere in Asia Pacific, however, Mr Palmqvist, noted that the situation for many destinations has worsened particularly in the past two weeks.
South Korea, which looks to come out of the virus epidemic thanks to the country's swift response in containing the virus, could potentially see hotels reopening for business to domestic travellers once the virus has been completely rooted out.
"We could expect to see a gentle uptick in demand towards the latter end of April, but at a slower pace than what China has seen," he said.
In a more dire situation are Indian Ocean markets, especially with India in lockdown. Hotels in the region are looking as a similar outlook of "really, really low occupancy numbers and a fight for survival for hotels", very much like Italy and Spain.
In Southeast Asia, the region saw occupancy shift dramatically from January to February. In January, three of seven markets - Indonesia (+5.8%), Malaysia (+5.4%) and Myanmar (+10.2%) - were still seeing positive growth, explained Mr Bernard Kee, regional manager Southeast Asia, STR.
By February, all seven markets were seeing single to double digit declines, from Indonesia (-7%), Thailand (-31%) to Singapore (-46.9%), the worst hit.
Occupancy in Singapore hotels began to fall after Chinese New Year, with notable exceptions such as the Singapore Airshow in mid-February and when Malaysia instated a lockdown on 17 March. Staycations also provided an uptick for hotels in Singapore, especially for Sentosa hotels, which was at 70% occupancy last weekend.
In Malaysia, hotels occupancy posted a sharp decline on 14 March, with the decline continuing as Malaysia went into lockdown.
Similarly, Indonesia hotels also posted a sharp decline from 15 March, as citizens were advised to stay home.
For Thailand's key destinations Bangkok and Phuket, occupancy rates have declined to about 20% to 30% respectively. A key difference is that while Bangkok hotels has managed to hold steady average daily rates unlike Phuket hotels, which saw significant decline
Vietnam hotels have seen a linear decline in occupancy from 45% to about 20%, with key events such as the F1 Vietnam Grand Prix being cancelled.
For Cambodia, Myanmar and Laos, occupancy rates have, in some instances, halved and now hover around the 15- to 20% mark.
Advice for hotels
While the situation continues to develop and evolve in a way that has surpassed our metrics and benchmarks, Mr Palmqvist emphasises the need to remain calm: "Do not panic, there will be a recovery".
Planning ahead continues to matter, whether it is for the second half of the year or in 2021.
"In certain Chinese cities, hoteliers are planning for summer now as they start to see an uptick now. Anyone who starts to manage it is able to start to see what they can do to regain business, because most of it will start from domestic travel," he said.
But the fundamental importance remains the human aspect of the hospitality business.
"The most important thing remains lives, not numbers. We've got to look after one another before we start to talk about occupancy numbers."