China set for massive rise in hotel numbers

Updated: 2011-08-11 11:24

By Wang Wen (China Daily)

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BEIJING - One international-brand hotel is expected to open in China every four days during the next 18 months, making the country one of the world's fastest-growing markets for the hospitality industry.

However, rising costs will present a challenge to the sector, according to the property agency Jones Lang LaSalle Hotels.

As many as 84,000 new rooms will be provided by international hotel chains in 30 major Chinese cities between the end of 2010 and 2013, according to the China Hotel Market Outlook 2011, a report released on Wednesday by the Chicago-based hotel investment services company.

Hans Galland, senior vice-president of Jones Lang LaSalle Hotels, said the company has researched almost all the international hotel chains operating in China, including Starwood Hotels and Resorts Worldwide Inc, Hilton Hotel Corp and Marriott Hotels International.

The researchers discovered that these companies provided nearly 160,000 rooms in 30 major cities at the end of 2010, an increase of 60 percent since 2005. Those 30 cities constitute the majority of the nation's hotel market, he added.

"The increase will continue and the country will have at least 240,000 guest rooms in international hotels by 2013," said Galland. The Kempinski Hotel Group, which on Monday opened its 10th hotel in China in Huizhou, Guangdong province, will open eight hotels in China before the end of 2012 and plans to expand the number to 30 by 2015, said Ji Yan, director of the company's public relations department for China.

On Aug 2, the China Business News reported that Hilton, which currently has 18 hotels in China, plans to increase its number to 100 nationwide in the next five years. The 2011 outlook, covering more than 266 domestic and international hotels and management companies, shows that hoteliers around the country are confident in their performance in 2011 and expect occupancy to rise to 68.1 percent. The average daily price rate will rise by 0.4 percent over the course of this year.

However, the rising cost of labor, energy and commodities has become one of the most pressing challenges to operating margins in the nation's hotel sector. The report also shows that 43 percent of respondents said rising costs are their top business concern this year.

Hotel operators should search for ways to control costs in the coming years, including saving energy and better revenue management, said Galland.

"Hotels in second-tier cities could help us to relieve the problem of labor costs," said Kempinski's Ji, referring to lower wage levels in those cities.

The outlook also said that expansion in metropolitan areas such as Beijing, Shanghai and Shenzhen will slow down in the 18 months to 2013.

Meanwhile, second-tier cities with few high-end hotels - such as Zhuhai in Guangdong province and Zhengzhou in Henan province - will see an expansion in the sector in the near term.

The rise of the Chinese hotel market is being pushed by both the development of local economies and the country's growing reputation as an international tourism destination, said Galland.

Statistics from the National Tourism Administration show that in 2010, the Chinese mainland attracted 134 million international visitors. That number is expected to reach 153 million by 2015.