Home > > Business travels in China are growing strongly, more hotels needed and coming....

Business travels in China are growing strongly, more hotels needed and coming....

09/19/2014| 8:02:57 PM|

The Middle Kingdom is also the top at hotel construction and with currently 527 construction projects China is the second largest market for hotel developments - after the USA (there are currently 621 new hotels in the pipeline).

This was announced by TOPHOTELPROJECTS, the worldwide leading provider of b2b hotel data. But the focus in the hotel construction is increasingly shifting to the cities in the inland. The population of the Middle Kingdom is considered as the fondest of traveling people in the world, and according to predictions, the country could become the largest market for business travels until 2016.

The Germans were replaced in 2013 as world champions of travel by the Chinese. In China itself huge travel movements are in progress, several hundred million are travelling to the Chinese New Year´s Eve and Mid-Autumn Festival. Coupled with the numerous business trips - China is the largest trading nation in the world - this has greatly promoted the hotel industry in the past years.

End of 2013 2.7 million rooms in 11,700 hotels were waiting for guests, and a large number of luxury hotels will enter the market this and next year. The revenues of 40 billion dollars in 2013 were below the previous year, and the industry was driving a lush loss, according to official statistics. This is the new reality of slower growth, where different factors are responsible for. The general economic leisurely, less foreign tourists, more competition and especially the government campaign against waste, lead to hoteliers. AT Kearney predicts the market by 2022 to 100 billion dollars.

In some cases analysts see the hotel market as saturated, a very poor earnings in 2013 is one reason as the industry had a loss of 2.1 billion yuan (RMB). However, the "penetration", how many hotel rooms per 1,000 populations are available, is still significantly lower than in developed markets. While this is in the USA at 20 and in the UK at ten, the number in China is only at two. Would the sector grow as expected, with 6.3 million rooms per 1,000 inhabitants around eight rooms were available until 2022.

The occupancy rate has decreased in the past years, in 2012 it was 59 percent (2011: 62%), and in 2013 it was estimated at 61%. In eastern, northern and central China it was lower, on the other hand in West China and especially in South China a higher amount was reached with over 65 percent. The room's revenue represents only about half of sales, food and beverages are at about 40 percent, the proportion with more stars continues to rise.

Especially the banquet and conference business is an important revenue provider, which is why the campaign against government waste of the current Chinese government has made this especially for the high quality hotels. Not only party cadres dare not to stay in five-star hotels, but also companies impose less invitations, order cheaper menus and especially alcoholic beverages.

This meant that some hotels have applied for downgrade to four-star status. Therefore they want - as in the case of the renaming of the First Class at the China Southern airline to Business Class - with constant service and less "wasteful" to attract bookings. In the past, for example, hotels on the island Hainan could demand three to four times their usual rates in the peak travel season, as the rooms were pre-booked and were found to be "complacency" for influential party cadres available.

Anti-corruption campaign meets luxury hotels 

The mood among hoteliers is therefore not just euphoric, but the trend in early 2014 is much better than in the summer 2013. A survey especially for eastern China provided a turnaround. Especially in Shenzhen, Shanghai and Sanya hoteliers were optimistic, while Beijing, Tianjin and Chongqing showed the worst results.

The experts at AT Kearney expect a consolidation of the sector, especially in the high-end and in the middle segment. In the budget sector some adjustment has already taken place, such as Home Inn, Ejia Express, Motel 168 and Top Star hotels.

However there is structurally a growth potential. So the purchasing power in the cities of the second and third row has risen sharply in the past years, which is making the business of high-priced hotels more interesting. In addition, China has expanded airports and high-speed lines domestically, which improves the links for business and tourists significantly. In addition, a larger middle class discovers her new desire to travel.

Therefore, the industry could further growth, but analysts from the AT Kearney see varies by economic at the segments. Pulses are expected especially for mid class and budget hotels. This comes especially from the cities of the second and third row as the demand for the so-called MICE, ie meetings, reward travel, conferences and events.

International chains are expanding

The international - and also local - hotel chains are expanding further. End of 2012 alone Marriott, Starwood Hotels, InterContinental Hotels Group and Accor had together around 400 hotels in development.

Here also the desire to travel abroad plays a role, because abroad Chinese travelers will book well-known brands. And from their top rank as world champions of travel, they should not soon be superseded.

While nearly 30 percent of the hotels operated by state and collective enterprises, foreign investors are only for a small proportion. But the picture changes when one looks at the five-star hotels: here, foreign and Hong Kong companies have 20 percent of the hotels under their management.

For new businesses the cities in the second row now increasingly the cities of the third and fourth row are coming in the focus. In the summer of 2013, for example, Kempinski has opened a property in Taiyuan, capital of Shanxi Province. 2014, four more hotels will follow, representing a third of global openings. In August 2014 a hotel has been opened in Changsha for guests, Beijing and Dalian follow in the fourth quarter.

Even Shangri-La is primarily aimed at cities in the second and third row. Through greater competition in the most important centers earnings is more difficult, therefore, the Hong Kong Company wants to open up new markets. While a hotel in Tianjin was opened in summer 2014, in the second half of the year Qinhuangdao, Nanjing and Sanya will follow.

For the present 51 hotels mainly domestic tourists are the focus, therefore the new locations would be selected. In addition, the branding is aimed at a less luxurious image, the hotel group was known on a sales tour in August 2014. There should be more aligned to the average population - while maintaining the high quality promise.

Cities of the third row in focus 

The Accor Group has 128 hotels in China mainland; new openings in 2014 will be added in Hainan, one property in an unknown location in central China and a winter sports resort near the border with North Korea. Ritz-Carlton sets on undiminished desire to travel and the popularity of golf in China.

End of 2015 a golf resort will open with 201 rooms and 21 private villas in Haikou on the holiday island of Hainan. The planned public golf course with ten grounds should become the largest in the world. The operator of Mission Hills Golf Club has experience; in Shenzhen the largest facility in the world is already operated.

Starwood hotels will open three new properties in September. The St. Regis Chengdu is part of a mixed use in Huahzi-Plaza with 279 luxury rooms; the Azure Qiantang will provide 205 rooms at the Shangchen district in the affluent city of Hangzhou.

Even Beijing gets another W hotel in the Chang'an district with 349 rooms. Currently in China almost every three weeks a Starwood Hotel is opening, for example, in Wuhan, Shaoxing, Nanchang, Zhengzhou and Qingdao. By 2017, at least 13 new properties will arise.

The InterContinental Hotels Group (IHG), claims to be the first international group in China, and is operating in Greater China already 200 hotels and plans to add 180 more. In January 2013, Hilton had 35 hotels in China; by 2015 the number will rise to 100.

At the same time Marriott had 61 properties and plans to increase this to 125 by 2016. Marco Polo will open three new hotels in China during 2014, in the next five years six more should be added – in Chengdu, Guiyang, Wuxi, Chongqing, Tianjin, Suzhou and Changsha.

Mandarin Oriental's first property in China was opened in 2009 in Sanya. They have expanded in the past years in the country. Early 2013 hotels were opened in Shanghai and Guangzhou. In the next three years further properties in Shenzhen, Chengdu and Chongqing will follow to increase the total number of operated hotels in China to eleven.

Read the original article.

TAGS: luxury hotels | Marriott | Starwood IHG | Accor
©2022 广州力矩资讯科技有限公司 粤ICP备06070077号
Tell us more about yourself!