China’s aviation and hospitality sectors have suffered a sharp drop in demand amid a return of Covid-19 restrictions after leading the world’s pandemic recovery for more than a year.
Hospitality data analyst STR reported a plunge in occupancy rates in China’s hotels in early August and airline association Iata noted a contraction in air travel.
Domestic aviation demand in China returned close to 2019 levels by early this year and then surpassed the previous peak despite China’s international borders remaining closed.
The country’s hotel sector similarly recorded occupancy rates close to 2019’s in a market overwhelmingly dependent on domestic demand.
But STR reported average occupancy rates across mainland China in early August fell from 70% to 40% within a fortnight amid new virus outbreaks. Revenue per available room (RevPAR), the standard hospitality industry measure, fell to half the 2019 level.
At the same time, Iata reported China’s domestic market “returned to contraction” in its latest analysis of global markets despite the fact that China “continues to lead” the global economic recovery alongside the US.
Iata noted China recorded an 11% fall in domestic traffic in June as restrictions were reintroduced in several cities.
The association’s latest business confidence survey saw Asia-Pacific displaced by North America as the region expected to lead the next phase of recovery.
Aviation analyst OAG reported China’s airline capacity was slashed by a third in a single week at the end of July.
Looking to the winter, OAG chief analyst John Grant said: “Many of the data points suggest capacity won’t be much better than last winter.”
In a sign of the extent of the collapse, Macao international airport reported 60% of all scheduled flights were cancelled in the first nine days of August.
Chinese online travel giant Trip.com, which owns Skyscanner, is reported to be seeking up to $1.5 billion in new financing to withstand the latest downturn.