In­ter­na­tional innkeep­ers still flock­ing to China

China Daily (Canada) - - BUSINESS - ByWANGWEN and ZHENG XIN in Sanya, Hainan

The cur­rent down­turn in the na­tion’s high-end ho­tel mar­ket has not curbed in­ter­na­tional innkeep­ers’ con­fi­dence in China, as they con­tinue their ex­pan­sion plans.

“China cer­tainly should be in the top two (out of Hil­ton’s world­wide mar­kets) within the next five years,” Christo­pher Nas­setta, pres­i­dent and CEO of Hil­ton World­wide, said on Thurs­day.

The United States-based group had 43 ho­tels in five brands in China at the end of 2013. The mar­ket cur­rently is in fourth place for the ho­tel group’s busi­ness.

But Hil­ton should have thou­sands of ho­tels in China in the long term, Nas­set­ta­said, and the group al­ready has 140 in the pipe­line for the world’s sec­ond-largest econ­omy.

In ad­di­tion, two new brands, in­clud­ing Em­bassy Suites Ho­tels, could be in­tro­duced into China by the end of this year, he added.

But Hil­ton ac­tu­ally missed the most ac­tive pe­riod over the past decade, when in­ter­na­tional hote­liers were en­joy­ing a re­mark­able ex­pan­sion in China.

Most of Hil­ton’s top ri­vals have­many lo­ca­tions in­China, and they con­tinue to de­velop in the smaller cities.

Mar­riott In­ter­na­tional Inc has 67 ho­tels and 111 prop­er­ties un­der con­struc­tion or planned in China, with quite a few lo­cated in sec­ond- and third-tier cities, in­clud­ing Hangzhou, Zhe­jiang prov­ince; Sanya, Hainan prov­ince; and Zhuhai, Guang­dong prov­ince.

In­ter­con­ti­nen­tal Ho­tel Group plans to dou­ble the num­ber of its ho­tels across China over the next five years, said Richard Solomons, global chief ex­ec­u­tive of IHG, on the side­lines of a travel in­dus­try fo­rum in Sanya.

Ac­cord­ing to the IHG, about 90 per­cent of its newly opened ho­tels in 2013 were lo­cated in sec­ond-, third- and fourth-tier cities.

“This re­flects the align­ment of the group’s de­vel­op­ment strat­egy to fu­ture in­dus­try growth driv­ers,” Solomons said.

How­ever, China’s ho­tel mar­ket has stag­nated since early last year, and ex­perts are ques­tion­ing whether the high-end ho­tel mar­ket is over­sup­plied in the coun­try.

Sta­tis­tics from the China Na­tional Tourism Ad­min­is­tra­tion show that in the fourth quar­ter of 2013, the aver­age daily rack rate for five-star ho­tels in China de­creased by 0.05 per­cent year-on-year, while the aver­age oc­cu­pancy rate was down by 5.23 per­cent­age points.

“It was a very tough year for China’s ho­tel in­dus­try,” said Zhang Run­gang, di­rec­tor of the China Tourist Ho­tels As­so­ci­a­tion. He was pes­simistic about this year, as well. “The mar­ket sit­u­a­tion will not change in 2014.”

Zhang said that a main rea­son for the mar­ket de­cline was the shrink­ing of high-end con­sump­tion paid for with pub­lic funds, as the govern­ment re­leased new reg­u­la­tions to com­bat cor­rup­tion and ex­trav­agence.

The in­dus­try must make changes to sur­vive, he added.

By July 2013, high-end chains com­prised 56 per­cent of China’s to­tal ho­tel rooms, ac­cord­ing to STR Global, an in­ter­na­tional in­dus­try data and anal­y­sis provider.

On the other hand, in­ter­na­tional brands are not just eye­ing the do­mes­tic mar­ket; they also are en­cour­aged by the huge out­bound travel fig­ures from China.

Out­bound tourism to­taled 98 mil­lion trips in 2013 and will ex­ceed 100 mil­lion this year, ac­cord­ing to the China Tourism Academy.

“We will take ad­van­tage of this op­por­tu­nity,” said Hil­ton’s Nas­setta.

In or­der to at­tract more Chi­nese guests, Hil­ton launched a project called Huany­ing (Wel­come) in 2011. The project in­cludes a Chi­nese lan­guage ser­vice, Chi­nese restaurants, mu­sic and other ser­vices tai­lored es­pe­cially for Chi­nese cus­tomers.

Mar­riott also is com­ing up with “Chi­nese-ready ho­tels” in cities that at­tract many Chi­nese tourists, such as New York City and Van­cou­ver. These sites pro­vide Chi­nese con­sumers with fa­mil­iar food and Man­darin-speak­ing staff to bet­ter meet their needs.

Arne Soren­son, pres­i­dent and chief ex­ec­u­tive of­fi­cer of the com­pany, summed it up by not­ing that the whole world is com­pet­ing for the Chi­nese tourist. Con­tact the writ­ers at wang­wen@chi­ and zhengxin@ chi­

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