China’s trade-war fueled economic slowdown hasn’t appeared to derail demand for hotel stays at Hyatts (H) in the third quarter. Nor has it altered Hyatt’s long-term development plans for the country.
“Demand is stable right [in China],” Hyatt Chief Financial Officer Joan Bottarini said on Yahoo Finance’s The First Trade. Hyatt entered the China market 50 years ago and today boasts 70 hotels in the country. The company overall has more than 850 hotels in operation globally.
That take on current conditions in China should be music to the ears of Hyatt’s investors.
Hyatt made it quite clear on its second quarter earnings call in early August the China market was under increasing pressure. Revenue per available room (RevPar) — a key operating metric in the hotel industry — fell 3% at Hyatt’s full-service hotels in Greater China in the quarter. The company pinned the blame on weakness in the important Macau and Hong Kong markets.
Couple that with the fact that since August protests have erupted in Hong Kong and China’s economy has weakened across the board, stability of any kind for a consumer company is a good thing.
Despite near-term challenges in the country, Hyatt isn’t backing down on its expansion plans. Bottarini said Hyatt has 100 hotels in the development pipeline for the China market. In fact, Hyatt is taking the bold step of launching a new brand specific to the China market.
Hyatt announced a partnership earlier this year with Chinese hotel chain Homeinns Hotel Group for the new brand. No name was disclosed, nor a timeline on when the first location would open. The brand is expected to cater to the preferences of local Chinese travelers.
“We have got a great outlook in the long-term strategy in China,” Bottarini said.