Hotels brace for pain of worsening US-China trade war as consumers likely to cut non-essential spending

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/business/article/3014096/hotels-brace-pain-worsening-us-china-trade-war-pain-consumers-likely-cut?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | June 18, 2019 1:52 PM SGT
Hotel occupancy rates and ­revenues in Asia-Pacific fell in the first quarter as the worsening ­US-China trade war dented consumer confidence, according to a report by property agency Colliers International.
Revenue per available room, a key measure of hotel performance, dropped 7.2 per cent year on year in the first three months while overall occupancy rates ­decreased to 67.4 per cent, the report found.
"It is evident that the recent ­escalation in the trade dispute and the political impasse between the US and China is starting to weigh on business and consumer confidence, thereby tempering demand growth," said Govinda Singh, executive director for ­valuation and advisory in Asia at ­Colliers and the report's ­author.
The figures show the impact on consumer discretionary spending of a worsening economic outlook brought about by the increasingly bitter trade war.
"I wouldn't say [the hotel ­segment] is the most vulnerable, but it's certainly on the frontline shall we say of the impact [of the trade war] as [spending on hotels is] discretionary, but there's going to be a lag effect so if things really go south, then you won't probably see that filtering through until next year," Singh said.
Colliers is expecting 3 to 4 per cent growth in revenues for hotels in the region this year, but any further escalation of the trade dispute could see no growth or even a ­decline of between 2 and 3 per cent.
"When we did that forecast, I factored in the scenario that the trade war will perhaps not be as bad as it is getting," Singh said.
"But if it gets worse, and ­certainly it seems likely to get worse before it gets better, then of course that's going to have a ­negative impact."
He added that hotel demand was driven by business and consumer confidence, so any impact on that would feed through to the hotel business as a whole.
The overall performance of Asian hotels was dragged down by the more...