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INVESTMENT

Global hotel brands increasingly targeting second tier mainland cities

PUBLISHED : Friday, 05 September, 2014, 9:50am
UPDATED : Friday, 05 September, 2014, 9:50am

International hotel brands are expected to increasingly target lower tier Chinese cities despite increasing challenges in the sector, according to international property consultant Knight Frank.

In its latest research report released on September 4, Knight Frank said the mainland’s hotel market is facing fierce competition among local and international hotel brands, slower local economic growth, increasing operating costs and the government’s policies to curb the consumption of luxury goods and services.

“Looking ahead, we expect further development in China’s hotel market, particularly in second and third-tier cities where potential is vast,” David Ji, head of Research & Consultancy, Greater China at Knight Frank, said in the report.

Knight Frank said negative factors did not dampen investors’ expansion plans in the country.

We expect further development in China’s hotel market
David Ji, Knight Frank

Sofitel, for example, will open eight more hotels in mainland China by 2017, with four more under the planning stage. Meanwhile, Banyan Tree will open hotels and resorts in Yangshuo and Huangshan this year.

In July, Wharf announced the launch of a luxury brand, Niccolo, to operate hotels at its mainland flagship commercial complexes. The first Niccolo hotel will open in the first quarter of next year within the group’s newly opened International Finance Square Chengdu in Sichuan province.

The report also covers the hotel sector in six major cities in Greater China, including Beijing, Shanghai, Guangzhou, Hong Kong, Macau and Taipei.

Macau remained the most active last year, adding over 1,700 five-star hotel rooms to its stock, followed by Beijing and Guangzhou. In the first half of this year, Beijing became the most active city, adding over 1,300 new rooms.

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