International arrivals drop significantly

• As at YTD November 2022, Shanghai welcomed around 574,400 overseas visitors, recording a y-o-y change of -40.0%, less than 10% of the visitors in 2019.
• The National Day Festival and China International Import Expo (CIIE) served as good demand generators to the hotels in Shanghai. However, in the backdrop of travel restrictions linked to the pandemic, most citizens were highly encouraged to stay within the country. As a result, several hotels saw a high percentage of bookings from domestic visitors.

Nearly 1,500 rooms complete in 2022

• A total of 1,470 rooms completed during the year 2022, such as the Artyzen Habitat Qiantan Shanghai (246 keys) and the HUALUXE Changfeng Park (312 keys).
• In 2023, 3,915 rooms are expected to enter Shanghai. Some notable hotels are Alila Shanghai (188 keys) and Sofitel Shanghai North Bund Hotel (384 keys), both being renovation projects.

Shanghai hit hard in 2022

• The visitor traffic between Shanghai and other cities failed to fully recover due to numerous citywide lockdowns across the country. In 2022, revenue per available room (RevPAR) fell by 32.1% y-o-y to RMB 346.2, and both occupancy and average daily rate (ADR) decreased significantly, by 13.4 percentage points to 41.6%, and by 10.2% to RMB 832.4, respectively. 
• Shanghai had recorded the largest share of China hotel transactions in the first quarter of 2022, accounting for 80% of the total transaction volume. This is largely attributed to the sale of Hyatt on the Bund, which was sold to Shanghai Land Group by Shimao. Hotel transactions at the end of the year remained muted.

Outlook: As travel restrictions end, a strong recovery is expected

• Looking ahead, a steady and robust recovery in hotel performance is expected. China has lifted travel restrictions starting from January 2023. Domestic travel is anticipated to continue to recover, given the city’s attractiveness to both leisure and corporate travellers. Shanghai is also expected to welcome some overseas demand as quarantine upon arrival is no longer required.
• With the current macroeconomic challenges, investors in the domestic hotel investment market are anticipated to hold cautious investment strategies, and price expectations are returning to rationality. With travel restrictions lifting, the outlook and resilience of the domestic urban and resort hotel market should rekindle investor confidence, with some hotel transactions expected to happen in 2023.