International visitors return steadily to Shanghai

• In the second quarter of 2023, monthly overseas tourism arrivals have grown rapidly. Shanghai welcomed 294,800 international visitors in May, however at 38% of the level recorded in May 2019.
• The May Day Golden Week was a national hit this year. Nationwide, travellers exceeded 2019 levels for the same period, leading to a rapid rise in the performance of Shanghai’s 5-star hotel market during the holiday. Additionally, spending per capita over this period recovered to 89.5% of pre-pandemic years.

Two new hotels open in 2Q23

• The new openings are the 212-room Artyzen Habitat Taopu and the 281-room Shanghai Harbour Lake InterContinental Hotel. The latter was an upgrade and renovation project, which had been in operation as Crowne Plaza for ten years.
• With some projects postponed to 2024 due to the pandemic, a total of 859 rooms are set to enter the market in the next two quarters, including the 143-room Kimpton Bund Shanghai and the 384-room Sofitel in North Bund (a rebranding of Jiulong Hotel, an independent brand).

Market sees a recovery from 2022, but continues to lag

• The upscale and above-market hotel industry is gradually recovering. RevPAR increased rapidly by 115.9% to RMB 651 as of YTD June 2023, compared to the same period last year, mainly attributable to the recovery in occupancy. Occupancy increased by 24.7 ppts to 63.9%, while average daily rates (ADR) increased by 32.3% to RMB 1,019.
• However, compared to the same period in 2019, RevPAR has only reached 80% of 2019 levels, while occupancy rates and ADR recovered to 93% and 94%, respectively. This reflects the lag effect from the COVID-19 pandemic.

Outlook: Demand from MICE rebounds

• At the beginning of the year 2023, only 58 large-scale exhibitions were organised. However, Shanghai has completed 132 large-scale exhibitions by the end of June as the country gradually reopens. There are currently 164 more events scheduled in the second half of the year, and the number of exhibitions is expected to continue increasing.
• Under the impact of macroeconomic factors, investors in the domestic hotel investment market are holding cautious investment strategies, and price expectations between buyers and sellers are returning to rationality.