A leading mainland hotel chain headquartered in Shanghai expects the sales volume of the country's hospitality industry to expand by more than 20 per cent over the next five years and that of budget hotels by at least 30 per cent.
Hong Kong-listed Shanghai Jin Jiang International Hotels said it would increase the number of its budget hotels from 505 by June this year to 1,000 in three to five years. 'The living standards of China's population is increasing. People are travelling more and they want to stay in hotels that are not just liveable, but safe and clean,' said Jin Jiang managing director, Chen Hao.
The company is a major hotel service provider on the mainland, with 614 hotels spread across 31 provinces. Of these, 109 are four- and five-star, while 505 are budget hotels.
Chen said that in the first half of this year, the company opened more than 60 budget hotels. That number is set to exceed 100 this year.
Rising pay on the mainland is expected to boost domestic spending, of which the budget hotel sector will be a big beneficiary as Beijing tries to encourage domestic consumption to steer the economy away from its focus on exports.
Salaries are expected to rise up to 20 per cent this year and the trend is likely to continue for another five years, supporting spending. But some experts warn against the oversupply in hotel rooms that Shanghai is bound to face after the World Expo. Zhao Huanyan, researcher at the Tourism Research Centre of the Shanghai Academy of Social Sciences, said: 'The budget hotel segment in Shanghai is already saturated.' He added that the ratio of budget hotels to all hotels in Shanghai was 77 per cent while for all other mainland cities, it was below 30 per cent. In the US, the ratio is about 70 per cent.
