Multiple waves of fiscal stimulus and the Golden Week travel holiday has given China an air of hopefulness despite economic headwinds, but STR's Jesper Palmqvist says the region has a continued combination or short-term worries and long-term growth potential.
Speaking on the latest episode of the Hotel News Now podcast, Palmqvist, STR's regional vice president for Asia-Pacific, said the combination of the Golden Week holiday and stimulus efforts definitely created an updraft, but one that isn't necessarily permanent.
"We had a great Golden Week," he said. "No doubt, people were traveling. They were going to places that we assumed they'd be going — a lot of those new and upcoming destinations and brands that made sense for them. ... And I suppose it had a similar kind of effect as the domestic stock markets had, even if less extreme, when the stimulus package came: big boost and then kind of back down again because it was for all intents and purposes back to normal quite quickly once it ended with that extended period."
Palmqvist highlighted how the Western understanding of the Chinese economy is sometimes overly dire, particularly because no other economy of its size can course-correct in real time.
"It's one of the few countries that can turn around something real quickly," he said. "They have the power to influence spend very quickly compared to other countries its size and the policy-making to do that."
Palmqvist was joined by Matthew Burke, STR's regional director for the Pacific, who added that countries such as Australia and New Zealand are "very different animals" in comparison.
Burke said the demand environment is still settling in New Zealand a year after some governmental changes.
"They're reimagining the economy and what they want to be able to do," he said. "At the same time interest rates were quite high to hammer down inflation, and that's obviously had a impact on consumer sentiment domestically, and also in terms of businesses as well and how they travel. So that's impacted Wellington and then Auckland has the same elements, but it also has a rapid rise in supply that was all built for the forthcoming convention center and, putting COVID aside, that international arrivals would continue to advance and travelers from America are coming through in higher numbers now than they were in 2019."
The story in Australia continues to mirror that of the U.S., with softer hotel demand growth against a backdrop of expenses creeping upward, Burke said. The starkest difference between the countries is Australia doesn't have the split in hotel performance seen in America.
"We haven't see that same bifurcation at the lower end of the market," Burke said.
For all of HNN's discussion with STR's Jesper Palmqvist and Matthew Burke, which also includes discussion on performance in countries like Japan, South Korea and Indonesia, listen to the podcast above.