Chain hotels rally together to survive pandemic blues

Chinese chain hotels bucked trends and continued to expand, while the overall hospitality industry reported a slump in 2021 due to COVID-19, according to the 2022 China Hospitality Development Report.

The report was jointly released by the China Hospitality Association, the School of Tourism Sciences at Beijing International Studies University and a Shanghai-based consultancy earlier this month. It showed that the pandemic dealt a blow to domestic hospitality in 2021 as the number of hotels declined 9.7 percent year-on-year to 252,000.

However, chain hotels maintained robust growth momentum with their total number of outlets reaching 57,000 at the end of 2021. This marked a rise of 5,000 hotels from the end of 2019 despite the effects of the pandemic, according to the CHA.

The top 50 Chinese hotel groups combined had nearly 4 million guest rooms, covering 85 percent of the domestic chain hotel market.

Among them, Shanghai-headquartered Jin Jiang International has opened more than 3,500 new hotels over the past two years. It is planning about 1,500 new openings this year.

One of the reasons behind the rise is that individual hotels are vulnerable to external risks, so joining hotel groups became an attractive choice for independent hoteliers during the pandemic, Zhang Xuyun, an industry insider, told China Business Journal newspaper.

These hospitality titans have more resources to support pandemic prevention and control, while seeking a way out of the outbreak, said Qin Yu, a professor from the School of Tourism Sciences at BISU.

Of the 13.47 million guest rooms across the country, 35 percent were owned by chain hotels in 2021, up 4 percentage points from 2020, according to the report.

More efforts need to be made to close the gap, given that the proportion stood at 60 percent in developed countries, the CHA said.

Qin said China is now the world's largest hotel market, but it still has uneven development in different regions, segments and product structure.

Four first-tier cities-Beijing, Shanghai, Guangzhou and Shenzhen-registered a chain guest room ratio of 49.58 percent. By contrast, in other urban areas except provincial capitals and those at subprovincial levels, only 29.89 percent of guest rooms belonged to hotel chains, according to the report.

Lower-tier cities offer huge potential market for hotel chain operators, Qin said.

Domestic hospitality can get a vital upgrade if they absorb more independent hoteliers in small cities and implement localization strategies, the professor added.

As the latest COVID-19 outbreaks have been controlled in most regions of the country, the central government loosened restrictions on cross-provincial tourism at the end of May.

Previously, travel agencies were required to suspend cross-provincial tourism services when the departure or destination provinces had locations with a medium or high infection risk. Now the restrictions have been narrowed to counties and districts.

Xie Xiaoqing, a senior researcher at a research institute affiliated with online travel agency Ctrip, said the policy gave a boost to the recovery of domestic tourism.

The tourism market is accelerating its recovery with the summer holiday approaching and it will drive a rapid rebound in the hospitality sector, Xie said.