In luxury hotels across China, the rooms are empty and waiters lounge beside dining tables with no customers, a result of the devastation Covid-19 has had on numerous sectors.
But many businesses are slowly returning to normal in China as travel curbs and curfew-like community lockdowns have been lifted in an effort to fire up the economy.
Yet for some upmarket hotel chains, the sight of tourists and consumers returning to attractions and malls in big cities is not very reassuring – many fear that people’s pent-up demands and even the “post-pandemic binge” may not turn out to be strong enough to throw their faltering businesses and occupancy rates a lifeline.
Their hopes of an immediate turnaround were dashed by the news that the Four Seasons chain is pulling out of Shanghai. The Canadian luxury hotel and resort chain will no longer have any foothold in the largest city of the country after closing its two properties there in May and June.
Four Seasons manages two hotels, Puxi and Pudong, on both sides of Shanghai’s Huangpu River. The decision to fold the business came after more than 18 years of feasting and revelry for the city’s cadres and business elite, when the Four Seasons became one of the first foreign luxury hospitality brands to enter the city to cater to Shanghai’s rising appetite for fine dining and plush hotel stays.
Four Seasons, however, noted in a statement that its business consolidation in China had nothing to do with the epidemic. It is understood the group would not permanently close down the Puxi hotel, known for its palatial lobby and Michelin-recommended restaurants, but would renovate it to convert half of its 420 rooms into offices. Yet its reopening date has not been decided.
Four Seasons also manages hotels in Beijing, Guangzhou, Tianjin and Shenzhen in mainland China, on top of its sprawling complexes in Hong Kong and Macau. The company stressed it remained committed to the Chinese market and would carry on with its investment plans despite the recent dip in patronage due to the contagion.
Four Seasons’ woes are hardly unique. American hotel chain Hilton is yet to resume bookings for its 150 hotels with a total of 33,000 rooms across China after it had to turn away guests in February as a precaution amid nationwide travel bans and lockdowns.
Wyndham also runs hundreds of hotels covering both the high-end and budget segments in China and also saw its overall occupancy rate plummet 75% in February at its hotels that were still open, according to the Beijing Business Daily.
Stringent entry restrictions in Beijing, Shanghai, Guangzhou and Shenzhen targeting arrivals from overseas to keep out imported cases also means any recovery for these hotels has been pushed further back. International travelers, as well as meetings, incentives, conferencing and exhibitions (MICE) events, were typically pillars of income for five-star hotels in these top tier cities.
Meanwhile, InterContinental and its local partners will also close their harborfront hotel in Hong Kong’s bustling Tsim Sha Tsui district for a “top-to-toe facelift” later this month until 2022. The hotel opened its cavernous lobby and “seascape rooms” 40 years ago for guests to gaze over the city’s skyline across the harbor.
The trophy asset located on the southern tip of the Kowloon peninsula is prized for its sweeping, unobstructed panorama of the Victoria Harbour and was usually fully-booked during its heyday. The 503-room hotel will be rebranded Regent Hong Kong after the renovation.
The InterContinental’s parent IHG sold stakes in this Asia-Pacific flagship property to local investors for a whopping HK$7.3 billion ($942 million) in 2015, or roughly HK$15 million per guest room. Yet social unrest since last June and the ongoing Covid-19 outbreak have scared away business travelers and holidaymakers, and the crippling slump in bookings throughout these months have forced owners to temporarily shut the hotel for refurbishment.
All 700 staff members other than those running a Cantonese restaurant will be laid off, according to local papers.
In a statement, the hotel said it would help its employees find work in other hotels across the city that were also owned or managed by IHG and would give laid-off staff the priority in future hiring once the hotel resumes a new look in 2022.
Also, Hong Kong’s legendary 92-year-old Peninsula Hotel has also warned of an operating loss in the first quarter, as the contagious pathogen brings global tourism and business travel to a grinding halt.
The hotel group also issued a profit warning in February as it reported zero to very few bookings at its other hotels across New York, Chicago, Paris, Tokyo, Bangkok, Beijing and Shanghai during the thick of the global health scourge.
The drop in demand is due to arrivals in Hong Kong going down to a trickle amid the coronavirus calamity: February’s figure of 199,000 was merely 4% of the same period a year ago.