Concrete AnalysisHotel operators need to get China tourism market right
While outbound sector has been getting attention, a push for domestic travel means hospitality firms can play two-way bet with tie-up options
Last month, sales company Infinitus China sent 12,700 employees on a six-day trip to Thailand, travelling in groups of up to 3,000 at a time. This was hot on the heels of Tiens Group celebrating its 20th anniversary by sending 6,400 employees on an all-expenses trip to France, booking up 140 hotels in Paris and 4,700 rooms on the Cote d'Azur.
Understandably, the story caught the eye of the world's media.
Outbound tourism from China is big business. The projections for the surge in Chinese tourism are huge - 174 million tourists spending US$264 billion overseas by 2019.
As a result, Chinese investment in overseas hotels is having its share of the limelight: just this month Jin Jiang International Holdings announced a memorandum of understanding with Prince Hotels of Japan, having acquired Groupe du Louvre last year; and Fosun followed its hard-won acquisition of the loss-making Club Med by acquiring a 5 per cent stake in Thomas Cook. Last but not least is Chinese insurer Anbang's trophy acquisition of the Waldorf Astoria Hotel in New York for US$1.95 billion.
Cross-border investment in the hotel sector continues to rise, with US$68 billion of global capital flows projected for this year - a rise of 15 per cent from last year. The hotel sector is well placed to attract its share of capital and in some markets hotels are viewed as outperforming traditional commercial real estate.
Historically, international tourism was the driver of growth for China's hotel market. Now there is a real push to promote domestic tourism. How to secure a piece of that spending is the challenge, but there are positive signs for those able to adapt in search of new opportunities.