Skift Take

Just as China was beginning to show signs of strong momentum for hotels heading into the Lunar New Year, another report came out showing Omicron is too much of a headwind for hotels to overcome.

Series: Daily Lodging Report

Daily Lodging Report

Skift’s Daily Lodging Report is a subscription-required, email-only newsletter read by anyone and everyone in the hotel investor, owner, and operator space, including CEOs of some of the industry’s top brands. It covers North America and Asia Pacific with two separate regional editions.

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Here’s a sampling of what the Daily Lodging Report provided to its readers this past week. If you’re not a subscriber, you should be. Don’t wait. Sign up now here.

Sunday, Jan. 30

According to the Lodging Econometrics Q4’21 United States Construction Pipeline Trend Report, the franchise companies with the largest U.S. construction pipeline at year-end 2021 are Marriott International with 1,345 projects/170,586 rooms, followed by Hilton Worldwide with 1,239 projects/141,053 rooms and InterContinental Hotels Group with 761 projects/76,987 rooms. At the end of Q4’21, 689 projects/76,058 rooms are in the early planning stage of Hilton’s projects. Hilton has 228 projects/29,036 under construction at Q4 and 322 projects/35,959 rooms scheduled to start within the next 12 months. Marriott has 534 projects/63,120 rooms in early planning at the end of the fourth quarter, 262 projects/38,289 rooms under construction at the end of Q4 and 549 projects/69,177 rooms are scheduled to start in the next 12 months, IHG currently has 121 projects/11,375 rooms in the early planning stage, 136 projects/16,221 rooms in the under construction stage and 504 projects/49,390 rooms are scheduled to start within the next 12 months. The leading brands by project count for the top three franchise companies continue to be Hilton’s Home2 Suites by Hilton with 421 proejcts/43,824 rooms, IHG’s Holiday Inn Express with 288 projects/27,620 rooms, and Marriott’s Fairfield Inn with 247 projects/23,344 rooms. Other notable brands in the pipeline for the top franchise companies at Q4 are Marriott’s TownePlace Suites with 239 proejcts/22,759 rooms and Residence Inn with 212 projects/25,896 rooms; Hilton’s Tru by Hilton brand with 222 projects/21,222 rooms and the Hampton by Hilton brand with 267 projects/27,577 rooms; and IHG’s Avid Hotel with 148 projects/12,885 rooms and Staybridge Suites with 124 projects/12,734 rooms. Through year-end 2021, Marriott Hilton and IHG branded hotels represented 585 new hotel openings with 73,415 rooms. 201 of the hotels were Hilton brands, 267 were Marriott brands and 117 were IHG brands. The LE forecast for new hotel openings in 2022 anticipates that Marriott will open 207 projects/27,258 rooms; Hilton with 165 projects/18,764 rooms; and IHG with 115 projects/12,397 rooms. In 2023, Marriott is expected to open another 211 projects/25,056 rooms, Hilton will open 173 projects/21,450 rooms, and IHG with 148 projects/15,146 rooms.

Skift Note: The “Big 3” of U.S. hotels are likely to remain the Big 3 for the foreseeable future.

Monday, Jan. 31

A good section of the Asia Pacific region is in the process of relaxing border and travel restrictions, many targeting February 1st. Indian public hotel companies surged in trading today on the expectations of healthier earnings going forward as higher vaccination and lower hospitalization rates are expected to lead to a much stronger rebound than in the second wave. This optimism is beginning to spread across the AP region.

A total of 260 million passenger trips were made during the first 10 days of China’s Spring Festival, 46% higher than the same period in 2021, according to the Ministry of Transport. As of this past Wednesday, the number of railway and road trips reached 54.12 million and 196 million, respectively, while waterway and air passenger trips hit 3.88 million and 8.72 million. The peak was expected to hit yesterday, January 30th with return trips likely to peak during February 5 to 8 and February 16 to 17.

