A few months back, we revealed that Hawaii had risen to become one of the world’s hottest travel destinations. We have combed through our data and revealed another tropical island having its day in the sun: the jewel in the crown of Hainan Island, Southern China, which is the tourism hub of Sanya.
Just like its American counterpart, this remarkable holiday hotspot has routinely outperformed other major markets in China across the post-pandemic period, demonstrating remarkable resilience that has continued to increase in 2022.
While demand has remained strong enough to support hotel prices double that of the pre-pandemic period, it remains to be seen whether the lockdown imposed on the 6th of August 2022 will have a slowdown effect over the remainder of the year.
An outlier in the Chinese tourism landscape
China’s post-pandemic journey has been been a mixed bag of of highs and lows, requiring a number of restarts. China’s government was quick to trumpet their success in defeating COVID-19 through keeping infections and deaths low, allowing them to re-open their economy and put up GDP growth rates similar to pre-pandemic.
As time has gone on, however, other major economies have shied away from lockdowns. China, on the other hand, has continued to implement them. The approach has meant most of China’s major cities have faced the imposition of strict laws over the last 12 months, leading to tourists being turned away and citizens being confined to their homes.
These nearly endless setbacks have taken a toll on the hospitality markets across the major cities we measure through our comprehensive hotel rate shopping tool.
Only occasionally has China's major hospitality markets managed to exceed the price levels seen in 2019 throughout 2022. Burgeoning recoveries have then often been snipped in the bud by those aforementioned lockdowns.
Take Xi’an, for example, where prices were 38% above 2019 levels in January 2022 and 23% up during February and March 2019. A spike in cases in March 2022 turned that positive momentum on its head, as restrictions were enacted that month. They were then followed by another short but severe lockdown in July. This pushed prices below 2019 levels for the remainder of the year (as measured thus far.)
This narrative repeats itself across the other major cities, both on the mainland and in Hong Kong, where tourism is either recovering from lockdowns or being cut back by their imposition, alongside the ongoing uncertainty among consumers that they will be able to make their trips.
Pricing recovery in major Chinese destinations 2019 vs 2022
The stand-out exception amongst these cities is Sanya. The Sanya tourism market has weathered the pandemic unlike any other major Chinese destination and has had an excellent 2022 so far.
Aside from February, where prices were briefly below 2019 levels, the city’s hotel market has posted average prices substantially above where they were pre-pandemic, jumping to a high of 90% above 2019 levels in July of this year. These prices indicate strong inbound travel and a destination in demand.
A large part of Sanya's rise is due to the fact that, prior to the current lockdown, it had not experienced the same severe lockdowns as many of these other major cities. That doesn’t tell the whole story, however.
As China’s biggest population centres have been shut off to the outside world, so has outbound travel, depressing the overall potential demand pool for popular tourism hotspots like Sanya.
In Sanya, there have been entry requirements in place throughout 2022, both for internal and international travel. Arrivals from areas deemed high risk in China (which has been a huge swath of the country) have been required to quarantine for seven days and have a green code in the country’s health app, as have international arrivals.
In fact, the market has not been completely free of the influence of COVID-19 and there are continuing hurdles that have the potential to deter tourists from making the journey.
Sanya pricing recovery 2019 to 2022 - All hotel star groups
Despite this, Sanya has posted room rates above 2019 levels not just in 2022, but also in 2021. With the exception of the Chinese Lunar New Year, room rates in both 2021 and 2022 have exceeded price levels set pre-pandemic. From May to July 2021, prices were 52%, 40%, and 62% above 2019 levels, respectively.
This underlines the robust Sanya market, and how Chinese tourists continue to view it as an attractive year-round destination in all but the most problematic of circumstances.
Percentage of hotels in key Chinese tourist destinations offering non-refundable rates
This high level of robustness can also be seen in the policies attached to rooms. A cursory review of China’s biggest travel destinations, shows that Sanya stands out for the low level of hotels that are offering refundable rooms.
Non-refundable rates are the norm in Sanya at the time of writing, where 71% of properties are marketing non-refundable rooms, whereas in Beijing, Guangzhou and Shanghai the majority of hotels are not, as they bid to attract customers into making bookings knowing that the situation remains unstable.
Reflecting the recent severe and well-publicised lockdowns in Shanghai, the city has the most hotels offering flexible policies, with 76% of locations trying to sell refundable stays to travellers.
All of these data points underscore the importance of local policy, but it may also be the case that the relatively light touch in Sanya has made this destination seem like a safe and steady choice.
Both pricing and forward-looking data points support Sanya as one of the most consistent and strongest performing locations within China. Prices consistently sit above pre-pandemic levels, but they continue to rise in our dataset throughout the remainder of this year and into 2023, despite the lockdown.
Final and advertised hotel prices in Sanya, China from 2021 to July 2023
Building on prices that have sat above 2019 levels for a year-and-a-half, OTA Insight data shows that hotels in Sanya are advertising room rates noticeably above 2021 levels for the second half of 2022. Posted prices for H2 2022 are, on average, 31% higher than in 2021 and a huge 84% up in 2019.
Looking ahead to 2023, price levels far exceed even this impressive level. Advertised prices for H1 2023 are two-and-a-half times the average level seen in 2019.
While overall prices are likely to fall closer to the actual stay dates for such far-out dates (as they are capturing a less price-sensitive market segment) these are indicative of how confident hotels in Sanya had been feeling about the market, prior to the lockdown.
It must be noted that all is not well in the Chinese economy. Alongside a jittery property market, problematic local government finances, and slowing GDP growth are the potential for more lockdowns and growing weaknesses in export markets for Chinese goods.
These issues likely indicate a tougher 12 months ahead for Chinese consumers, which may well impact the travel market.
Nonetheless, Sanya has thus far shown a resilience that puts it into a tier all its own. While the impact of the latest lockdown will undoubtedly affect hotels' performance in the short-term, so far, Sanya looks to remain one of the strongest performing local markets within the country for the remainder of 2022 and into 2023.
Leveraging OTA Insight’s predictive market demand and advanced rate intelligence, hoteliers can break down market conditions, visualise future demand for their region and analyse historic, current and future pricing trends to better inform their rate strategy.
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