Skift Travel News Blog

China’s ongoing lockdowns are weighing heavily on Trip.com’s business trip bookings.

For its second quarter results, corporate travel revenue was $31 million, which is a 46 percent decrease on the same period in 2021. It was also 5 percent lower than the previous quarter.

The company cited “continued disruptions resulting from the Covid-19 resurgence in China,” in its results, published this week.

Just weeks ago, Shenzhen, the country’s fourth biggest city, went into lockdown.

China’s zero Covid stance is impacting other corporate travel agencies, including American Express Global Business Travel. “China used to represent 5 percent of sales for international travel. That market is still potentially at zero today. When it opens up, that’s 5 percent,” said CEO Paul Abbott last month.

China’s subdued international airline market was also one of the reasons global international traffic remains down by nearly a third versus 2019, according to Willie Walsh, director general of the International Air Transport Association.

In June, Trip.com said it would target “lower tier” cities across China in a bid to grow its share of the corporate travel market.

Another quarter, another step in the right direction for IHG Hotels & Resorts, which is “very close” (or 10.5 percent) to global pre-pandemic RevPAR — or revenue per available room, a key industry metric.

But recovery in demand and pricing across its hotels in the Americas has led to group profit more than doubling versus 2021, with profitability now ahead of 2019 for that region, said CEO Keith Barr in a statement Tuesday, as it posted its interim 2022 first-half results.

For its second quarter, Americas RevPAR was up 3.5 percent on the 2019 second quarter.

Europe, the Middle East and Africa saw an “excellent improvement in performance” but Greater China had a “tough period” due to Covid-related travel restrictions.

“We have since seen a strong recovery in the most recent months, although risk of further volatility in trading in the region still remains,” Barr said.

IHG, which now operates 6,028 hotels, reported group revenue of $1.794 billion for the six months ended June 2022, which is a 52 percent increase on the $1.179 billion in the 2021 first-half.

Operating profit soared from $138 million in the second half of 2021 to $361 million in this year’s second half, an upswing of 162 percent.

That’s up 2.6 per cent on the comparable period in 2019.

Check back later today for more updates

As travel recovers in Southeast Asia, the AirAsia superapp saw the ranks of its monthly active users reach more than 10.6 million in the second quarter with an assortment of services, Capital A stated Monday in releasing the airline group’s preliminary operating statistics.

On the digital front, the AirAsia superapp saw its monthly active users rise 236 percent year over year to more than 10.6 million in the quarter that ended June 30, and that represented a 70 percent jump compared with the first quarter. Category leader Grab in Singapore had about three times the number of users in the first quarter, which was the latest statistics available.

Capital A, formerly known as AirAsia Group Berhad, said the rise in its monthly active users can be attributed to “the strong return of travel” and efforts to attract new users for the mobile app.

Transactions, boosted by increases in flights, ridesharing, the Kiwi.com-powered booking of airlines outside the group, and the company’s subscription discount service Super+, rose 524 percent to nearly 4.9 million in the second quarter.

The release of these preliminary operating statistics did not include revenue numbers or transaction values.

Capital A’s BigPay fintech offering, with new products such as the DuitNow QR code merchant payments and money transfers, saw the number of customers with an active card increase 62 percent year over year to more than 1.2 million.

The company’s logistics business, Teleport, saw its cargo tonnage fall 27 percent year over year because of the tough lockdowns in China that began in March. Deliveries, however, soared 630 percent year over year to 1.15 million because of a new e-commerce platform that the company began using during the second quarter, Capital A said.

Malaysia-based Capital A said its passenger numbers in the second quarter leaped 633 percent, and its load factor of 84 percent was its highest since 2020.

In a marked change of sentiment, China has vowed to strengthen efforts to open international travel, by resuming and increasing passenger flights in an orderly way and by steadily improving visa and Covid testing policies.

China will make Covid control measures more targeted and well-calibrated under the premise of ensuring safety against Covid infections, Chinese premier Li Keqiang said. This is the first time an official from the top Chinese leadership has commented on relaxation of international travel.

He said the country would also look to facilitate cross-border travel for labor services in a prudent and orderly manner. “All international students may return to China to continue their studies should they wish so,” Keqiang added.

According to China’s education ministry, until the end of 2018, at least 492,185 international students from 196 countries and regions were studying in China. International students have repeatedly petitioned the Chinese government to lift the nearly two-year ban on their return. From June onwards, China has been gradually allowing students from some Asian nations to return.

Amid anger over the fallout from China’s commitment to zero-Covid policy, Keqiang, a trained economist, had recently urged local government officials to immediately take action to stabilise the situation.

Promoting stable growth of the world economy is a common and urgent task for all, the Chinese premier said while speaking at the World Economic Forum’s special virtual dialogue.

On the state of the Chinese economy, he noted that in the second quarter this year, under the impacts from a new round of Covid flare-ups and other factors beyond expectation, downward economic pressure rose steeply, and major indicators tumbled in April. In May, the decline in major economic indicators slowed. In June, the economy stabilized and rebounded.

“That said, we are keenly aware that recovery of the economy is not yet firmly established, and painstaking efforts are required to keep overall economic performance stable,” he added.

Highlighting China’s development potential, he said, the country would effectively coordinate Covid-19 response and economic and social development.

“We will continue to take development as the basis of and key to overcoming all challenges China faces, and work hard to bring the economy back to a normal track as soon as possible,” he added.

Tourists and business travelers take note, because the U.S. government has added a new destination risk category.

On Tuesday, President Joe Biden signed an executive order called “Bolstering Efforts to Bring Hostages and Wrongfully Detained U.S. Nationals Home.” And as part of that move, it will introduce a new risk indicator — “D” for wrongful detention — to the State Department’s travel advisories.

