China’s strict Covid-19 curbs a roadblock for growing investment in hotels sector

A record high construction of hotel rooms seen in the first quarter of this year is unlikely to continue, JLL executive says

China’s zero-Covid policy has largely decreased business activity, Knight Frank executive says

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The view from a hotel in Shanghai. Hotels in mainland China have seen revenues and occupancy decline during the pandemic. Photo: Handout

Published: 9:30am, 1 Jun 2022Updated: 9:44am, 1 Jun 2022

Hotel companies and investors were likely to reduce investments in mainland China in the coming years, despite the number of hotels currently under construction reaching a record high in the first quarter of 2022, because of the country’s Covid-19 measures, analysts said.

In the January to March period, China’s total hotel construction pipeline stood at 3,711 hotel projects and 704,101 rooms, higher by 8 per cent and 7 per cent, respectively, from a year ago, according to data provider Lodging Econometrics’ latest report.

This was despite Beijing’s strict Covid-19 containment measures, such as routine lockdowns and strict quarantine requirements for international visitors, hobbling a full recovery in the tourism sector.

“The current Covid-19 measures have exerted some impact on business and investment … The first quarter of 2022 showed a record high construction of hotel rooms in China, but it is unlikely for this trend to continue, as some of the new projects were actually planned in pre Covid-19 times,” said Tao Zhou, managing director and head of JLL hotels and hospitality in Greater China. “We are likely to see a slowdown in new developments for hotels over the next two to three years.”