International Hotels expand in China to build up their brand
When millions of Japanese began to travel abroad during the country’s economic boom in the 1980s, international hotel operators around the world launched tailor-made service for Japanese tourists.
Thirty years later, hoteliers have had a change of their hearts. Chinese tourists have become their new darlings as the Chinese economy continues to flourish, and the country’s citizens flock to popular overseas destinations in record numbers.
While continuing to improve Chinese-style services in hotels worldwide, international hoteliers have expanded hotel outlets in mainland China rapidly in a move seen as a brand-building gamble.
“International hotel operators hope to build up their brands through opening hotels in different mainland cities,” said Goodwin Gaw, chairman of Gaw Capital, a Hong Kong-based private equity real estate fund, with investments in China ranging from the commercial to the residential.
Gaw, who reckons there is an oversupply of hotels in China, believes that international brands’ expansion is part of the marketing strategy.
“When mainlanders travelling abroad. They may pick their hotels,” said Gaw.
Meliá Hotels International Group is one of the international hotels eyeing both mainland demand and Chinese outbound travellers.
The group, which ranks the third largest and 17th largest hotel group in Europe and the world respectively, currently has over 370 properties worldwide. Last year, they entered China with Meliá Xian and Meliá Jinan, and they have just signed the deal to open Meliá Shanghai by 2016.
“(The expansion) has dual purpose. One is Chinese market in China. Outbound is also interesting for us, we see the potential of Chinese to go abroad,” said María Zarraluqui, Global Development Managing Director for Meliá Hotels International.
She said Melia Hotels has a strong presence in South America and that will capture the rising number of Chinese travellers who love exotic cities such as Cuba to experience their lives.
“China market is a very interesting market for us,” said Zarraluqui.
“At the present moment we have eight hotels signed.” Talking about future plans in China, she said: “ Twenty hotels would be a good figure,” she said.
Apart from China, Melia International is also expanding in Asia, according to Zarraluqui.
US hotel operators are also expanding their network in China, with Hilton planning to open 180 hotels in China.
Andrew Clough, senior vice president Development, Middle East & Asia Pacific, Hilton Worldwide, said the growing middle income class in China prompted the company to keep an eye on mid-scale hotel developments in China.
“ Mid-scale hotel is all about capturing the domestic Chinese population,” said Clough.
Starwood Hotels and Resorts Worldwide, which owns brands such as Sheraton and Westin, has about 130 hotels in its pipeline in China and InterContinental Hotels Group plans to open 186 hotels over the next five years in the key China market
With outbound tourism from China growing, hoteliers also offer tailored services to Chinese travellers.
Hilton Hotels & Resorts, the flagship brand of Hilton Worldwide, offers Hilton Huanying, a tailored experience for Chinese travellers such as dedicated TV channel with Chinese programming and food catered for Chinese.
Hilton Huanying takes its name from the Chinese word for “welcome” and the programme debuted in 2011, said Andrew Clough, senior vice president Development, Middle East & Asia Pacific, Hilton Worldwide.
Currently there are 83 participating properties in 25 countries that encompass many destinations popular among Chinese visitors including San Francisco, New York City, Hawaii, Vancouver, London, Tokyo and Sydney.
Revenues improved in hotels with “Huanying” services, said Clough.
This year, InterContinental Hotels Group introduced similar tailor-made service – called “China Ready”, or “Zhou Dao” in Putonghua , that accepts China UnionPay cards, feature Chinese television channels in their rooms.