These advisories exist for all countries around the world to warn Americans of risks they may face in traveling to particular destinations.

To start with, six countries will be issued the latest “D” category, which is aimed at deterring and punishing wrongful detention of U.S. citizens abroad by authorizing government agencies to impose sanctions and other measures.

They are Myanmar, China, Iran, North Korea, Russia and Venezuela, which are all deemed to be places where there is elevated risk of wrongful detention.

The indicator joins the existing “K” for kidnapping indicator that covers the risk of kidnapping and hostage taking by non-state actors as well as a range of other existing risk indicators.

“We are eager to share how the Biden-Harris administration is expanding the toolkit that the U.S. government uses to help bring home American hostages and wrongful detainees” said a senior administration official.

Investment in the hotel sector in Asia Pacific continued to recover as investment volumes totaled $6.8 billion in the first six months of 2022, according to real estate brokerage firm JLL’s report.

Capital deployment into the region’s hotels sector showed a return to pre-pandemic levels, registering a 12 percent increase compared to 2019.

Countries in the Asia-Pacific region are expected to experience a fast pace of recovery in the second half of 2022, Skift Research noted recently in its Asia Pacific Accommodation Sector Market Estimates 2022.

In terms of investment volume Japan received the maximum capital —  $1.8 billion, followed by Korea’s $1.7 billion, and Greater China, including Hong Kong ($1.6 billion).

A strong domestic and international tourism demand and the recent devaluation of the Japanese Yen would drive investors to acquire hotel assets in Japan, JLL noted.

JLL also expected further price reductions of hotel assets and forecasts China’s hotel transaction volume to total approximately $2 billion in 2022.

Strong recovery was witnessed in countries like Singapore ($899.7 million), Maldives ($205.5 million), and Indonesia ($159.6 million).

The activity was more subdued in Australia ($145.5 million) and Thailand ($37.7 million), however, JLL noted that these countries would witness greater investment in the second half as numerous marque deals would be closing.

More hotels are entering the Thai market as sellers are under pressure to sell, noted JLL and forecast that transaction volumes would reach close to $300 million this year.

While the 75 transactions in the first half of 2022, were down 33 percent compared to the first half of 2019, the 19,822 rooms transacted during the first half of 2022 was 30 percent higher compared to the first half of 2021 and 9.4 percent compared to 2019.

“The increase in deal activity was influenced by a spike in portfolio transactions as institutional investors sitting on dry powder seek to deploy their capital more efficiently,” the report noted.

However, according to JLL, ongoing momentum will likely be challenged by growing macroeconomic and geopolitical headwinds in the second half of 2022.

“We remain steadfast in our conviction that total Asia Pacific hotel investment volume will cross the $10 billion mark despite the scarcity of assets coupled with macro and geopolitical headwinds that will continue to influence capital activity,” said Mike Batchelor, CEO, Asia Pacific, JLL Hotels and Hospitality Group. 

The National Health Commission of China has slashed the quarantine time for inbound travellers by half.

International arrivals will now only need to spend seven days in a centralized quarantine facility, and then monitor their health at home for three days, down from seven previously.

Relaxing its stringent zero-Covid policy has already spurred travel industry share prices, in particular airline stocks. China’s measures over the past year resulted in international flights running at just 2 percent of pre-pandemic levels, according to reports.

The share price of Delta Air Lines, United Airlines and American Airlines’ rose by almost 2.5 percent in early trading on Tuesday.

The restrictions have long deterred cross-border travel, and frustrated millions of Chinese citizens living outside of their country. Widespread restrictions also prompted major hotel companies to tread cautiously regarding future development in the country.

Marriott International has signed a new partnership with China’s Ant Group, which owns online payment platform Alipay, to help it drive more business in the region.

Marriott will now give Alipay members a range of benefits when they sign up to Marriott’s loyalty program Bonvoy, including digital coupons for an afternoon tea at its hotels, or the chance to enter a lucky draw by spending at the hotel.

Breakfast promotions are also offered at various cities, including Guangzhou, Shenzhen, Hangzhou, Chengdu and Sanya.

The tie-up is the latest deal in its plan to leverage loyalty to bolster its presence in across Asia.

The hotel group already has a joint venture with e-commerce giant Alibaba in China. Marriott considers its storefront on Fliggy, Alibaba’s travel division where it sells its global hotel inventory, to be a direct-booking channel with costs that are lower than going through online travel agency distribution.

Marriott said this latest Alipay partnership is in addition to the 10-plus million newly-enrolled members the company has gained through various channels since 2017 in China, including through Fliggy, as well as other Ant initiatives.

Marriott International has 450 operating hotels across 23 brands in Greater China.

“To support the recovery of the travel industry, we are looking to offer exclusive travel experiences for high-net-worth members using Alipay,” said Henry Lee, President, Greater China, Marriott International.

Marriott has previously launched Korea’s first-ever co-branded hotel credit cards, and two new co-branded cards have also been launched in Japan.

“Marriott Bonvoy really is at the heart of our consumer strategy and we are doing everything we can to grow the program,” Bart Buiring, chief sales and marketing officer for Asia Pacific at Marriott International, previously said.

After Airbnb decided to exit the local Chinese market, local players are rushing in: Tujia, Meituan, Muniao, Fliggy and Xiaozhu are large local Chinese online travel and short-term rental players that are reaching out to the local Airbnb hosts to migrate them to their respective platforms, according to this report.

Tujia has set up a special business services team to work with the hosts and will soon launch “one-click launch” migration services, the story says. Similarly, Meituan has also set up a team to provide hosts with services such as quick audits of housing occupancy and quick responses within five minutes.