Business / Companies

Marriott among many seeing room for opportunity

By Wang Zhuoqiong (China Daily) Updated: 2012-06-20 10:25

US-based Marriott International Inc hopes its burgeoning Chinese business will drive the company's growth, as it plans to almost double the number of hotels in the country to more than 100 by 2014, a top executive said on Tuesday.

Arne Sorenson, president and chief executive officer, said as the company's second most important market after North America, China generates about 5 percent of its total revenue.

Marriott among many seeing room for opportunity

Marriott International Inc, which has six brands including The Ritz-Carlton, JW Marriott Hotels & Resorts, and Courtyard by Marriott, has 60 properties in China and another 50 in the pipeline. [Photo/China Daily]

"On average, we expect to open a hotel a month in this country over the next three years," he said at the first meeting in China for securities analysts and institutional investors.

The company has 60 properties in China, spanning six brands including luxury hotels such as The Ritz-Carlton and JW Marriott Hotels & Resorts and the upper-middle range Courtyard by Marriott. About 50 hotels are in the pipeline.

After 10 years of developing in major cities such as Beijing and Shanghai, the hotelier is going to smaller cities.

Last year, it signed hotels in 30 cities, mostly in second- and third-tier cities, said Paul Foskey, executive vice-president of international hotel development Asia Pacific Marriott.

He said 75 percent of the company's operations in China are luxury brands and 25 percent are upper-scale brands.

"In the medium to long term, upper- and mid-scale hotels have great potential," said Foskey. "But the company has strong interests in luxury brands at present."

Business in China is very strong, as measured by revenue per available room, which is 35 percent higher than its peers, said Paul Simon, Asia-Pacific president and managing director of Marriott.

Among the leading international brands operating in China, Marriott accounts for 15 percent of hotel supply and 23 percent of revenue, he added.

Marriott plans to have 4,000 hotels in 90 countries across its 14 brands by 2014.

Of the new rooms in the pipeline - between 90,000 and 105,000 - in the next three years, about 14 percent will be in China, said Anthony Capuano, executive vice-present of global development Marriott.

Sorenson said the lodging industry in China will continue to show double-digit growth over many years as the Chinese tourism market is booming to equal that of the United States in the next 20 years.

"There are 1 million rooms in China so far but 5 million in the United States," he said.

China is becoming the world's largest domestic travel market, with about 2.6 billion trips made last year.

Travel researcher Jiang Yiyi said the strong Chinese economy is the driving force that is attracting increasing foreign investment to the country's tourism sector.

As of the end of 2010, nearly 70 international hospitality brands from 41 countries were present in China, managing about 20 percent of the country's top-end hotels, according to the China Hotel Development Report by the China Tourism Academy.

Foreign brands are competing fiercely in the country for bigger shares.

Chicago-based Hyatt Hotels Corp has 19 properties under various brands including Park Hyatt, Andaz, Grand Hyatt and Hyatt Regency, with more than 30 under development.

InterContinental Hotels Group has 170 hotels in operation and 155 under development, which are to open in three to five years. New rooms in China account for about one-third of its global new rooms.

To lure more Chinese travelers, the United Kingdom-based InterContinental has created a high-end brand, Hualuxe Hotels & Resorts, to be launched in late 2013, with a goal of being present in more than 100 Chinese cities within 15 to 20 years.

However, Jiang, also director of the China Tourism Academy's International Tourism Development Institute, said international hotel groups should be more cautious about their rapid expansion, especially given the concentration on luxury hotels.

"Local governments and developers have a strong demand for luxury brands," Jiang said. "But I question the market potential for so many high-end hotels.

"The majority of Chinese domestic travelers are more interested in mid-lower scale hotels."

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