Investment

China’s Strict Covid Policies Likely to Deter Future Hotel Investment

Skift Take

Even if more Chinese cities follow the recent lead of Beijing and Shanghai in easing Covid restrictions, major hotel companies will still tread cautiously regarding future development in the country. Especially since widespread lockdowns could occur again if Covid cases surge.

Here are some excerpts from the Daily Lodging Report during the past week. If you’re not a subscriber, you should be. Sign up now, here.

Sunday, May 29

The Grand Hyatt Convention Center hotel in Miami Beach, FL is set to begin site work with an estimated completion date of 2025. The hotel will include 800 guestrooms including 48 suites, 90,000 square feet of indoor meeting space plus 10,000 square feet of outdoor space, 5 food and beverage outlets, 2 pools, a gym, club lounge and 320 parking spaces. Terra and Turnberry are the project developers.

Skift Note: Hyatt executives have been bullish on the prospect of group business travel making a significant recovery.

Monday, May 30

Hilton announced the signing of an agreement with CKR Resorts Private Limited to launch Hilton’s flagship brand in Hyderabad. The Hilton Hyderabad Resort & Spa is spread across 15 acres, situated in Shamirpet, Hyderabad near Genome Valley. The resort has 115 rooms and 13 villas with private plunge pools. The resort will offer various indoor and outdoor options for guests to host corporate events, meetings, social events and weddings. The resort is equipped with a fitness center and spa as well as multiple specialized dining outlets and a bar. Hilton currently operates 24 hotels in India, seven of which are Hilton Hotels & Resorts.

Skift Note: Hilton joins Radisson and the Pride Group of Hotels as major hotel companies that have announced expansion plans in the world’s second most populous country.

Tuesday, May 31

The Business Times reported that hoteliers in Singapore believe Staycations will remain popular, even as Singapore has international arrivals again. That being said, the people and companies being interviewed for the article painted a mixed picture. JLL said that industry trends have been normalizing, pushing down staycation demand as more locals travel but the recovery in international arrivals remains slow, on the back of limited airline capacities and the high premiums on ticket prices. JLL said local demand is still present and benefits certain hotels that can better cater to the leisure market. The managing director for Swissotel The Stamford and Fairmont Singapore hotels said they are still seeing good demand for daycations as well as staycations. The GM of Conrad Centennial Singapore said their hotel is specifically targeting business travelers in the Marina Bay area and a senior tourism lecturer for Ngee Ann Polytechnic said more hotels are moving away from staycation packages and gearing themselves up for the increase in international arrivals. While the reopening of the borders is changing the mix for all the hotels in Singapore, without the Chinese traveler, all hotels in Asia are going to have to keep all options open to fill their rooms.

Skift Note: Singapore is among the Southeast Asian nations that has taken steps to treat Covid as an endemic virus.

At $292 billion, investment reached its highest first-quarter level on record in the first three months of 2022, according to JLL data. Offices, hotels and retail all saw quarterly investment figures rise year on year. Some of the positive sentiment has come from a relative return to normalcy. After years of severe lockdowns, employees and companies have been eager to get back to the office amid the rise of hybrid working. Such confidence saw a boost in office investment along with retail and hotel sectors. Hotel investment reached $16 billion, up 127% from the year earlier.

Skift Note: The increased investment comes as corporate travel continues to make significant progress in its rebound.

Wednesday, June 1

The South China Morning Post said the Zero-Covid policy has resulted in hotel companies and investors likely reducing investments in the mainland in the coming years. Analysts said this was due to the country’s Covid measures. These comments were made even as the number of hotels currently under construction reached a record high in the first quarter. JLL told the SCMP that this trend is not likely to continue as many of these new projects were planned pre-Covid. They expect a slowdown in new developments for hotels over the next two to three years. This also follows Airbnb confirming they were pulling out of China. Knight Frank said China’s Zero-Covid policy has largely decreased business activities and if the lockdown continues in Shanghai or extends to other cities, hotel investment in China will be quiet and the market will see low transaction volumes.

Skift Note: China’s strict Covid policies are preventing major hotel companies from making a full recovery.

Selina announced the opening of Selina Union Market in Washington, D.C.’s Union Market neighborhood. The hotel, the seventh for Selina in the U.S., expands Selina’s global portfolio to over 155 open and secured properties. Selina Union Market houses 106 rooms, multiple open floor co-working spaces and private meeting rooms, a restaurant, four rentable artist studios, a cinema room, a common kitchen, onsite wellness studio, a downstairs cellar, and an expansive rooftop. 

Skift Note: The Selina Union Market features plenty of space for work and place — fitting because the company’s CEO and co-founder Rafael Museri said the future of hospitality combines remote work, leisure and friendship.

Thursday, June 2

According to Lodging Econometrics’ Construction Pipeline Trend Report for the Middle East, at the end of 2022’s first quarter, the region’s hotel construction pipeline stands at 536 projects/138,915 rooms. At Q1 ‘22, projects currently under construction stand at 331 projects/19,421 rooms. Projects scheduled to start construction in the next 12 months are at 78 projects/22,041 rooms. Projects in the early planning stage are at 127 projects/25,453 rooms. Countries with the greatest number of projects in the construction pipeline at the end of Q1 are Saudi Arabia with 208 projects/59,290 rooms, the United Arab Emirates with 121 projects/2,999 rooms, Egypt with 69 projects/16,412 rooms, Qatar with 61 projects/14,835 rooms, and Oman with 30 projects/6,195 rooms. Dubai continues to lead the construction pipeline in the UAE with 84 projects/24,306 rooms. According to LE analysts, at Q1 ‘22, the cities in the Middle East with the largest hotel construction pipeline are the Provincial region with 71 projects/14,848 rooms; Riyadh with 60 projects/12,080 rooms; Doha, Qatar with 51 projects/12,395 rooms; Jeddah with 42 projects/8,758 rooms; and Makkah with 35 projects/23,604 rooms. 48% of the projects in the pipeline in the Middle East belong to three leading franchise companies at the end of the first quarter. Hilton Worldwide with 96 projects/25,216 rooms, Accor with 87 projects/23,583 rooms, and Marriott International with 76 projects/22,098 rooms. The leading brands in the pipeline for these companies are Hilton’s Doubletree by Hilton brand with 26 projects/5,885 rooms and its Hilton Hotel & Resort brand with 21 projects/7,096 rooms. Accor’s top brands with the greatest number of projects in the construction pipeline at Q1 are the Novotel band with 12 projects/3,664 rooms and the Movenpick brand with 12 projects/2,811 rooms. Marriott top brands in the pipeline are Courtyard by Marriott with 14 projects/3,219 rooms and the Residence Inn brand with 8 projects/1,090 rooms. During the first quarter, the Middle East opened 19 new hotels accounting for 4,193 rooms. LE is forecasting a total of 103 hotel projects/24,723 rooms to open in 2022; and another 114 new hotel projects accounting for 27,306 rooms to open in 2023.

Skift Note: Soccer’s World Cup, which will take place in November and December, has driven Qatar’s hotel construction boom. But the country doesn’t have enough rooms to accommodate tourists without World Cup tickets.

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