Jones Lang LaSalle: More than half of the luxury hotels surveyed in China are confident about occupancy rates and average room rates

The Zhitong Finance App learned that recently, JLL released the “2024/2025 Chinese Market Hotel Operator Confidence Index Report”. The survey was completed in the second half of 2024. In this context, most domestic hotels surveyed showed a conservative attitude about their performance throughout this year. However, half of the luxury hotels are expected to show greater resilience and growth potential in terms of occupancy rates, fueling the improvement of the market. Looking at 2025, despite the relatively moderate pace of growth in the industry, hotel operators are still showing positive signals in their performance forecasts. Domestic luxury hotels continue to lead the market with a more optimistic attitude: more than 50% of the luxury hotels surveyed have confidence in occupancy rates and average room rates, while budget hotel operators will continue to face challenges.

After the pandemic, compared to China, other markets in the Asia-Pacific region, such as Japan, Thailand, and Singapore, liberalized overseas travel earlier. Therefore, hotel operators in these countries forecast a certain increase in total revenue and GOP for the whole of 2024; in contrast, most domestic hoteliers are cautious about this year's performance forecasts, showing a downward trend in both of these predictions.

With the increase in the number of immigrants brought about by the continuous expansion of overseas markets and the active promotion of domestic cultural tourism administrations, Chinese hotels are expected to usher in new development opportunities: research shows that despite pressure to adjust, nearly 60% of hotel workers still believe that total revenue will grow in 2025, ranging from 0 to 20%; nearly half are expected to improve GOP in 2025.

In terms of human resources, more than 60% of the hotels surveyed said they will reduce the number of employees in the future. Among them, 44% of hotels believe that labor costs will rise further due to factors such as an increase in the social security base. With the revenue side being squeezed by market weakness, hotels continue to face operational challenges. Hotel workers need refined human resource management, conduct industry benchmarking through indicators such as annualized per capita income generation, annualized per capita profit generation, and annualized cost per capita, and introduce AI technology to improve efficiency. Meanwhile, in recent years, many domestic hotels have introduced robots to use in scenarios such as concierge, room service, and security to reduce labor costs and improve efficiency. Compared with manpower, robots have the advantage of being able to provide 24-hour service, perform repetitive tasks accurately without discrimination, and improve service efficiency through intelligent interaction and data analysis. However, factors such as technology maturity, customer acceptance, and return on investment need to be considered when introducing.

Research shows that due to the special nature of work and high personnel standards, the three departments of the hotel's front desk, catering service, and kitchen are the most prominent “difficult to employ” challenges. 51% of the hotels surveyed believe that “getting higher remuneration” is the most common reason for leaving their jobs. What supports this is that seeking financial returns is the primary consideration for hotel talents in the Asia-Pacific region in 2024, followed by a sense of accomplishment and flexibility. Therefore, in the current environment, hotels need to think about how to provide employees with a good experience in talent recruitment, training and retention, and reduce the costs brought about by personnel turnover.

Affected by multiple factors such as global economic uncertainty and changes in consumer demand, more than 60% of hotels in the Chinese market have a relatively negative attitude towards 2024 food and beverage revenue and profit forecasts, while most hoteliers believe that 2025's food and beverage revenue and profit will remain the same as 2024 or increase slightly.

The hotel catering business is closely related to passenger traffic. Most large hotels with 400-500 rooms or more drive the catering business, so when basic passenger flow can be guaranteed, the individual customer unit price of such hotels is more advantageous. JLL observed that recently, most hotel catering businesses have mainly relied on the breakfast needs of hotel guests and group meals. As a result, the unit price of hotel diners, mainly individual customers, was suppressed by large hotels, and a competitive situation centered on bidding has emerged. This has caused the goal of hotel catering to shift from creating value and improving customer experience to cost performance and bidding, which deviates from the original intention and mission of the industry.

In order to seek long-term development in the current competitive landscape, JLL suggests that hotel operators can consider paying attention to the local market needs of the community and surrounding residents in order to integrate and revitalize local community relationships and discover potential customers. For example, hotels can regularly host community events to showcase dishes made with local produce to get closer to the local community and enhance the appeal of the restaurant and the reputation of the hotel brand.

In terms of sustainable development, technological upgrades and improvements in electromechanical equipment have become capital expenditure priorities. For most hotels in China, cost reduction is the main driver for investing in sustainable development. However, the shortage of funds still needs to be solved urgently, which also indirectly affects the qualification situation requiring financial support: in 2024, only 13% of the surveyed hotels in the Chinese market were rated externally, and they are planning to do so in 2025. In 2025, hotel-level data collection, sustainable capital expenditure, and sustainability reporting are the three major priorities for sustainable development actions.