"Digital Transformation" Accelerates Overall

A research report by the Prospect Research Institute shows that, in terms of the hotel industry's business conditions, 2019 has seen a double decline in the occupancy rate and average room rate of mid-range hotels. Influenced by this general environment superimposed on the epidemic factors since 2020, the report expects that the new increase in mid-range hotels will be further reduced to less than 1,000 in 2020.

The organization predicts that the operating data of mid-range hotels will also continue to decline in 2020. In particular, in terms of average room rates, the return on investment is expected to fall between 5-10 percent year-on-year, which will spill over into already heavily competitive markets such as Chengdu and Xi'an, among other cities. Not only that, but despite the fact that the domestic epidemic prevention and control situation has already achieved phased results since the beginning of the second quarter, it is expected that the hotel industry in cities such as Tianjin and Chongqing will still find it difficult to improve in the short term.

Industry analysts believe that during the epidemic, online and offline integration services have received unprecedented attention, and cloud tourism, cloud shopping, cloud entertainment has become a new megatrend. The traditional hotel management and operation mode generally exists in a single marketing method and membership management imperfections brought about by high management costs and single consumption scene, the epidemic to a certain extent forced the hotel industry to accelerate the digital transformation.

The hotel industry is gradually recovering

With the epidemic prevention and control shifting to normalization, the industry has seen a series of support in the form of voucher subsidies, tax incentives, quota cuts and loan extensions. The government's economic help policy for the hotel industry into a business downturn to bring a certain degree of favorable.

Despite the sudden outbreak of the epidemic at the beginning of the year to the hotel industry has brought a serious challenge to the overall performance of the serious decline. However, with the effective control of the domestic epidemic, tourism and hospitality industry gradually recovered, the hotel industry's vitality is also gradually recovered. In particular, the beginning of the second quarter, the hotel industry ushered in some obvious signs of rebound.

The overall number of hotels in China from 2010 to 2019 showed year-on-year growth, with a compound annual growth rate of 4%. the number of hotels in China in 2019 was 884,000, up 2% year-on-year.

From the point of view of the occupancy rate of the main domestic market, the daily occupancy rate of the Beijing market in the first week of March was mostly maintained at about 10%, and by the end of March has climbed to 21.6%; and the market of Lafontaine hotels in the region of the Beijing Ring around the Beijing Ring climbed to a comprehensive room occupancy rate of 70% in April. During the May 1st Golden Week, the room occupancy rate in the Beijing-ring region further rose to 77.76%.

The rise in hotel occupancy means the market is showing signs of recovery. On the other hand, due to the impact of the epidemic, the long suppressed travel demand has not been fully released. Industry analysts believe that, for now, hotel companies should reduce costs as much as possible according to their own operating conditions to survive the market winter.

With the change of the economic situation, consumer demand will gradually change from brand consumption, conceptual consumption, cultural consumption gradually to cost-effective consumption of rational consumption direction. The resulting impact is that, in the next few years, the concept of de-conceptualization, de-hype mode of operation will not be able to make ends meet, adhere to the lower cost, better quality of the hotel brand or will be more stable.

--For more data sources and analysis, please refer to China Hotel Industry Development Outlook and Investment Strategy Planning Analysis Report by Prospect Industry Research Institute.