APPD Market Report Article


May 31, 2022


RMB 347.6


Hotel demand greatly disturbed by COVID-19 resurgence

  • Under the staycation trend, Shanghai upscale hotel market witnessed a rise in occupancy by local residents during the Spring festival. The occupancy in February hit 49.6%, which was up approximately 17 percentage points from February 2021 and the highest occupancy rate since 2020. The market ADR remained at 920 RMB, same level as last year.
  • The hotel demand in Shanghai has been significantly impacted following the virus outbreaks across China, including Suzhou and Hangzhou outbreaks in February and the lockdown in Shanghai from end of March. As a consequence, the occupancy in March dropped by 20 percentage points from March 2021.

One hotel opens in Q1, while 2,246 rooms are scheduled for 2022

  • Artyzen Habitat Qiantan Shanghai with 246 rooms opened in the first quarter of 2022. This is the second hotel by the brand in Shanghai.
  • A total of 2,246 rooms are slated to open later this year. The notable ones are the rebranded projects, such as the Sofitel Jiulong in the North Bund area with 384 rooms, and HUALUXE Changfeng Park with 312 rooms. 

Challenges and uncertainty trigger hotel transactions

  • As of YTD March 2022, revenue per available room (RevPAR) decreased by 9.3% to RMB 348, due to a drop of 5.5 percentage points in occupancy, whereas ADR maintained its level at RMB 883, recording a y-o-y growth of 3.3%.
  • Shanghai has recorded the largest share of China’s hotel transactions in 1Q22, accounting for 80% of the total transaction volume. This is largely attributed to the sale of the Hyatt on the Bund, which was sold to Shanghai Land Group by Shimao.

Outlook: Expected market recovery strengthens transaction pipeline

  • Since early March, Shanghai reported numerous confirmed and asymptomatic COVID-19 cases. The city has been in lockdown for weeks, which suppresses the business and leisure demand. A pent-up demand and recovering hotel performance are expected when the virus is well-contained, and the travel restrictions are lifted.
  • Property developers are expected to continue offloading their hotel assets in order to improve their cashflow position, the pricing expectation gap is expected to narrow between buyers and sellers. Hotels suitable for conversion into rental housing continue to be highly sought-after by investors.

Note: Shanghai Hotels refers to Shanghai's upscale and luxury hotel market.

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