For Bold Luxury Hoteliers, Opportunities in China Despite Slowdown

on May 23 2013 | in Travel | by | with No Comments

Hilton, China, Hilton Shijiazhuang, Shijiazhuang

With chatter of a slowdown in China, some hoteliers remain undaunted.

Horwath HTL China, a tourism consultancy, recently commented on the strain luxury and five-star hospitality markets are experiencing, but noted that demand and demographic advantages in a country the size of China offer opportunities for those willing to make bold strides, according to China Daily.

Hilton Hotels & Resorts is rising to the occasion. “We plan to open around 10 properties this year (in China) and expect to accelerate the pace of growth moving forward,” said Bruce Mckenzie, senior vice-president, operations of greater China and Mongolia. Of the 10 Hilton Worldwide brands, only 4 are currently operating in China. That will change soon.

Instead of opening locations in already-saturated cities like Sanya, on Hainan Island, the famous “H” logo will be emblazoned across remote areas of China that do not yet have many high-end hotels. Mckenzie believes his brand has many opportunities to pick from, because room supply in China does not yet equal demand in some areas. “Higher personal income means more travel, both domestic and international, requiring more hotels in both business and leisure destinations,” he said.

Hilton aspires to increase its current 32 hotels on the Chinese mainland with more than 12,000 rooms to more than 150 properties with 55,000 rooms in the next several years, said Alex Kassantly, general manager of Beijing Conrad Hotel. “Smart luxury” will remain the brand’s core philosophy.

Hilton’s competitor, InterContinental Hotel Group (IHG), is also picking up momentum. In 2012, the group launched the HUALUXE chain of hotels and resorts specifically for Chinese, and with it, a plan to reach 100 cities across the country. But IHG, too, is thinking carefully about where to open up shop.

Richard Solomons, chief executive of IHG, said, “It is easy to come in and put hotels everywhere. But we turned down more deals than those we signed in China. We have to get a real understanding of what drives growth and success. We need to understand what is right for long-term development.”

Part of the IHG strategy is to weave itself into the local fabric, not only offering rooms for travelers, but facilities for local weddings and meetings. Solomons said that currently half of the group’s revenue comes from this local slant. “I think we want to become a Chinese business and eventually say our Chinese business is bigger than our American business,” he said.

Currently, the greatest impediment standing in the way of smart growth for any chain is a lack of knowledgeable staff. “The hospitality business is not about the building but the experience,” Solomons said, “To get the right people in right training and encourage them to stay on in the industry is important.”

photo credit: hilton

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