The outlook for tourism in China — particularly domestic travel — has been a talking point so far in earnings calls for major international hotel brands. But while many analysts worry it will be a source of softness, there is a mix of both disappointment and hope in that country.
Speaking during the most recent episode of the "CoStar News Hotels" podcast, STR's regional vice president in the Asia-Pacific region Jesper Palmqvist said there is definitely disappointment for how travel performed over the summer holiday period, but some markets and segments are still doing well.
"There are some adjustments [for our expectations] in some cities, but overall it's continuing the trend as we expected it to be," he said.
Hilton, for example, saw a 2.2% year-over-year decline in revenue per available room in China in the second quarter after 1.3% growth in the first, leading some to question whether economic weakness has finally caught up to travel in the country.
But Palmqvist pointed out travel overall still remains a bright spot for China but seems to be finding a "new balance."
He said luxury and "premium mass market" hotels seem to be performing better than the norm, and that's also where there's the heaviest investor interest.
"So I wouldn't flag [summer disappointment] as a major concern yet because remember in the last couple of months we're not losing anymore," he said. "Year over year, that has stopped. We're seeing some growth in some markets."
Backing up the idea that luxury is outperforming other sectors, Hyatt Hotels Corp. reported outsize strength in the second quarter, with RevPAR in Greater China up 7.2% with a 18% increase in visitors from the U.S. and a 24% increase in visitors from China.
For more from STR's Jesper Palmqvist, listen to the podcast embedded above.