Influx of Chinese tourists set to boost hotel earnings in 2024

Chinese tourist arrivals are staging a phenomenal comeback, promising a lucrative windfall for local hotels just in time for the high season.

Analysts predict this tourist surge to continue its upward trajectory, creating an economic boom for the hotel industry.

Chinese tourist arrivals are making an astonishing recovery this month, igniting hopes for a booming hospitality sector that analysts believe will persist until the upcoming Chinese New Year on February 10. Official data reveals a bounce-back in December, with key markets such as China, Russia, South Korea, and India leading the resurgence.

According to Boonyakorn Amornsank, an analyst with Maybank Kim Eng Securities (Thailand), average daily arrivals from China in the first half of the month accelerated to 47% of the daily average in the same period of 2019. Boonyakorn asserts that this momentum is expected to persist through to Chinese New Year on February 10 next year.

However, the Maybank analyst highlights a potential hurdle— the slow resumption of flight capacity for Chinese flag carriers, posing a downside risk to the Tourism Authority of Thailand’s ambitious target of hosting 8.2 million Chinese visitors in 2024, compared to the projected 3.5 million for this year.

Maybank remains optimistic, foreseeing key international tourist markets hitting full stride in the fourth quarter of the following year. Despite concerns about the slow recovery of Chinese group tours, they believe the impact on hotels’ earnings forecasts will be limited.

The unique spending habits of Chinese travellers are also under the spotlight. Boonyakorn noted that travellers from the mainland tend to spend less on accommodation compared with other nationalities, while the length of stay is relatively shorter for Chinese guests.

Occupancy increase

Recent channel checks with hotel management indicate a positive trend. The blended occupancy rate for listed hoteliers increased to 70% in the past two months, up from 68% in the third quarter and 69% in the same period of 2022. Boonyakorn predicts a 21% year-on-year surge in hotel sector earnings to a record high in 2024.

Leading the charge in benefiting from the rebound in Chinese arrivals is Central Plaza Hotel (CENTEL), with the highest exposure to Chinese guests in Thailand and the Maldives. Minor International (MINT) also shines as Maybank’s top pick, lauded for its strong earnings growth potential and attractive valuation, reported Bangkok Post.

Despite potential headwinds, Kasem Prunratanamala, head of research at CGS-CIMB Securities (Thailand), remains bullish, predicting a 19% year-on-year increase in tourist arrivals next year. He cites a weaker global economy as a downside risk but highlights a strong surge in Chinese tourists and a healthy global economic outlook in 2024 as catalysts for continued growth.

The figures are promising, with hotel occupancy rates surpassing pre-pandemic levels in September, standing at 65.2%, beating the 2019 rate of 62.7%. However, the share of revenue from foreign tourists remains at 21%, still below the pre-pandemic level of 38%. Kasem pragmatically concludes that it may take a couple more years for the ratio to reach the pre-pandemic level.