Authorities in Zhuhai, China announced the lifting of lockdown and control measures for the entire Nanping area ahead of the coming Chinese New Year holiday. Nanping Town is just a 20-minute drive from Hengqin Port and has around 100,000 residents, many who work or study in Macau. They have been locked down since January 14th when 10 positive cases of Covid-19 were detected but now removed the lockdown as there have been no positive cases since January 23.

Skift Note: A trio of good news from the Asia Pacific region, particularly in China, stirs optimism around the potential for better hotel performance this month.

Tuesday, Feb. 1

According to HNR Hotel News’ American Travel Trends & Sentiment – Week of January 31st survey of 1,200 American travelers shows that travel sentiment has recovered from Omicron and some areas even soared to levels not seen since the Summer 2021 vaccine rollout-high. American travelers optimistic about the course of the pandemic over the next month climbed over 11 points in the last two weeks, reaching 41.9%. Even the feeling that COVID will be with us for the long-term dropped 5 points in the last two weeks, from 69.4% to 64/6%, and Americans feeling an increasing sense of normalcy, up 3 points to 36.9%. In addition, a growing number of Americans admit they often feel that life should go back to normal despite the pandemic, 63.1% vs. 60.3% two weeks ago. This week, 81.5% are in a ready-to-travel state-of-mind, up over 5 points in the last two weeks and, more importantly, among the highest levels it has ever been in the pandemic era. Nearly 77% of American Travelers report high levels of excitement to travel in the next 12 months. More than ¾ have dreamt and planned travel in the last week alone, a rate not seen since Summer 2021. 92.1% of American travelers will take at least one trip in the next 12 months. In terms of the pandemic’s cloud, while 44.3% still feel COVID is impacting their ability to have meaningful travel experiences and 23.8% remain expectant that their travel plans will be impacted by the virus in the next 6 months, these sentiments are both on a continued decline. 

Skift Note: Omicron is likely to be a speed bump in the hotel recovery, especially in the U.S.

Wednesday, Feb. 2

The South China Morning Post said Chinese hoteliers’ hopes that Lunar New Year would turn things around have been dashed. They quoted JLL as saying it remains to be seen whether hotels will even be able to report a year on year rise during the holiday week. In other words, no chance to even get close to CNY 2019 or even 2020 when the celebrations were cut short by the realization this was just not an everyday flu. Trip.com said bookings for hotel rooms during the holidays are a far cry from business during Lunar New Year 2019. It was three months ago when hotels began planning for what they were expecting to be a major jackpot, this Golden Week. This was despite what should have been concerns that Beijing would clamp down on things with the Olympics coinciding with the week. Then Omicron surfaced and the fat lady began singing. Trip.com reported massive cancellations for the seven-day period. There were 415 million Chinese taking a trip in the 2019 holiday week. Last year there were 256 million. Hotels wound up cutting prices just to try to attract locals to try to offset lockdowns and just a sense that the government really doesn’t want people traveling right now. JLL said hotels and resorts located in major cities, or in regions within a two-hour drive of these cities may still salvage a good holiday week, predicting the possibility of 90% occupancy for some.

Skift Note: Perhaps we spoke too soon about good news out of China for hotel performance this month.

Thursday, Feb. 3

Truist held a conference call with CoStar, discussing their STR unit’s updated lodging forecast and recent trends. STR is looking for 19.4% year over year RevPAR growth in 2022 and 7% growth in 2023 for now. Despite the headline growth numbers, net of inflation, real ADR and RevPAR are forecasted to remain below 2019 levels through the end of the forecast period of 2025. Real ADR and real RevPAR recovery versus 2019 are not projected to take place until after 2025. CoStar commented on how different this recovery is as usually it is room demand recovers and then ADR but this time it has been the other way around.

Skift Note: Higher rates are fueling impressive recovery numbers for the hotel sector, but this is still a slow and steady race to a full rebound.

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Tags: daily lodging report, hilton, hotels, ihg, marriott