Omicron setback in China no deterrent to hotel developers
China’s domestic hotel performance plummeted amid an Omicron surge gripping major cities on the mainland as well as Hong Kong. But you wouldn’t know that given the interest in developing the area from big companies like IHG.
Here’s a sampling of what the Daily Lodging Report provided its readers with last week. If you’re not a subscriber, you should be. Do not wait. Register now here.
Sunday March 13
Mandarin Oriental Hotel Group launched a branded collection of the world’s finest private villas and mansions in sought-after locations, while delivering exceptional service and experiences. Mandarin Oriental Exclusive Homes is launched in partnership with Stay One. Specific benefits of a Mandarin Oriental Exclusive Home include: exceptional and exclusive homes, dedicated personal concierge service, private on-demand dining experiences, luxurious housekeeping, family experiences, health and safety standards standards, luxurious amenities and exclusive benefits for Mandarin. Oriental regular customers. Mandarin Oriental Exclusive Homes’ initial collection includes the following: In Ibiza, Tagomago Private Island, The Palms, San Jose and Villa Lagarto, Jesus. In the south of France, Villa Oxygen, Grimaud, and La Maison vue de Saint Jean, Ese-Mer. In Mallorca, Villa Puesta del Sol, Port d’Andratz and Ca’n Miquelet, Deia. In the UK, the Cirencester Estate, Cotswolds.
Skift Note: A branded home rental offering that meets the brand standards of a genuine Mandarin Oriental hotel is a significant competitive advantage over other hotel companies entering the vacation rental space.
Monday March 14
Things are getting worse instead of better in China regarding the Covid-19 epidemic, as authorities placed Shenzhen in a week-long lockdown. The Covid outbreak there is linked to Hong Kong and although all the measures they have taken and the rapid spread in Hong Kong should have resulted in a spike there, Chief Executive Carrie Lam said the cases from Hong Kong had yet to peak, reporting 32,340 new cases on Sunday. . Lockdown in Shenzhen will last until March 20and and came after 60 cases were detected in the city during the week. The 17.5 million inhabitants will be tested. Shenzhen is located in Guangdong Province, immediately north of Hong Kong. For the whole of mainland China, they reported 3,400 new cases of Covid-19 on Sunday, double the number reported on Saturday. Besides Shenzhen, the city of Jilin in northeastern China and the neighboring city of Yanji have also been partially locked down, with Jilin reporting more than 500 cases on Sunday. After two years of Zero-Covid policies, it’s time someone admitted their policy was flawed.
Macau has finally reached an 80% vaccination rate. That prompted calls to resume group tours from China, but the director of the Macau Government Tourism Board said that was still a long way off. The mainland government has not set any vaccination targets for the resumption of group visits. The MGTO director was speaking at a seminar on the future of tourism in the post-pandemic region. We can only hope that this epidemic in China, two years after the first, marks the end of the pandemic just as the first marked the beginning.
Skift Note: Lower vaccination rates among older populations and fear of overwhelmed healthcare networks are driving China’s zero-tolerance approach to new spikes in cases. That’s not good news for hotels looking to see some semblance of normalcy this year.
Service Properties Trust has announced that Todd Hargreaves has been named President and Chief Investment Officereffective April 1, 2022. Mr. Hargreaves has been Vice Chairman of SVC since 2019 and Vice Chairman and Chief Investment Officer of SVC since 2020. Mr. Hargreaves succeeds John Murray, who becomes President and CEO of Sonesta International Hotels Corporation, also effective April 1, 2022. Mr. Murray succeeds Carlos Flores at Sonesta. Flores is stepping down from his role effective March 31, 2022. As part of his transition to President and CEO of Sonesta, Mr. Murray will step down as President and CEO of Service Properties Trust and President and CEO of Industrial Logistics Properties Trust. Mr. Murray will continue to serve as a Managing Trustee on the Boards of SVC and ILPT. Mr. Murray will also continue to serve as Executive Vice President of the RMR Group and as a member of RMR’s Executive Operating Committee. Sonesta, SVC and ILPT are RMR customers.
Skift Note: Sonesta’s new CEO comes from the lodging trust responsible for much of the company’s rapid growth during the pandemic — growth that has come at the expense of Marriott and IHG.
tuesday march 15
Skift, the parent company of this publication, published an article on IHG and their plans to increase its expansion in China. Greater China recorded both the largest share of IHG theatrical openings in 2021 as well as theatrical signings, surpassing both the Americas as well as Europe, the Middle East, Africa and Asian countries beyond China. Greater China was one of only three regions where IHG showed an increase in properties, with IHG adding nearly 13,000 rooms in 69 hotels there. IHG recorded a loss of nearly 4,000 rooms in EMEAA and a decline of nearly 15,000 rooms at 30 hotels in the Americas. Greater China is currently the worst performing region of the top three hotel markets. IHG is looking long-term and said it won’t stop investing in China. IHG has a development pipeline of 435 hotels in Greater China, 34% of IHG’s development pipeline of nearly 271,000 rooms, second only to the Americas which has 36%.
Skift Note: China’s setback with the spikes in coronavirus cases is not hampering the country’s pace of hotel development, especially with large Western hotel companies like IHG.
Wednesday March 16
Membership Collective Group Inc. has announced that Chief Financial Officer Humera Afzal will be stepping down in June due to factors outside the company.. A search process is underway to appoint a successor. Ms. Afzal will continue to serve as Chief Financial Officer until the end of her notice period on June 14, 2022 and will help ensure an orderly handover of her duties.
Skift Note: The chief financial officer of Soho House’s parent company plans to leave the new public company this summer. One has to wonder how far his successor and others in the company can continue to tout growth without answering the decades-old question: When will Soho House ever post a profit?
Thursday March 17
Despite overwhelming public opposition to the proposed In-app casinos in Japan and 90% of companies that expressed interest from the tender, Japan’s ruling political party is doubling down on integrated resorts, and the three potential host candidates are racing against time to overcome the challenges in order to submit their plans by April 28and. In Osaka, the projects of MGM/Orix are to build an IR on the artificial island of Yumeshima in the city. The Osaka City Assembly has received around 130 casino-related petitions that are skeptical of the project. Some are calling for the plan to be scrapped, others are calling for a referendum on whether the area should host the station. In Wakayama and Nagasaki prefectures, would-be operators continue to be harassed by reports of difficulties in finding lenders and investors. While everyone keeps talking about the opposition and the fact that public opinion is so against IR, no one seems to be asking the most important question. Will casinos costing close to $10 billion (Osaka) and over $3 billion (Nagasaki and Wakayama) succeed? While Japan won’t have the problems that caused the huge IR losses in South Korea and Vietnam, Macau’s success never resonated in the Philippines. The hope is that these casinos will be more like the success of the duopoly in Singapore than the marginal success of the Philippines.
Skift Note: MGM Resorts should better look to Singapore’s playbook in its growth ambition in Asia, as other markets seeking to emulate Macau such as the Philippines have failed.