Page 214 - 2016_WhitePaper_web
P. 214
6 White Paper on the Business Environment in China
international hotel management companies had entered Chi- director He Jianmin from the Shanghai University of Finance
nese market with 60 brands of 502 hotels. The top five that have and Economics told China Daily that some international
opened the most hotels in China are Wyndham with 159, In- brands—including Accor, InterContinental Hotels Group and
terContinental with 69, Accor with 43, Starwood with 37 and MGM Hospitality—have already created localized brands spe-
Marriott with 31,”12 and the leading international brands are, cifically for the Chinese market.17
collectively, expanding not only in tier 1 cities but also into tier
2 and tier 3 cities as well.13 The appeal of launching local-styled brands is not limited
to the Mainland, either; it was reported that there will be “88
Budget hotels, however, seem to be proliferating faster and million Chinese travelers overseas by 2015”; other Summit at-
further than luxury brands. China Daily reported in mid-2008 tendees sagely agreed that “a custom hotel brand designed for
an estimation that by the end of 2007 there were more than 100 China is also an effective way to gain Chinese customers who
budget hotel brands operating approximately 1,000 locations travel abroad.”17
across the nation,14 whereas one industry report more recently
published figures indicating that the number of locations had Still, it would seem that at least in the top segment of the
grown to 2,800 nationwide by January 2009.15* Of the report- market existing international brands are faring quite well al-
edly 1,200 hotels that were under construction in Asia Pacific as ready: a China Tourism Academy report found that by the end
of July 2010, 802 were said by a China Daily source to be on the of 2010 “nearly 70 international hospitality brands from 41
Mainland, and a quarter of those reported to be in the “lower countries and regions” were “managing about 20 percent of the
price category.”16 country’s top-end hotels and taking 80 percent of the profits.”18
U.S.-based budget chain Days Inn, for example, is planning One culprit for the spectacularly poor competition from
to open 500 new properties over the coming five to seven years Mainland hotel companies in terms of profitability is the lin-
according to the Chinese franchise’s co-owner;13 meanwhile, a gering presence of non-hospitality-oriented state-owned enter-
tourism expert from the Shanghai Academy of Social Sciences prises in the sector: despite Minister Li Rongrong of the State-
predicts that more than 1,500 new hotels over all categories will owned Assets Supervision and Administration Commission
open on the Mainland every year from 2010 to 20151 ordering SOEs to divest of “non-core hotel assets” in 2003,
nearly a decade later “some 2,000 hotels valued at trillions of
Despite impressive growth, some challenges remain in the yuan remain under SOE ownership”19
“China Market”, including “a mismatch in China between what
was needed in the market and the desire of often public sector Although this brazen disobedience to a ministerial-level of-
investors to build statement five star hotels,” (which we read as ficial is somewhat surprising, China Daily reports several rea-
government vanity projects) and, according to China Daily, sons why SOEs may not want to divest so quickly of their hotel
“the poor level of staff training.”16 assets: first, “some SOEs own the property managed by interna-
tionally known hotel brands, which have many times brought
Another issue attached to the conspicuous production of faster returns than their core businesses.” Secondly, “inefficient
high-end hotels is that, according to one analyst, they are often operations at many SOE-run hotels [makes] potential buyers
built to drive up the prices of attached offices, residential apart- wary” and thirdly, “questions surrounding existing hotel staff
ments and retail spaces.13 and tax liabilities are other hurdles to potential sales.”19 In other
words, while an SOE-owned hotel may be able to bend regu-
Employee acquisition and retention continues to be prob- lations and get away with poor efficiency, similar performance
lematic. According to “experts” quoted by China Daily, “com- would be untenable for a private enterprise competing in the
pared with other countries, employee turnover at hotels in Chi- market.
na is very high.”17
Following President Xi Jinping’s public push for govern-
Furthermore, as the industry as a whole expands the talent ment austerity, hoteliers “are taking steps to make their prop-
pool is not growing apace, leading to a situation in which “many erties look a little less fabulous” up to and including attempting
hotels urgently need professional staff members, but are finding to remove stars from their 5-star ratings in a bid to “win back
it even more difficult to recruit excellent employees as the business from politicians.”20
demand for hotel professionals increases.”17
“Among the about 700 five-star hotels in China,” writes The
As the market continues to develop, however, internation- Wall Street Journal, “average occupancy sagged five percentage
al brands are increasingly looking to cater their experiences to points in the year to mid-2013, to 50 percent, according to gov-
Chinese guests both in China and abroad. At the “21st Century ernment figures cited in China Tourism News. The figures show
Hotel Industry Summit” held in 2012, Tourism Management
*Admittedly, this figure comes from the abstract of a report, since its full contents are almost certainly beyond the scope of this ’White Paper’ and furthermore cost
in excess of 1,000 Euros.
