Luxury hotels in China are struggling hard to regain market

Friday, April 10, 2020

In luxury hotels across mainland China, the rooms are empty and waiters lounge beside dining tables with no customers, a result of the devastation Covid-19 has had on many businesses. But many businesses are slowly returning to normal in the mainland China as travel curbs and curfew-like community lockdowns have been lifted in an effort to fire up the economy.

Yet for some upmarket hotel chains, the sight of tourists and consumers returning to attractions and malls in big cities is not very reassuring – many fear that people’s pent-up demands and even the “post-pandemic binge” may not turn out to be strong enough to throw their faltering businesses and occupancy rates a lifeline.

Their hopes of an immediate turnaround were dashed by the news that the Four Seasons chain is pulling out of Shanghai. The Canadian luxury hotel and resort chain will no longer have any foothold in the largest city of the country after closing its two properties there in May and June.

Four Seasons manages two hotels, Puxi and Pudong, on both sides of Shanghai’s Huangpu River. The decision to fold the business came after more than 18 years of feasting and revelry for the city’s cadres and business elite, when the Four Seasons became one of the first foreign luxury hospitality brands to enter the city to cater to Shanghai’s rising appetite for fine dining and plush hotel stays.

Wyndham Hotels also runs hundreds of hotels covering both the high-end and budget segments in China and also saw its overall occupancy rate plummet 75% in February at its hotels that were still open.

The stringent entry restrictions in Beijing, Shanghai, Guangzhou and Shenzhen targeting arrivals from overseas to keep out imported cases also means any recovery for the hotels has been pushed further back. International travelers, as well as meetings, incentives, conferencing and exhibitions (MICE) events, were typically pillars of income for five-star hotels in these top tier cities.

Meanwhile, InterContinental and its local partners will also close their harborfront hotel in Hong Kong’s bustling Tsim Sha Tsui district for a “top-to-toe facelift” later this month until 2022. The hotel opened its cavernous lobby and “seascape rooms” 40 years ago for guests to gaze over the city’s skyline across the harbor.

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