Spooked by coronavirus, political tension, seven hotels in Shanghai, and Hong Kong likely to delay scheduled opening dates

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/property/hong-kong-china/article/3086653/spooked-coronavirus-political-tension-seven-hotels?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3086653 | June 2, 2020 2:54 PM SGT
At least seven hotels in Shanghai and Hong Kong are expected to delay their scheduled opening dates this year due to the collapse in tourism amid the coronavirus pandemic. And the casualty list could grow even longer.
A new report by property consultancy Knight Frank said five Shanghai hotels are likely to delay opening, including the Westbund Hotel Shanghai, with 219 rooms, the Xuhui Binjiang, the J Hotel, with 258 rooms, and the Ritz-Carlton Hongqiao, with 282 rooms.
That's on top of two hotels in Hong Kong that recently announced they will delay their openings: CK Asset Holdings has deferred the opening of its 840-room Hotel Alexandra in Fortress Hill to an unspecified date, while a consortium of Hong Kong's biggest developers has pushed back the 206-room The Silveri Hong Kong MGallery in Tung Chung by at least six months.
The hotels in the two cities represent a combined 2,246 rooms.
Others are at risk, too. A total of 27 hotels are scheduled to open across Greater China in 2020, which would add 9,608 rooms.
"Some of the hotels will delay openings if they have scheduled to commence by the first half of the year, while others might do soft opening to test the market," said Martin Wong, Greater China research and consultancy associate director at Knight Frank.
That is especially true in Hong Kong, he said. In addition to the virus, it faces a resurgence in social unrest after Beijing's move to impose a national security law on the city. Seven hotels with 2,300 rooms are scheduled to open in the city this year.
The hotel industry's woes in the region began in 2019, with a slowing economy brought on by the protracted US-China trade war that weakened consumer discretionary spending. In addition, protests in Hong Kong deterred mainland tourists from visiting the city.
"The weak growth trajectory of the hotel industry was further dragged down by the Covid-19 outbreak and this is expected to continue in the first half of 2020," Knight Frank's "Greater China Hotel Report" said.
However, a recovery is likely to take hold beginning in the third quarter of the year, it said.
But Hong Kong's hotel industry is likely to lag in enjoying the recovery. It continues to be roiled by a political crisis that could get much worse as Beijing seeks a tighter grip over the semi-autonomous city " a scenario that is unacceptable to many Hong Kong protesters who have taken to the streets.
"In Hong Kong, almost all [hotels] will delay opening, as hoteliers are fighting against the structural change of visitors' arrivals, social unrest and Covid-19," Wong said.
Overnight visitors in Hong Kong fell 18 per cent to 23.8 million in 2019, according to the city's Tourism Board, while occupancy in premium hotels declined 7 percentage points to 74 per cent and the average daily rate dropped 8 per cent to HK$1,982 (US$256).
Hotels in mainland cities are expected recover more quickly because they have more domestic than international visitors.
Colliers, in a separate report, said the coronavirus pandemic's impact on the hotel industry in Asia-Pacific has been more severe than that caused by the 2003 SARS outbreak.
Hotels in China, Hong Kong, and Taiwan "have been severely affected by Covid-19, with occupancy rates in China dropping to as low as 7 per cent in February," the report said.
"For Hong Kong, the city has a challenging start to 2020 following the ongoing socio-political unrest and the decline in the hotel (revenue per available room) was extended into February 2020 and again in March 2020," the report said.
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