New | Mainland Chinese tourist boom fuels hotel expansion plans
Midscale brands tap fast-growing middle class as China's hotel market to surpass US by 2025
Midscale brands are expected to take the lead as international hotel chains embark on an aggressive expansion plan on the mainland, where a fast-expanding middle class and rapid urbanisation is set to create greater opportunities for the hospitality industry.
InterContinential Hotels Group, the largest international hotel operator on the mainland, will double its number of hotels there over the next five years, while Carlson Rezidor Hotel plans to triple its number of hotels to 50 by 2019, and Hilton Worldwide plans to introduce a new brand. All of them are expanding through management contracts.
Kenneth Macpherson, InterContinental's chief executive for Greater China, said he expects China's hotel market to surpass the US in 2025, with 40 per cent of global tourism growth coming from China and India.
"A rise in middle class numbers is translating into more consumption," he said. "It is consistent with the government's policy and particularly focused on tourism development and leisure spending."
The chain expects to double the number of hotels in the next five years. It has 205 hotels totalling 58,600 rooms in the pipeline. More than half will be managed under the midscale brand of Holiday Inn and Holiday Inn Express, while 18 will operate under the luxury brand of InterContinental Hotels and Resorts.
"There is a limited number of InterContinental hotels you can put in a city but you can put a lot of Holiday Inns," he said.
At present, its hotel management portfolio comprises 241 hotels with 77,930 rooms spanning 70 mainland cities.
Under its asset-light strategy, InterContinental Hotels sold its only wholly owned asset in the China market, InterContinental Hong Kong in Tsim Sha Tsui, for US$938 million, the largest en bloc hotel deal in the city.
Thorsten Kirschke, the Asia-Pacific president of Carlson Rezidor Hotel, said the chain plans to increase its hotels from 14 to 50 in China by 2019.
"Our hotels in the mainland are catering for the domestic market," he said, pointing out that it would expand its midscale brand, Park Inn, in order to capitalise the growing middle-class demand that will raise tourism spending.
The chain operates 1,370 hotels with 180,000 rooms under development and has a footprint in 110 countries and territories.
Hilton Worldwide, meanwhile, said it would bring its "lifestyle" brand, Canopy by Hilton, to the mainland market, to attract customers who value design, common areas and advanced technology.
The group will also expand its midscale brands to capture the mainland domestic market, said Andrew Clough, senior vice-president of development, Middle East & Asia Pacific, at Hilton Worldwide, with talks underway to open Canopy by Hilton hotels.
