Domestic travel within China was strong last year, experiencing a 10% increase over the year before. Visitor arrivals declined by about 1%.

Hotel operators need to differentiate their properties to stay competitive, Michael Taylor writes

Domestic travel within China was strong last year, experiencing a 10% increase over the year before. Visitor arrivals declined by about 1%, and tourism spend dipped from US$51 million in 2013 to US$48 million.

According to Hotelchatter.com, more than 30 high-end hotels opened in China last year – averaging more than two a month. With so many launches, is oversupply in the works?

“As we move further into 2015, this growing glut of supply and the weakening demand for rooms in China makes competition rife within the industry, pushing hotel owners and management companies to seek out various means to differentiate their properties and attract as well as retain loyal spending customers,” says Anthony Ross, executive vice-president for Asia Pacific, Middle East and Africa, Preferred Hotels and Resorts.

“With this movement, more Chinese hotel owners are now re-evaluating the substantial costs and dilution of control over their assets that they are subject to with large international chain brands, often times taking the bold step to de-flag from these chain brands to develop their own.”

The government has taken several steps to give inbound tourism a shot in the arm. Initiatives include the implementation of 72-hour visa-free transit, incentives for travel agencies and more aggressive advertising and marketing around the world.

“Air and land transportation services have also increased connectivity between domestic destinations and China’s neighbours around the region, making travel to and within the country more efficient and pocket-friendly,” Ross says. “There has been continual growth in the demand and supply of hotel rooms, particularly in second and third-tier cities.”

The Preferred Hotels & Resorts group entered the China market in 2005. It added nine new properties in 2014, bringing the number of member hotels in the country to 22. Another four to six properties will be added this year. Included will be The Temple House, part of the Swire Group, which is expected to open by the second quarter of 2015 in Chengdu in Sichuan province.

Stunning setting

Bangkok-based Six Senses Hotels Resorts Spas will open its first property in China in July 2015. It will be located at Qing Cheng Mountain, a one-hour drive from Chengdu. The site was chosen because of its stunning scenery and the important role it has played in Chinese history.

“When the project first came to us, we were blown away by its position at Qing Cheng Mountain and the nearby Unesco World Heritage and Natural Cultural site,” says Benjawan Sudhikam, director of public relations and communications.

“From a historical perspective, it was in Chengdu that the first emperor built his capital around 2,400 years ago. It was here that the legendary Silk Road began with traders plying fine brocades, embroideries and bronzes all the way to Arabia.”

The region is also known as the birthplace of Taoism. “In addition, it is celebrated as the homeland of giant pandas and the impressive Dujiangyan irrigation system built in 256 BC,” Sudhikam says. “The area is simply beautiful and the ideal spot to create the Six Senses Qing Cheng Mountain.”

If this is the group’s first project in China, it will surely not be the last. “Six Senses has many projects under review in China,” Sudhikam says. “We believe that we will add several properties in China in the years ahead.”

Early movers

Hong Kong-based Shangri-La Hotels and Resorts was one of the first international hotel chains to enter the mainland China market, opening a five-star property overlooking West Lake in the picturesque city of Hangzhou in 1984. With the opening of Shangri-La Hotel, Nanchang, in February, the group will have 42 hotels in 31 destinations in the mainland.

The group opened four hotels in China last year, including Shangri-La’s Sanya Resort and Spa, Hainan – the group’s first resort in China.

“Because of our early entry into the market, the group has been able to target and secure some of the best locations in primary and secondary cities,” says Lori Lincoln, director of corporate communications, Shangri-La Hotels and Resorts.

“Our growth is well-paced, and Shangri-La is planning to open nearly 20 hotels through 2017 in China, with portfolio expansion in key cities such as Beijing – where the group has six hotels already – as well as in cities such as Nanchang, Tangshan, Hefei, Qinghuangdao, Yingkou, Jinan and Xiamen.”

Starwood entered the mainland market in 1985 with a hotel in Beijing. The group currently operates 146 hotels under nine brands throughout the country. It opened 17 hotels and signed 41 deals in 2014 and will open another 20 hotels in Greater China this year.

“Tier-one cities such as Beijing, Shanghai, Guangzhou and Shenzhen will remain key to us, while we are also expanding into the fast-growing tier-two and tier-three cities like Chengdu, Dalian, Hangzhou,

Sanya, Nanjing, Changsha, Zhuhai,

Lijiang, Suzhou, and Xiamen,” says

Wendy Huang, vice president sales and marketing, Greater China, Starwood Hotels and Resorts.