Marriott International plans aggressive expansion plan in China

Hotel group eager to court Chinese business travellers on domestic trips

PUBLISHED : Sunday, 08 November, 2015, 11:43pm
UPDATED : Sunday, 08 November, 2015, 11:43pm

Global hotel chain Marriott International has unveiled an aggressive expansion plan in China that includes entering more than 20 second and third-tier cities in four years.

Marriott joins other global hotel groups expanding in China. InterContinental Hotels Group recently said it would double its hotels over the next five years while Carlson Rezidor Hotel said it planned to triple its hotels to 50 by 2019.

"Not just international travellers, we want to appeal to Chinese business travellers that travel between Chinese cities, " said Craig Smith, the president and managing director of Marriott Asia-Pacific. "We find there is increasingly more leisure travelling within China by the Chinese."

Marriott already has hotels in 26 Chinese cities. "I want to make that 50-plus cities in three to four years," Smith said.

New locations will include cities such as Yiwu in Zhejiang province, famous as the world's largest supplier of trinkets, and Xinzhou in Shanxi province, home to the well-known Wutaishan resort.

Despite Beijing's anti-corruption drive that has dented luxury consumption and an economic slowdown, sales at Marriott have risen 5 per cent in China this year. In Shanghai, sales are up 12 per cent.

Compared with major cities, Smith said that in smaller cities a larger percentage of the revenue is derived from food and beverages rather than rooms. In some cities, food and beverages can account for up to 60 per cent of revenue because of the shortage of function rooms for weddings or meetings.

Marriott has more than 80 hotels under five brand names in China: Ritz-Carlton, JW Marriott, Marriott, Courtyard and Renaissance.

The hotel giant sees great potential in the Chinese market and will double its portfolio in the country in four years.

"The economy is slowing down but it is still around 7 per cent. And the middle classes are growing so fast." Smith said.

"Think about it. We run 50 hotels in Atlanta, a small city in the US, but only 22 hotels in Shanghai."

Smith said he expected China to surpass the US to become the largest source market for hotels in seven to 10 years, but stressed that Chinese customers were more "sophisticated" when booking hotels.

To satisfy the "smarter" Chinese travellers, Marriott has set up programmes and services tailor-made for Chinese customers. In September, the group signed a deal with Alibaba's Alipay, the Chinese version of Paypal, to facilitate digital payments. Smith said it is also working on a collaboration deal with WeChat payment.

Contrasting its performance on the mainland, Marriott's sales in Hong Kong have shrunk 4 per cent this year.

"Luxury hotels probably are hurting the most because much less luxury Chinese travellers are coming to Hong Kong," Smith said.

In the Asia-Pacific, Marriott's strongest revenue growth this year is from India and Japan, where sales surged 20 per cent.

Smith said it was mostly driven by the yen's devaluation.

"Chinese travellers coming to our hotels were up 120 to 140 per cent this year," he said.