Hotels In China: A Market Analysis
Access Asia has published this updated report on the hotel industry in China covering the market and current state of recovery of the hotel sector in China. China has seen its hotel industry overhauled in the last ten years with a large influx of foreign capital and brands that has forced the local and state operators to improve their establishments and services. In 1999 and 2000 occupancy rates and profits have picked up as the market surged due to greater numbers of visitors to China. With WTO imminent the sector offers new opportunities to foreign investors.

Hotels In Hong Kong: A Market Analysis
Access Asia has published this updated report on the hotel industry in Hong Kong as part of the China Contact Market Research report series. The report covers the market and current state of recovery of the hotel sector in Hong Kong. The report covers occupancy rates, hotel revenues, the major domestic and foreign chains in Hong Kong, new players and forecasts to 2005.

Additional Information

Hotels in China

Introduction

The Chinese hotel industry has come a long way in the last two decades. In 1979 Beijing did not have a single star-rated hotel for tourists. Beijing now has over 250 star-rated hotels. The growth of business in China, tourism and internal movement have all made China an increasingly attractive proposition for the international hotel chains. At the same time the state-owned sector has upgraded to meet the requirements of the new Chinese consumer. The Chinese state became a major developer and owner of hotels in the 1980s as China opened its doors to increasing numbers of tourists and the international business community. Many of these have been renovated since the mid-1990s to capture the growing number of package tours and to compete with the international standard chains.

The range and price of hotel and accommodation options in China is rapidly growing. This growth is occurring as both the state, domestic companies and the foreign chains all increase their presence in the market and move out from the major markets of Beijing and Shanghai to the secondary cities as well as targeting the new resorts and airports.

This report deals with the market for hotels in China in terms of number, occupancy, room yields, rates and types of guest. The report closely examines the activities of the major international players and their current presence and future plans for China. This includes the global chains as well as regional chains such as Shangri-La, and concentrates on the activities of the international chains rather than the state-owned sector where growth is less dynamic. The report also includes details of hotel marketing and advertising, a SWOT on the market and current issues facing the industry.

For further information on the Hong Kong and Macau hotel market see Access Asia’s China Contact report, ‘Travel & Tourism in Hong Kong’. For further information on tourism in China see Access Asia’s China Contact report, ‘Travel & Tourism in China’.

Definitions

China does not use a unified star rating system for hotels whatever the claims of the national tourism and hotel authorities. Therefore a number of different classifications have been used in this report where deemed most appropriate for analysing the available data. They include: The Star Rating System based on western perceptions and occasionally used by hotel authorities in China. The system comprises:

• Five star: usually used to mean foreign invested hotels.
• Four star: including most remaining foreign invested hotels and some state-owned properties.
• Three star: including a large number of state-owned hotels and some private hotels.
• Two star: including mostly collective, pooled and private hotels.
• One star: including mostly Chinese hotels that, as with two star establishments, cater largely to Chinese guests.
• No star rating: this is the bulk of Chinese small hotels catering almost solely to the local population. Additionally, hotels are sometimes grouped by ownership status:
• State-owned: those hotels owned by the Chinese state.
• Collective: those hotels owned most often by agricultural, industrial and business collectives. These are often rurally based.
• Private: these are few in number and represent nascent entrepreneurism in the hotel industry by Chinese investors.
• Pooling: these are hotels featuring mixed ownership structures usually through Chinese interests.
• Shareholding: Again, as with pooling above, these are usually hotels featuring a mixture of interests - both Chinese and foreign.
• Foreign invested: these are invariably owned and/or managed by the international chains in conjunction with overseas property developers/investors. Foreign in this context is taken to mean any overseas involvement excluding Hong Kong, Macau and Taiwan.
• Hong Kong, Macau and Taiwanese invested: these establishments are usually upmarket hotels with investment from overseas Chinese (overseas Chinese are subject to slightly different visa, investment and other regulations in China). Without any one coherent rating system other classifications are used including grading hotels by number of rooms. Additionally, within the text broad bands – upmarket, mid-range and budget - often classify hotels.
• Upmarket hotels can be found in all the major cities and a growing number of provincial towns and include the vast majority of the foreign funded hotels in China. In general they usually conform to four or five star international status and have, or have had, foreign management. Upmarket hotels in China invariably have international business centres, money changing facilities, conference facilities and a range of restaurants.
• Mid-range hotels are often those built by local developers, or less well-known foreign investors, that invariably have pretensions to upmarket status. Room rates tend to be below RMB300 and restaurant facilities are less western-oriented. Indeed, these hotels are usually targeted at the growing Chinese business community and Asian travellers.
• Budget hotels are almost unknown in China and there has not yet been the expansion in low priced accommodation seen in countries such as the UK and the USA. Therefore budget hotel in China invariably indicates cheap and poor quality. Most are not available to foreigners and English is intermittently spoken. Plumbing is notoriously faulty, lifts slow and restaurants poor quality if attached. They tend to be located near railway stations or, in the case of Beijing and Shanghai, in the suburbs.

Hotels in Hong Kong

The Market

Access Asia has published this updated report on the hotel industry in Hong Kong as part of the China Contact Market Research report series. The report covers the market and current state of recovery of the hotel sector in Hong Kong.

In the years prior to the handover and in 1997 hotel room rates, flights and the cost of visiting rose to astronomical levels. Room rates may have since been slashed and two-for-one flight promotions run, but the image of Hong Kong as an expensive destination is fixed in many potential visitors' minds.

By the latter half of 1999 room rates in Hong Kong were stabilising and occupancy rates creeping up again. Though the industry has taken a bruising in the last few years the reality remains that hotels are property and property remains a major investment and asset in Hong Kong.

There are also several bright spots on the horizon for Hong Kong’s hoteliers. Tourism numbers are climbing again while the Disney project is now going ahead. However, on the other hand, some claim that Hong Kong will be overshadowed by the rapidly emerging Hong Kong

Key Facts

• Reductions in room rates of 70-80% were not uncommon in late 1997 and 1998 as witness by the falling number of visitors and occupancy levels. Consequently, hoteliers have seen their revenues slashed in 1998. Hong Kong has 86 hotels with a total of 33,975 rooms.
• Despite higher occupancy levels in 1999 room charges have seen little growth. Room rates appear to have at least stabilised and are expected to hold steady in 2000 though not to return to pre-1997 levels.
• The surge in visitor arrivals at the end of 1999 resulted in a 3% increase in average room rates to HK$841 per night in October 1999. Demand for high-tariff B hotels was particularly strong.
• In 1999, the level of total guest billings was HK$19,231 million, a decline of 12.1% over 1995. However, the industry has recovered somewhat from the recession with the decline down from 5.1% in 1998 over 1997.

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