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.

Market Definitions

Access Asia has published this updated report on the hotel industry in China 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 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.

By the end of 1998 the market was saturated with too many four and five star international hotels and a lack of affordable budget accommodation. The result was a slump in room rates and occupancy levels.

However, in 1999 and 2000 occupancy rates and profits picked up as the market surged due to greater numbers of visitors to China, the long holidays around the 50th anniversary celebrations and improved marketing.

Key Facts

• China has a total of approximately 5,201 hotels, a growth of nearly 20% since 1996. This represents a total of 701,700 available rooms in China.
• In 2000 the hotels sector recorded a 10.1% growth. Despite overcapacity at the top end of the market the sector received a boost from the influx of visitors to Beijing for the 50th anniversary celebrations of the Chinese revolution around the National Day celebrations in October.
• Additionally, Shanghai was boosted by a growing number of conferences and exhibitions and the market is general saw a rise in domestic travellers using hotels.

Core Contents

• The total market for hotels by hotel bill values and hotel expenditure as a component of total tourism spending and pan-Asian comparisons.
• Total number of hotels and by province
• Origin of hotel revenue streams by category (room rates, catering etc.)
• Total hotel capacity in terms of room numbers, ownership structure and by grade.
• Hotel profitability by ownership form, size and star rating.
• Occupancy rates in total and by grade, size, major city and star rating.
• Hotel occupancy duration times and average length of stay.
• The effect of the inbound tourism market on the hotel industry
• Room rate data for all major chains and cities.
• Issues affecting the market including legislation, hotel technology, family hotels, WTO, telecoms, catering, budget hotels & new players.
• Advertising and marketing trends within the industry.
• Consumer profiles of hotel guests in China.
• SWOT analysis on China’s hotel market.
• Profiles of over 50 major foreign and domestic companies involved in China’s hotel market.
• Full forecasts 2001-2005

Company Coverage

• Accor
• ANA Hotels
• Asia Orient Holdings
• Asia Standard Hotels Group
• Bass Hotels & Resorts
• Beijing Sanyuan Foods Company
• Cathay Hotels
• Century Hotels
• Chevalier International Holdings
• China Eastern Airline
• China Famous Hotel
• Corporation
• China International Industry & Commerce
• China Travel Hotel Management Services HK
• Choice International
• CIE Management
• Civil Aviation Administration of China Hotels
• Crowne Plaza
• Emerald Hotels
• Equatorial Hotels
• Everbright Group of China
• Far East Hotels & Entertainment
• Four Seasons Hotels & Resorts
• Future Express eHotel
• Gloria International Hotels
• Golden Tulip Worldwide
• Guangdong International Hotel Management
• Guangzhou Pearl River Hotel Management Co.
• Hilton Hotels
• Holiday Inn
• HK & Shanghai Hotels
• Howard Johnson International
• Hutchison Whampoa
• Hyatt Hotels & Resorts Intercontinental
• Kempinski Hotels
• Mandarin Oriental
• Marriot International
• Maxdo Group
• Media Centre
• Meritus Hotels & Resorts
• Miramar Hotel & Investment Company
• Mövenpick Hotels & Resorts
• New World Development
• Nikko Hotels
• Northwest Developments
• Radisson SAS
• Ramada International
• Regal International
• Ritz Carlton Hotels
• Shanghai Jinjiang Tower Company
• Shanghai New Asia
• Shangri-La Asia
• Sheraton Hotels
• SMI Hotels & Resorts
• Sofitel
• SRS Worldhotels
• Starwood Hotels & Resorts
• Summit International
• Swiss-Belhotel
• Swissotel Management Corporation
• The Leading Hotels of the World
• Utell International
• Westin Hotels
• Wharf Holdings
• Windsor Hotels
• Yunnan Zhonghui Tourism Company
• Zenith International
• Zhengzhou Yuda Real Estate
• Zhejiang World Trade Centre Hospitality Service Corporation

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