HOTELS ’ InvESTmEnT OuTLOOk
HOTELS ’ InvESTmEnT OuTLOOk
China ’ s brisk COViD respOnse
The country recorded only three months of negative GOPPAR , getting back to positivity by May . aids rebound
The origin of COVID-19 may very well have been China , but the country has also done the best to contain it , a boon for the profitability of its hotel industry .
According to HotStats data , China plumbed the depths of the pandemic worse than most but rose from its February nadir better than all , as evidenced by its V-shaped recovery in gross operating profit per available room ( GOPPAR ). In fact , in August , China climbed closer to prior-year profit levels and was almost in line with pre-crisis levels . Its US $ 37.19 GOPPAR , while 14 % down versus the same time last year , was essentially the same as December 2019 , at US $ 37.50 .
That is cause for celebration : December was the last normal month before the coronavirus spread . January saw a 46.8 % YOY decline in GOPPAR , followed by a February that was noteworthy for a negative GOPPAR of ( US $ 28.29 ). Moreover , while many regions continue to register negative months of GOPPAR , China only recorded three months of such GOPPAR , getting back to positivity by May .
The propitious profit data is especially sweet for the region ’ s hotel owners , who had seen P & L statements hollow out . The rest of the world would do well to duplicate China ’ s success . China ’ s containment of the virus certainly did much to ameliorate its hotel industry .
The World Health Organization praised China ’ s health workers and people “ who worked together tirelessly to bring the disease to this very low level .” As of October 13 , and according to the Johns Hopkins Coronavirus Resource Center , China had 90,838 confirmed cases of COVID-19 and 4,739 deaths . Compare that to the U . S ., which at the same point had 7,825,329 confirmed cases and 215,439 deaths . Meanwhile , the U . K ., with a population 20 times smaller than China , has seen five times as many cases of COVID-19 and almost 10 times as many deaths .
Though no study exists that links the reduction of a region ’ s COVID-19 case load to its improvement in hotel metrics , there is little to suggest that isn ’ t the case . “ The speed of China ’ s response was the crucial factor ,” said Gregory Poland , director of the Vaccine Research Group at the Mayo Clinic . “ They moved very quickly to stop transmission . Other countries , even though they had much longer to prepare for the arrival of the virus , delayed their response and that meant they lost control .”
As China ’ s overall profit improvement continues , the U . S . remains stuck .
Though it has seen marginal gains , they are nowhere near China ’ s pace . The U . S . recorded six consecutive months of negative GOPPAR through August , settling in at ( US $ 6.81 ) in the month , which , after showing progress from June to July , was a 21.8 % decrease over July .
In Europe , the numbers are trending upward . The region went negative in GOPPAR in March and stayed there until August , when it popped back into positive territory at US $ 6.39 , a number that is still down 90 % YOY .
Therein lies the rub . Measuring the performance of the hotel industry has been reduced to month-over-month comparison , rather than the traditional yearover-year . Human psyche , which helps us navigate through life , will be the driver of the hotel industry ’ s recovery . Conventions and conferences , leisure and corporate travel — they will bounce back heartily once the pandemic subsides , either via vaccine or vigorous dissipation .
Hotel investment , typically , is a long-term pursuit . The hotel industry ’ s fundamentals , absent tumult , have characteristically been strong ; it ’ s now about waiting the pandemic out .
Contributed by David Eisen , director of Hotel Intelligence , Americas , HotStats
In August , China climbed closer to prior-year profit levels and almost in line with pre-crisis levels . Its uS $ 37.19 GOPPAR , while 14 % down versus the same time last year , was essentially the same as December 2019 , at uS $ 37.50 .
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November / December 2020 • HOTELS ’ Investment Outlook • www . hotelsmag . com