Skift Take

Countries beyond China in the Asia Pacific region are moving ahead with reopening plans in the coming months. The test is how long can China's "zero-Covid" policy last when the rest of the world is accepting it just has to live with coronavirus.

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, Feb. 6

Virgin Hotels announced its historic expansion into the United Kingdom this spring with Virgin Hotels Edinburgh, followed by Virgin Hotels Glasgow. The portfolio continues to grow stateside, with the opening of Virgin Hotels New York scheduled for late summer of 2022. Virgin Hotels Edinburgh, the first of Virgin’s Scottish hotels to open, will be in the landmark India Buildings. The hotel will feature 240 Chambers and Grand Chamber Suites and various restaurant and bar venues, including Virgin Hotels’ signature Funny Library Coffee Shop. Virgin Hotels Glasgow will open in late spring as the brand’s second Scottish hotel featuring 240 Chambers and Grand Chamber Suites and various restaurant and bar venues, including their signature Funny Library Coffee Shop. Virgin Hotels New York will include 463 Chambers and several concept suites, a rooftop pool and bar, numerous dining spaces, two floors of luxury retailers and the hotel’s signature venues, Commons Club Funny Library Coffee Shop and The Pool Club. 

Skift Note: After stalled growth over the years, Virgin Hotels appears to finally be gaining some momentum with several openings slated for this year. 

Monday, Feb. 7

There are conflicting stories/issues regarding Covid and borders in Asia. The headlines screamed about how Australia is set to reopen to the fully vaccinated as of February 21st. Vietnam said they are speeding forward with their plans to reopen to vaccinated international tourists on March 31st. Then there was the Associated Press story on how many Asian countries are facing a spike in Covid-19 infections following the Lunar New Year holiday celebrations. Hong Kong, which is still trying (unsuccessfully) for China’s Zero Covid Policy, now has a new high of 614 local infections. Cases tripled in Singapore on Friday to 13,000, but then dipped to 7,752 by Sunday. Singapore has reported over 100,000 cases the last month. Japan reported nearly 90,000 new cases on Sunday. Indonesia reported 36,057 cases on Sunday. South Korea is expecting a peak of daily jumps of 130,000 to 170,000 by late February. How do you reopen the borders with this? You reopen the borders to those that statistics and percentages say will only have mild cases. It would probably be easier to just stop testing at this point.

Skift Note: Omicron surges in the Asia Pacific region are throwing more uncertainty on the area’s reopening confusion.

Tuesday, Feb. 8

The total for visitor arrivals for the entire Golden Week Lunar New Year holiday in Macau was only 113,699, less than what the average daily visitor count was to Macau during the Holiday Week in 2019 (172,857). The result is -90% lower than what was registered in 2019. The Macau Hotel Association issued a statement saying booking numbers were higher than last year but the CNY period was disappointing for the sector as room rates were lower than usual for the period.

Skift Note: The Lunar New Year holiday did not deliver a performance recovery to China’s go-to gaming destination. Given the zero-tolerance policy on new cases in Mainland China, is this really shocking to anyone?

Wednesday, Feb. 9

Hong Kong unveiled their toughest pandemic measures to date, including restrictions on private gatherings at homes, higher fines for rule-breakers, and a ban on unvaccinated people entering supermarkets, malls, and other places. The vaccine pass arrangement is supposed to go into effect on February 24th and will now cover more venues than they originally planned. Restaurants, gyms and beauty parlors were part of the original plan, but now only vaccinated people can go to shopping malls, supermarkets, department stores, markets, hair salons and religious venues. Chief Executive Carrie Lam did not mince words, saying they are going to make it inconvenient for the unjabbed. Religious venues and hair salons will have to close from Thursday until February 24th.

The average occupancy rate of Macau’s hotels rose 15.2% year on year to 63.8% during Chinese New Year but average room rate was way down with travel restrictions blamed. The Macao Government Tourism Office said the average occupancy rate of five-star hotels reached 70.3% during the 7 day Lunar New Year holiday period, up 19.3 percentage points from CNY week in 2021. Four-star hotels’ occupancy rate was 53.5%, up 3.6 percentage points while three-star hotels grew 14 percentage points to 59.2%. Two-star hotels were up by 9.2 percentage points to 31.6%. The average occupancy rate of apartment hotels was 60%, down -6.8 percentage points. Economical accommodation establishments average occupancy rate was up by 13.1 percentage points to 44.1%. Average room rate overall fell by -11.8% year on year during CNY to MOP1,096. Five- and Four-star hotels saw their room rates sink by -18.4% and -12.4% respectively. Three- and Two-star hotels were down by -19.5% and -8.5% respectively.

The travel restrictions did not seem to impact nearby China southern island Hainan, reporting robust tourism during the seven-day holiday. The province handled more than 5.4 million domestic tourist trips during the holiday, generating 7.53 billion yuan. The provincial tourism authority said duty free shops drove the interest but homestay and other accommodation providers near the Hainan Tropical Rainforest National Park reported solid business. The rural scenic spots around the island received about 540,000 tourists during the holiday. Overall, the average occupancy rate of hotels in Hainan reached 72%, up 16.5 percentage points compared to last year.

Skift Note: Hong Kong and two top tourist destinations for China sent very mixed signals during the Lunar New Year holiday and beyond. But it is especially bad news for Hong Kong, which — amid political protests — grappled for tourism even before the pandemic.

Thursday, Feb. 10

Truist gave their lodging earnings preview, saying for 4Q21, they are not expecting material outperformance nor underperformance and on the margin, they expect most companies to post modest earnings beats. They believe the real takeaway this earnings season will likely be that consensus numbers for 1Q22 will come down for most companies. Truist said rather than the 4Q numbers, they will be more focused on management commentary on the impact of Omicron on hotel bookings and speculation on the trajectory of the business travel, international, and group recovery and the sustainability of domestic leisure travel; net unit growth outlooks for C-Corps; labor cost impact for hotel owners/REITs and action in 4Q on return of capital by those that have not already resumed and commentary on timing for those who have not. Truist is not expecting RevPAR and earnings guidances, other than perhaps from Choice Hotels and Wyndham.

Skift Note: Hotel earnings season picks up next week, and major companies are likely to focus on just putting Omicron in the rearview mirror. Once again: It’s better to be Choice Hotels and Wyndham heading into this reporting season rather than a company with a lot of focus on business travel.

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Tags: coronavirus, coronavirus recovery, daily lodging report, hotels, virgin hotels

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