Accor to build one-third of its new China hotels in tourist spots

PUBLISHED : Wednesday, 28 May, 2014, 1:00am
UPDATED : Wednesday, 28 May, 2014, 1:00am

Accor, Europe's largest hotel operator, says it will build about a third of its 100 planned mainland hotels in tourist destinations as rising wealth leads to growing leisure travel and oversupply in cities depresses room tariffs.

Domestic tourism on the mainland was "growing at a rate of knots", Michael Issenberg, Accor's Asia-Pacific chairman, said last week.

That was making tourist spots more attractive than many urban sites, he said.

"If people acquire wealth, they want to travel," Issenberg said. "That's been the big change. Even five years ago, it was all cities."

The French hotel giant has already opened sites on ski slopes near the North Korean border, a beach resort on tropical Hainan island and a central Chinese forest park among its 128 mainland hotels. That will help it capitalise on domestic tourist trips that are forecast to grow by about 11 per cent a year in the next four years, according to data from Euromonitor International.

Other international leisure companies are also targeting the mainland market. Swedish fashion chain Hennes & Mauritz has opened a store in Zhangjiajie, which serves central Hunan province's scenic Wulingyuan national park. The town is also home to an Accor Pullman hotel.

China overtook Germany in 2012 to become the largest outbound tourism market, according to the United Nations World Tourism Organisation. International spending by Chinese travellers rose 26 per cent last year to US$129 billion, the agency said this month.

Expansion by domestic and international companies on the mainland has slowed some hotel operators' ability to increase room rates.

InterContinental Hotels' revenue per available room in China rose just 0.7 per cent year on year in the third quarter of last year, according to company filings.

Hotels in eastern China filled about 64 per cent of rooms in April. That compares with occupancy rates of about 70 per cent in Accor's economy hotels globally and 68 per cent in its upper- and mid-market locations last year.

"The oversupply can be chronic if things keep getting built, but if the supply even starts to moderate, demand will catch up," Issenberg said.

The chain was also building six new hotels in Myanmar amid rising foreign investment in the country, he said. A first site will open next month in the capital Naypidaw with others to follow in Yangon and at scenic Inle Lake.

Setting up credit-card payment networks, getting insurance and training workers was still a challenge in a country that had little experience with tourism, he said.

Myanmar had about 36,177 tourist arrivals in August last year, compared with 2.4 million during the same month in neighbouring Thailand.