APPD Market Report Article

Beijing

November 29, 2022

Mike Batchelor, CEO - Hotels & Hospitality Group, Asia Pacific

-25.4%

RMB 359

RevPAR
Rising

Leisure demand thrives; MICE demand continues to be sluggish

  • Beijing witnessed a strong rebound in leisure demand in Q3, benefitting from the summer holiday and the Mid-Autumn Festival. According to the data from the Beijing Municipal Bureau of Culture and Tourism, the city’s 199 key tourist attractions welcomed approximately 3.8 million tourists during the Mid-Autumn Festival holiday, creating a 24% arrival increase y-o-y.
  • Due to strict regulations on gatherings and visitor controls, demand from MICE and corporate travellers remained sluggish in Q3 2022. Only five large conferences were held in Q3, and this contributed to a y-o-y decrease of over 80%.

No new supply in Q3; two luxury hotels pre-open

  • No new supply entered the market in the quarter.
  • Two luxury hotels, Xitan Beijing and Beijing Wild Goose & Pine Hotel and Resort, entered the pre-opening stage. These properties will add 38 and 67 rooms to the market respectively. It is noteworthy that Xitan Beijing is under the renowned Relais & Chateaux group and will provide a series of wellness facilities and activities.

Performance in Q3 2022 is driven by the summer holidays

  • Benefitting from the summer holidays, the average daily rate (ADR) in August stood at RMB 991, and occupancy reached 64.3%, leading to a revenue per available room (RevPAR) of RMB 637, and making August the best-performing month of the year. In September, ADR and occupancy fell by 5.6% and 21.7 percentage points (ppts), respectively, leading to a m-o-m RevPAR decrease of 37.4%.
  • In the first nine months of 2022, Beijing hotels recorded RMB 1,005 and 35.7% in ADR and occupancy, respectively, resulting in an increased RevPAR compared to the end of Q2, due to stronger demand during the holiday. However, due to the sluggish performance in the first half of the year, the YTD September RevPAR declined y-o-y by 25.4%, representing around 43.4% of the same period in 2019.

Outlook: Hotel demand is expected to start improving by mid-Q4

  • During the 20th National Congress, mainland China reconfirmed the general policy of “dynamic zero”. The increased understanding of the virus should give rise to more effective and science-based prevention and control strategies, and it is expected that the adjustment of the epidemic prevention strategy will improve the convenience of entering and leaving Beijing.
  • Multiple conferences and exhibitions in 2022 were delayed and rescheduled to either Q4 or early 2023. Once the epidemic prevention restrictions have eased, the postponed conferences will be a further opportunity for MICE demand to recover in Beijing.

Note: Beijing Hotels refers to Beijing's upscale hotel market.

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