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  • Faculty & Research

    Knowledge creation on China, from proven China experts.

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  • Faculty & Research

    Knowledge creation on China, from proven China experts.

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Thursday, February 27, 2020

How will the coronavirus outbreak impact China’s hospitality industry?

By Yin Yelv

The COVID-19 epidemic has inflicted a great toll on the tourism industry, especially the hotel sector. For example, the occupancy rate at Atour decreased 85% during this year’s Lunar New Year holiday compared with that of last year. In addition, many hotels have suspended operations, suffering big losses, especially those in scenic spots in the hardest hit areas such as Wuhan and Hubei province. Currently, Atour has nearly 500 hotels around the country with about 15,000 employees. Every hotel will face tough times if the epidemic lasts more than a few months.

Since the outbreak, hoteliers have exhibited great courage and responsibility. For example, at Atour, we promptly set up an emergency response team, daily reporting for the prevention and control of the disease, and have emphasised staff protection and hotel disinfection. For clients, we not only launched a refund protection policy, but also extended the validity of their memberships. For franchisees, we have offered expense reductions or exemptions in order to help them ride out the current situation.

The epidemic will stifle the hotel industry and fuel consolidation. Some players will shutter. In the meantime, the whole industry will pay more attention to making hotels smarter and more diversified developments. Specifically, I believe the outbreak will lead to the following changes in the hotel industry:

First, a number of hotels will fail to survive – express and economy hotels will struggle and will leave prime areas in first- and second-tier cities.

Second, the outbreak will accelerate the digital transformation of the hotel industry, making hotels smarter. Contactless security services in hotels are expected to be rolled out on a large scale. In the future, services such as unmanned reception, face swipe check-in, guest voice control and smart service robots will replace some human interaction.

Third, the outbreak will also speed up the growth of online business and the diversification of the hotel industry. At Atour, for example, we are evolving from a night-sale hotel to a lifestyle platform, with the non-hotel segment of the business growing rapidly. Last year alone, our new retail sales tripled year-on-year.

Yin Yelv (CEIBS EMBA2007) is the Founder & CEO of Atour Group.