Chain operations buck trend to expand
While the overall hospitality industry reported marked shrinkage in 2020, affected by the COVID19 pandemic, Chinese chain hotels bucked the trend and expanded, according to a recent report.
Released by the China Hospitality Association, Beijing International Studies University School of Tourism Sciences and a Shanghai-based consultancy company, the report showed Chinese chain hotels added 166,000 guest rooms last year, enabling a 5 percentage point rise in their share of the domestic hospitality industry.
In the upmarket and midscale hotel segment, in particular, chain hotels saw a year-on-year increase of 43.01 percent and 6.28 percent in guest rooms, respectively.
The upswing in the size of the chain hotels show such a business model has a better capacity to resist risks, said Han Ming, president of the CHA.
As the prevention and control of the pandemic is successful nationwide, the hospitality industry will forge ahead with high-quality development, she added.
The top 50 Chinese hotel groups in the country had a combined guest room number of some 3.69 million at the end of 2020, an increase of 14.2 percent year-on-year. Each of those firms has an approximate average of 73,800 guest rooms. This marks an upsurge of more than 9,000 rooms from the end of 2019, according to the report.
Among them, Shanghai-headquartered Jin Jiang International has ramped up expansion. The group opened more than 1,800 hotels last year, according to its financial report. The company aims to sign deals for 10,000 new hotels. About 7,000 of them are expected to open in the next three years.
Another Shanghai-headquartered hospitality company, Huazhu Group, showed robust growth momentum. The hotelier announced in its financial report that at the end of 2020, it had 2,449 new properties scheduled for openings.
BTG Homeinns Hotels revealed in its 2021 mid-year financial report that it is advancing an expansion drive to open 800-1,000 new hotels this year.
New Century Hotels & Resorts told China’s Foreign Trade magazine that it had nearly 280 new openings in the pipeline.
Hotel groups are running on light assets; rather than investment, they profit from franchise fees for their brand value and management expertise, the Beijing-based magazine quoted Zhao Huanyan, chief knowledge officer at Huamei Consulting, as saying.
Therefore the more expansion gained, the more profits they will reap, Zhao said.
While Chinese hotel companies have experienced rapid growth in recent years, how to grow stronger is a key issue to their sustainable development, said Lin Cong, vicepresident of the CHA.
Chinese hotel groups’ average age is 29 years old. In contrast, their overseas peers’ average is 87, Lin said.
“Great changes have taken place in the global economy ... and the cultures of the West and East are incorporating each other,” he said. “Under the current business ecology, an ideal operator needs to be well-informed about different cultures and think over how to make their business grow more competitive and last longer.”
Data from the Ministry of Culture and Tourism show that during the three-day Dragon Boat Festival holiday earlier this month, tourists reported roughly 89.14 million visits to domestic attractions. It generated 29.43 billion yuan ($4.6 billion) in tourism revenue.
The accelerated recovery in domestic tourism is conducive to the hospitality sector’s resilience; it is expected to be restored to the 2019 level, Wang Xingbin, an expert on tourism from Beijing International Studies University, told the magazine.
“However, some of highly rated hotels are not likely to be fully covered this year, due to a sharp cut in overseas business travelers because of limits on international travels,” Wang said. “Only after the limits on international travels are lifted will the hospitality industry be able to recover completely.”