What could the return of China mean for your hotel program?

by Anu Kuchibhotla

Hotel Practice Line Global Lead, Global Business Consulting

After almost three years of severe restrictions, China has removed the quarantine period for international travelers and made outbound travel easier for Chinese citizens.

How might it affect your travel program – and what can you do to manage the impact?

Welcome back

As Chinese demand returns, are we about to see a massive wave of revenge travel from the world’s biggest spenders on international travel and tourism? ??

Probably not. Initially, the return could be more trickle than torrent; health restrictions on inbound visitors from China – announced across North America and Europe - will likely dampen demand. Chinese travelers may also face difficulties or delays in obtaining visas where embassies are not yet open.

That said, even a relatively small return of Chinese demand could further boost hotel prices in destinations already anticipating price rises this year. Amex GBT’s Hotel Prices 2023 forecasts rate increases ranging from 5.5% in Bangalore and 6.2% in London to 7.3% in San Francisco, 8.2% in New York, and 10.0% in Paris. As we saw from the return of travel in 2022, supply tends to lag returning demand, reducing availability and allowing hotels to raise their rates. ?As for the size of any rate rises, it’s not sensible to make forecasts; we just can’t predict how fast Chinese visitors will return.

Your program, your travelers

The easing of health restrictions should make it easier for international business travelers to return to China.?But don't expect it to be cheap getting there. While China’s domestic airline capacity is recovering fast (it’s now at 126% of 2019 capacity) international capacity recovery will be slow, barely in excess of ten per cent for the first half of the year. If your travelers need to fly to China, options are could be limited and fares high; this situation is unlikely to improve soon.

However, once in China your travelers should find plenty of accommodation choices. The country can offer a significant number of available hotel rooms, particularly in the higher tier properties used by international travelers.?Around a quarter of the inventory in these categories was in use in November 2022 in key cities like Beijing and Shanghai.?This bank of spare supply will reduce hotels’ ability to raise prices.

Mitigating the impacts

While your travelers should not face difficulty securing hotels in China, the return of Chinese demand to global destinations could see room rates – already on the rise – further increase. To maintain your hotel program, we advise:

• Focus on ongoing program management; consider carrying out additional audits that allow you to take stock of moving prices.
• Track your booked rates – the actual amount that travelers are spending to secure their accommodation; don’t just rely on negotiated rates data.
• Insist your travelers use the travel management company (TMC) booking channel; your TMC can track data and has visibility on booked rates.?Make use of the entire TMC toolkit including TMC rates, TMC s content, and reshopping tools.

As ever, with a proactive flexible approach – utilizing all the tools at your disposal – you can continue to secure the accommodation you need at the most competitive price.

Read more from Anu on the Great Reopening of China and what it means for your travel program in Business Travel News Europe.