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U.S.-China trade tensions and political unrest in Hong Kong affected hotel companies in the third quarter, with Hilton, InterContinental Hotels Group (IHG) and Accor all reporting declines in Asia.
In a call with investors on Wednesday, Hilton CEO Christopher Nassetta said that third-quarter revenue per available room (RevPAR) decreased 2.7% in its Asia-Pacific region, weighed down by a 5.6% RevPAR drop in China. In Hong Kong, Hilton reported a RevPAR decline of 40%.
“Hong Kong obviously had a tough quarter,” said Nassetta. “[For the year], we think greater China will be down low single digits, [let’s] call it 3%. Mainland China we think will be flat to down a point and Hong Kong down 23% to 25%.”
Systemwide, Hilton’s RevPAR growth was relatively stagnant in the quarter, up just 0.4%.
For IHG, Asia was similarly sluggish, with the company reporting a third-quarter RevPAR decrease of 2% in mainland China, due in part to lower corporate and meetings business, as well as a 36% RevPAR drop in Hong Kong.
The company’s RevPAR in greater China slipped 6.1% for the quarter, while IHG’s systemwide RevPAR fell 0.8%.
Accor was heavily impacted by the same headwinds, reporting an Asia-Pacific RevPAR decrease of 1.1% in the third quarter, with greater China posting a RevPAR decline of 6.7%.
“Asia-Pacific is [unpredictable], because who can predict how the trade war between two major nations of the world can go, especially with the very strong personalities and political implications of those discussions,” said Accor deputy CEO Jean-Jacques Morin during an investor call. “And my assumption was that it would slightly improve with time, but the story is different. Things have deteriorated. And on top of that, you have Hong Kong.”
Accor has six properties in Hong Kong.
China’s downtrend also had a disproportionate impact on Accor’s luxury portfolio, with Morin estimating that the Chinese market accounts for around 40% of Accor’s luxury room inventory in its Asia-Pacific region. Accor’s luxury segment — which includes the Raffles, Fairmont and Sofitel brands, among others — saw RevPAR fall 0.4% globally in the quarter.
Systemwide, Accor’s third-quarter RevPAR was down 0.7%.
Meanwhile, Morin’s somewhat pessimistic outlook was echoed by Hilton’s Nassetta, who said concerns about Asia, combined with other macroeconomic and geopolitical issues across the globe, are “creating a level of uncertainty” within the hospitality sector.
“In this kind of environment, there are caution flags out,” said Nassetta. “I think everybody’s reading the papers, watching what’s going on with Brexit, what’s going on with the trade wars, not only in the U.S. and China, but Korea and Japan, looking at broader economic issues, an election year coming up in the U.S. and an impeachment process going on. There are a lot of uncertainties in the world and markets don’t like uncertainties.”
Source: travelweekly.com