High-end stays on the rise as market changes

Asia's largest Conrad hotel with more than 700 rooms will be launched in Shanghai, a representative of leading global hospitality company Hilton announced on April 30 during a conference held at the Waldorf Astoria Shanghai.

As one of four hotels agreed between Hilton and Shimao Group Holdings during the conference, Conrad Shanghai will be located at People's Square and is expected to open in early 2022.

Besides the Conrad in Shanghai, Hilton also announced the launch of the Waldorf Astoria in Shenzhen, Guangdong province, and two Conrad hotels in Wuhan, Hubei province, and Zhuhai, Guangdong province.

"The signing of these four luxury hotels with Hilton is testament to our mutual optimism for the luxury travel market in China, especially in this current era when we are experiencing a rise in interest in cultural tourism," said Tang Ming, CEO of Shanghai Shimao Hotel Management Company and Shimao Star Hotels Group.

"We hope to continue working hand in hand with Hilton to jointly build an enabling ecosystem for the hospitality industry and further enhance Chinese consumers' luxury experiences at the hotels we will launch together," he added.

The signing of the agreements between the two enterprises is an indicator of the booming high-end hotel market.

Zhang Rungang, vice-president of the China Tourism Association, pointed out that the growth rate of budget hotels reached an important inflection point in 2017, and then has continued to decline gradually year by year. Mid-end hotels also dropped sharply to 10.2 percent in 2019 after experiencing an average annual growth rate of 25 percent for three years in a row. However, the steady growth rate of high-end hotels in 2019 was 10.5 percent, the first time in more than a decade that the growth rate ranked first.

"High-end hotels are likely to be the next market outlet," Zhang said.

"The number of middle class in China has reached 400 million, which is almost equal to the total population of the United States. Consumers' pursuit of a higher standard and more concrete accommodation products will be the greatest driving force for high-end hotels to become the market outlet," he added.

Huang Deli, president of development at Hilton Greater China and Mongolia, noted that hotels in the upper-to-mid-scale and luxury segments bucked the development trend in 2020, with deals involving luxury hotels reporting a year-on-year increase of 167 percent, according to a recent survey by hospitality consultant Horwath HTL.

"The booming market is caused by an improved external situation, expanded internal demand, consumption promotion and tourism. Meanwhile, policies have increased support for the cultural tourism industry by improving the high-quality hospitality industry to stimulate the consumption potential," Huang said.

He further explained that the expansion of the middle class in China and the rising disposable income of residents has resulted in a booming demand for high-end consumption, especially under the restrictions on international travel due to COVID-19.

"Meanwhile, investors have also changed their strategy, preferring stable and low-risk investment and believing that the long-term value of luxury hotel assets will provide a stable guarantee for them," Huang said.

While the high-end market is still showing an upward trend, the hospitality industry will keep its eye on it, including Hilton.

According to Qian Jin, president of Hilton Greater China and Mongolia, Hilton will bring its luxury hotel brands into second-and third-tier cities and will continue to fill the market as well as grasp the consumption trend.