Chinese developers eye overseas hotel deals

Chinese hotel developers are gearing up for inroads in foreign markets as they follow the spending trail of mainland tourists.

The go-global push is also influenced by fears of a room glut in the mainland's hospitality sector. Some wisdom from the ages, too, could well have entered the thinking of the developers, perhaps mindful of the Chinese proverb that rich water should be kept in one's own fields.

The Communist Party's anti-corruption drive and frugality campaign have also been blamed for contributing to a malaise in the domestic hotel market.

Room rates at five-star hotels in major mainland cities declined 5 per cent last year, property consultancy Jones Lang LaSalle said.

The lacklustre home market has given hotel developers added incentive to sniff out opportunities from the strong outbound travel flows.

About 100 million Chinese visited tourist destinations abroad last year, splashing out US$120 billion on their way to becoming the biggest spenders in global tourism, the state-owned Economic Daily said.

Franshion Properties (China), which is planning a spin-off listing on the Hong Kong stock market, said it would study trends on the mainland's outbound tourism in the hope of finding a new growth engine. The company's hotel assets, including the landmark Jin Mao Tower in Shanghai, would be separated for an independent listing.

"We will keep a close watch on popular tourist destinations such as London and New York," said a senior executive at China Jin Mao Group.

"We intend to focus on the places most Chinese travel to for our development and expansion plans."

The developers are banking on a belief that Chinese would feel more comfortable staying at hotels offering Chinese food and services when travelling abroad.

"We want to build hotels at places where Chinese go," said Simon Manning, a vice-president at Langham Hospitality Group, owned by Hong Kong developer Great Eagle Holdings. "Wealthy Chinese are going to be the next largest consumer group worldwide."

Manning added that making the hotels Chinese-friendly while maintaining a good relationship with the Chinese community - including the embassies and firms' overseas-based branches - held the key to success.

Zhang Yuliang, the chairman of Greenland Holding Group, Shanghai's largest property developer, earlier said that a better understanding of Chinese habits and mindset would give local companies an overwhelming advantage over foreign rivals in attracting mainland outbound tourists.

Greenland is conducting a back-door listing on the mainland share market as part of its efforts to back up the company's assault on the global market.

Jin Mao said it would keep the namesake Jin Mao brand in its hotels abroad alongside the global hotel brands that were introduced to manage the outlets.

Jin Mao Tower, in Shanghai's Lujiazui finance and trade zone, for a time became the mainland's tallest skyscraper after it was completed in 1999. The 88-storey building has been seen as a symbol of Shanghai's transformation into one of the world's elite metropolises.

"Jin Mao impresses Chinese people as a premier brand and it will help us attract domestic tourists abroad," the executive said.