According to JLL data, approximately USD 4 billion worth of deals changed hands last year in the domestic market, and the majority of the buyers were local Chinese groups.
In recent months, excess hotel supply has helped to boost liquidity with some developers considering conversions of hotel properties to office or residential buildings in the hunt for yield, says David Marriott, from JLL’s Hotels & Hospitality team in China. This has led to an oversupply of rooms and subdued trading performance, particularly in a number of Tier-2 and Tier-3 cities.
Besides investments, domestic companies are also increasingly taking over hotel management contracts previously run by international brands. These include the Hilton Jing’An, which was rebranded as The Kunlun and is presently managed by Jin Jiang Hotels and Beijing Wanda Sofitel, which is now operating as Wanda Vista Hotel.
Looking forward, domestic transaction volume is likely to remain healthy, supported by a continued pipeline of new hotels, strong demand and infrastructure upgrades throughout the country. In key markets such as Beijing and Shanghai, JLL expects RevPAR (revenue per room) to increase between three and four percent in the next few years.
“Driven by leisure and business travel and China’s increasing popularity as a MICE (Meetings, Incentives, Conferences and Exhibitions) destination, the longer term prospects of China’s hospitality market is bright,” says Marriott.
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