THE FUTURE OF HOSPITALITY IN CHINA VS U.S.

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What is the future of hospitality in China vs. U.S.? Archilier Architecture May 15, 2020

Steel workers at the St Regis Hai-Tian Center Tower prepared to top off the tower crown Most of us are probably aware of the devastation that the COVID-19 pandemic has wreaked upon the global hospitality industry. As of April 29th, AHLA (the American Hotel & Lodging Association) was reporting average U.S. vacancy rates of 80% and losses of over $18B in revenue since mid-February with over 1.6M employees (70% of the workforce) laid off or furloughed. While the industry’s normal occupancy rate usually hovers around 70%, AHLA is projecting that the US market will recover to only about a 45% occupancy rate by January, 20211. Marriott’s CEO, Arne Sorenson announced in April that there will be no new development initiatives in 2020 and Accor & IHG, among others, have canceled dividends, cut pay, and closed hundreds of properties. Clearly, the pain is widespread and there is a long road to full recovery ahead. So, is there any sunshine amidst the gloom? Archilier Architecture, as a design studio with extensive experience doing hospitality in China, can report glimmers of hope coming from Asia. Unlike most western countries, China has been through something similar with the 2003 SARS epidemic. At the peak of the SARS outbreak in May, 2003 hotel vacancy rates dipped to 18%, similar to what we’re seeing today2. The economic damage was relatively short-lived, affecting primarily the 2nd fiscal quarter – though, interestingly, average daily room rates (ADR) were remarkably unaffected. By September, 2003 – less than a year after the first outbreak – occupancy rates had fully recovered. A key factor in the recovery of various provinces was the World Health Organization’s certification that particular cities had been removed from the “local transmission” list. In the opinion of Yang Shun-Chieh, a Director in Archilier’s Shanghai office, the


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