U.S.-China trade tensions and political unrest in Hong Kong affected
hotel companies in the third quarter, with Hilton, InterContinental Hotels
Group (IHG) and Accor all reporting declines in Asia.
In a call with investors on Wednesday, Hilton CEO
Christopher Nassetta said that third-quarter revenue per available room (RevPAR)
decreased 2.7% in its Asia-Pacific region, weighed down by a 5.6% RevPAR drop
in China. In Hong Kong, Hilton reported a RevPAR decline of 40%.
"Hong Kong obviously had a tough quarter," said Nassetta. "[For
the year], we think greater China will be down low single digits, [let’s] call
it 3%. Mainland China we think will be flat to down a point and Hong Kong down
23% to 25%."
Systemwide, Hilton's RevPAR growth was relatively stagnant
in the quarter, up just 0.4%.
For IHG, Asia was similarly sluggish, with the company
reporting a third-quarter RevPAR decrease of 2% in mainland China, due in part
to lower corporate and meetings business, as well as a 36% RevPAR drop in Hong
Kong.
The company's RevPAR in greater China slipped 6.1% for the
quarter, while IHG's systemwide RevPAR fell 0.8%.
Accor was heavily impacted by the same headwinds, reporting
an Asia-Pacific RevPAR decrease of 1.1% in the third quarter, with greater
China posting a RevPAR decline of 6.7%.
"Asia-Pacific is [unpredictable], because who can predict
how the trade war between two major nations of the world can go, especially
with the very strong personalities and political implications of those
discussions," said Accor deputy CEO Jean-Jacques Morin during an investor call.
"And my assumption was that it would slightly improve with time, but the story
is different. Things have deteriorated. And on top of that, you have Hong Kong."
Accor has six properties in Hong Kong.
China's downtrend also had a disproportionate impact on
Accor's luxury portfolio, with Morin estimating that the Chinese market
accounts for around 40% of Accor's luxury room inventory in its Asia-Pacific region.
Accor's luxury segment -- which includes the Raffles, Fairmont and Sofitel
brands, among others -- saw RevPAR fall 0.4% globally in the quarter.
Systemwide, Accor's third-quarter RevPAR was down 0.7%.
Meanwhile, Morin's somewhat pessimistic outlook was echoed
by Hilton’s Nassetta, who said concerns about Asia, combined with other
macroeconomic and geopolitical issues across the globe, are "creating a level
of uncertainty" within the hospitality sector.
"In this kind of environment, there are caution flags out,"
said Nassetta. "I think everybody's reading the papers, watching what’s going
on with Brexit, what’s going on with the trade wars, not only in the U.S. and
China, but Korea and Japan, looking at broader economic issues, an election
year coming up in the U.S. and an impeachment process going on. There are a lot
of uncertainties in the world and markets don’t like uncertainties."