214
international hotel management companies had entered Chi- director He Jianmin from the Shanghai University of Finance
nese market with 60 brands of 502 hotels. The top five that have and Economics told China Daily that some international
opened the most hotels in China are Wyndham with 159, In- brands—including Accor, InterContinental Hotels Group and
terContinental with 69, Accor with 43, Starwood with 37 and MGM Hospitality—have already created localized brands spe-
Marriott with 31,”12 and the leading international brands are, cifically for the Chinese market.17
collectively, expanding not only in tier 1 cities but also into tier
2 and tier 3 cities as well.13 The appeal of launching local-styled brands is not limited
to the Mainland, either; it was reported that there will be “88
Budget hotels, however, seem to be proliferating faster and million Chinese travelers overseas by 2015”; other Summit at-
further than luxury brands. China Daily reported in mid-2008 tendees sagely agreed that “a custom hotel brand designed for
an estimation that by the end of 2007 there were more than 100 China is also an effective way to gain Chinese customers who
budget hotel brands operating approximately 1,000 locations travel abroad.”17
across the nation,14 whereas one industry report more recently
published figures indicating that the number of locations had Still, it would seem that at least in the top segment of the
grown to 2,800 nationwide by January 2009.15* Of the report- market existing international brands are faring quite well al-
edly 1,200 hotels that were under construction in Asia Pacific as ready: a China Tourism Academy report found that by the end
of July 2010, 802 were said by a China Daily source to be on the of 2010 “nearly 70 international hospitality brands from 41
Mainland, and a quarter of those reported to be in the “lower countries and regions” were “managing about 20 percent of the
price category.”16 country’s top-end hotels and taking 80 percent of the profits.”18
U.S.-based budget chain Days Inn, for example, is planning One culprit for the spectacularly poor competition from
to open 500 new properties over the coming five to seven years Mainland hotel companies in terms of profitability is the lin-
according to the Chinese franchise’s co-owner;13 meanwhile, a gering presence of non-hospitality-oriented state-owned enter-
tourism expert from the Shanghai Academy of Social Sciences prises in the sector: despite Minister Li Rongrong of the State-
predicts that more than 1,500 new hotels over all categories will owned Assets Supervision and Administration Commission
open on the Mainland every year from 2010 to 20151 ordering SOEs to divest of “non-core hotel assets” in 2003,
nearly a decade later “some 2,000 hotels valued at trillions of
Despite impressive growth, some challenges remain in the yuan remain under SOE ownership”19
“China Market”, including “a mismatch in China between what
was needed in the market and the desire of often public sector Although this brazen disobedience to a ministerial-level of-
investors to build statement five star hotels,” (which we read as ficial is somewhat surprising, China Daily reports several rea-
government vanity projects) and, according to China Daily, sons why SOEs may not want to divest so quickly of their hotel
“the poor level of staff training.”16 assets: first, “some SOEs own the property managed by interna-
tionally known hotel brands, which have many times brought
Another issue attached to the conspicuous production of faster returns than their core businesses.” Secondly, “inefficient
high-end hotels is that, according to one analyst, they are often operations at many SOE-run hotels [makes] potential buyers
built to drive up the prices of attached offices, residential apart- wary” and thirdly, “questions surrounding existing hotel staff
ments and retail spaces.13 and tax liabilities are other hurdles to potential sales.”19 In other
words, while an SOE-owned hotel may be able to bend regu-
Employee acquisition and retention continues to be prob- lations and get away with poor efficiency, similar performance
lematic. According to “experts” quoted by China Daily, “com- would be untenable for a private enterprise competing in the
pared with other countries, employee turnover at hotels in Chi- market.
na is very high.”17
Following President Xi Jinping’s public push for govern-
Furthermore, as the industry as a whole expands the talent ment austerity, hoteliers “are taking steps to make their prop-
pool is not growing apace, leading to a situation in which “many erties look a little less fabulous” up to and including attempting
hotels urgently need professional staff members, but are finding to remove stars from their 5-star ratings in a bid to “win back
it even more difficult to recruit excellent employees as the business from politicians.”20
demand for hotel professionals increases.”17
“Among the about 700 five-star hotels in China,” writes The
As the market continues to develop, however, internation- Wall Street Journal, “average occupancy sagged five percentage
al brands are increasingly looking to cater their experiences to points in the year to mid-2013, to 50 percent, according to gov-
Chinese guests both in China and abroad. At the “21st Century ernment figures cited in China Tourism News. The figures show
Hotel Industry Summit” held in 2012, Tourism Management
*Admittedly, this figure comes from the abstract of a report, since its full contents are almost certainly beyond the scope of this ’White Paper’ and furthermore cost
in excess of 1,000 Euros.
214
