The United States is thus far the largest hotel market in the world. But researchers estimate that by 2025, China will enjoy the right to this title by having more than 6 million hotel rooms.
This report was issued by InterContinental Hotels Group (IHG), which is the world’s largest hotel company in terms of number of rooms. Thanks to figures from the National Bureau of Statistics in China and the UN World Travel Organization, IHG estimates that by 2039, China’s hotel market will expand 4 times its current size to reach 9 million rooms.
The Boston Consulting Group has already predicted China surpassing Japan in 2013 to take second place as the world’s largest market for tourism. If achieved, China will boast an impressive 8% of the world’s tourist market share.
Additionally, the Chinese National Tourism Administration predicts the number of incoming travelers to hit 3.3 billion by 2015!
So how has this growth been possible? Mainly through government support and the Chinese demand for famous brand names.
In 2009, China’s 12th Five-Year Plan (2011-2015) was expanded to include tourism as a pillar industry. This undoubtedly boosted their hotel sector, already driven by an upper-middle class in China that has recently developed rather quickly. When combined with the wealthy elite, China’s emerging upper-middle class will double that of their US counterparts in fewer than 15 years.
However, there have been legitimate concerns about oversupply in China’s domestic market.
In April, the average occupancy of five-star hotels in major Chinese cities was between 64 and 88 percent. This statistic reveals an increasing will to spend not only on luxury products, but on luxury experiences as well.
By 2015, approximately 400 billion yuan (62.5 billion US) will have been invested in new hotels. Undoubtedly, China’s GDP relies heavily on its tourism industry. In fact, the government expects it to contribute as much as 4.5% by 2015, with revenue rising 12% each year.
Despite the big numbers and overwhelming statistics, Chinese hoteliers remain optimistic and continue to welcome the booming business.
Refusing to be outdone, American hoteliers have a large hand in this Chinese expansion.
Companies like IHG and Starwood Hotels & Resorts each have development plans for 143 (already 162 IHG hotels) and 90 new Chinese hotels, respectively. Sheraton alone, owned by Starwood, will have 9 new hotels by the end of 2012. At the end of this year, the number of Sheratons in China will total 46.
Furthermore, Hilton Worldwide has plans to open 100 hotels by the year 2014. Similarly, some 44 Marriott hotels have been planned for construction, to add to the total of 56 Marriotts already working in China. Even more impressive, the Wyndham Hotel Group owns 401 hotels in China.
Of course, with over 26 million visitors to China in 2010, it’s a great opportunity for nearly any business.
Many more international hotels are even going beyond first-tier cities to expand their brand in second- and third-tier cities as well. Having already started in 2010, over 1500 new hotels will be built in China each year until the year 2015.
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