Mar­riott bets big on China

The Pak Banker - - Front Page - Tom Mcgre­gor

MAR­RIOTT Corp is rais­ing the stakes to ex­pand on a grander scale its ho­tel pres­ence in China. Ac­cord­ing to me­dia re­ports, "Mar­riott In­ter­na­tional Inc an­nounced on Tues­day that it ex­pects to open on av­er­age one ho­tel per month" in the coun­try.

The hote­lier gi­ant out­lined a plan to more than dou­ble the size of its Asia-Pa­cific re­gional op­er­a­tions in the next few years. A Mar­riott press re­lease in­di­cates that 132 ho­tels are expected to open in Asia in ap­proved deals that cover an ad­di­tional 143 prop­er­ties. The com­pany would con­struct at least 265 ho­tels by 2016 with 80,000 rooms, lo­cated in 16 coun­tries.

In re­cent years, Mar­riott has taken an ag­gres­sive ap­proach in China's hos­pi­tal­ity sec­tor while en­joy­ing re­mark­able suc­cess. The fig­ures should speak for them­selves.

"The com­pany wit­nessed the dou­bling of mem­ber­ship in Mar­riott Re­wards, its award-win­ning loy­alty pro­gram in Asia last year," as re­ported by The Na­tion news­pa­per of Bangkok. "Mar­riott Re­wards grew to more than a mil­lion mem­bers in China alone, a coun­try that con­tin­ues to lead the com­pany's Asia growth."

Nev­er­the­less, a strong record of growth in the past does not guar­an­tee sim­i­lar re­sults for the fu­ture. For the past three decades, China has ex­pe­ri­enced tremen­dous eco­nomic growth rates with its an­nual GDP at times surg­ing into the dou­ble dig­its.

Yet, times are chang­ing and the na­tion is go­ing through a slow­down of growth rates. It faces a tran­si­tional pe­riod, and Mar­riott will continue on with ma­jor ex­pan­sion in China.

The Cana­dian Press re­ports that, "Mar­riott's brands in­clude RitzCarl­ton, JW Mar­riott and Re­nais­sance. The com­pany re­ported $12 bil­lion in rev­enue in 2011. It has 3,700 prop­er­ties in 75 coun­tries and ter­ri­to­ries."

Si­mon Cooper, Mar­riott In­ter­na­tional's pres­i­dent and manag­ing di­rec­tor in Asia, re­mains op­ti­mistic. A press re­lease quotes him as say­ing; "We have seen great growth across our port­fo­lio and ex­pect to be launch­ing new brands in the re­gion soon."

Mar­riott has al­ready cre­ated a strong pres­ence in Bei­jing and Shang­hai and seeks to en­ter "emerg- ing pri­mary and sec­ondary cities across China and fur­ther en­rich­ing the port­fo­lio through the ad­di­tion of more re­sorts," ac­cord­ing to its press re­lease.

Presently, the hote­lier op­er­ates in 11 Chi­nese prov­inces and an­tic­i­pates to be run­ning in an ad­di­tional 13 prov­inces and re­gions by 2016, which would in­clude Hu­nan, Hei­longjiang, In­ner Mon­go­lia, Sichuan, An­hui and Ma­cao."

The key is­sue for Mar­riott could be re­lated to its pric­ing charges of ho­tel rooms. In Shang­hai and Bei­jing, many guests will­ingly pay higher lodg­ing rates since busi­ness trav­el­ers there tend to have more money and ex­pect to re­ceive lux­u­ri­ous ac­com­mo­da­tions.

Ad­di­tion­ally, the cities play host to nu­mer­ous in­ter­na­tional and na­tion­wide busi­ness con­fer­ences. Hence, Mar­riott is able to ben­e­fit sig­nif­i­cantly from the in­flux of vis­i­tors.

China's sec­ond-tier cities are de­vel­op­ing rapidly, but there are fewer big spend­ing busi­ness trav­el­ers come to these lo­ca­tions, so Mar­riott must com­pete for guests look­ing for bet­ter bar­gains. Mean­while, Chi­nese-owned and op­er­ated ho­tels in the sec­ond tier cities have a big­ger pres­ence and at­tract more Chi­nese guests, since they of­fer more af­ford­able rates.

There­fore, Mar­riott could face a tougher chal­lenge com­pet­ing for big­ger mar­ket share of ho­tel oc­cu­pancy rates in sec­ond-tier cities. Per­haps, the com­pany should con­sider open­ing more ho­tels that of­fer fewer lux­ury ameni­ties but more af­ford­able lodg­ing rates for trav­el­ers vis­it­ing China's sec­ond-tier cities.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.