Page 282 - 2017 White Paper
P. 282
7 White Paper on the Business Environment in China
China 2010b). Statistics from the National Tourism Budget hotels, however, seem to be proliferating
Administration reported a number of 134 million faster and further than luxury brands. China Daily
international visitors attracted to mainland China in 2010, reported in mid-2008 an estimation that by the end of
which is expected to reach 153 million by 2015 (Wang 2007 there were more than 100 budget hotel brands
2011). A 0.93 percent increase was recorded for overall operating approximately 1,000 locations across the
visitors between January and September in 2011 (The nation (Ding 2008), whereas one industry report more
National Tourism Administration of China 2011). recently published figures indicating that the number of
locations had grown to 2,800 nationwide by January 2009
In December 2008, China Daily reported a Ministry (Friedlnet 2009). Of the reportedly 1,200 hotels that were
of Commerce release stating that accommodation and under construction in Asia Pacific as of July 2010, 802
catering retail sales between January and November 2008 were said by a China Daily source to be on the Mainland,
had risen 24.9 percent year-on-year to 1.39 trillion yuan, and a quarter of those reported to be in the “lower price
and that there were 591 new foreign-invested companies category” (Moody 2009).
in the sector—31.4 percent fewer than the same period
in 2007—and “the actually utilized foreign funds slipped U.S.-based budget chain Days Inn, for example, is
11.9 percent to $840 million” (China Daily 2008). planning to open 500 new properties over the coming
five to seven years according to the Chinese franchise’s co-
The following year, the Ministry reported even fewer owner (China Daily 2011a); meanwhile, a tourism expert
new foreign-invested projects in the accommodation from the Shanghai Academy of Social Sciences predicts
and catering industries (41 and 90 fewer than that more than 1,500 new hotels over all categories will
2008, respectively); utilized foreign capital in the open on the Mainland every year from 2010 to 2015
accommodation sector predictably declined (by 20.6 (Yang 2011).
percent, in this case), although utilized capital in the
catering sector actually increased by 7.2 percent (Invest Despite impressive growth, some challenges remain
in China 2010a) (Invest in China 2010b). in the “China Market”, including “a mismatch in China
between what was needed in the market and the desire
It is possible some part of this decrease in foreign of often public sector investors to build statement
investment is related to the 2007 revision to the Catalog five star hotels”, (which we read as government vanity
for the Guidance of Foreign Invested Enterprises, which projects) and, according to China Daily, “the poor level of
beginning December 1, 2007, prohibited foreign direct staff training” (Moody 2009).
investment in hotels. While the majority of western“name
brands”primarily manage properties for local developers, Another issue attached to the conspicuous production
the revision also affected non-Chinese Asian developers, of high-end hotels is that, according to one analyst, they
who have been more directly invested in development are often built to drive up the prices of attached offices,
(Scott 2007). residential apartments and retail spaces (China Daily
2011a).
Another factor to consider is the already-high
saturation of major international Hotel brands, Employee acquisition and retention continues to be
particularly in the high end of the market; it was reported problematic. According to “experts” quoted by China
in 2007 by trade publication China Hospitality News, for Daily,“compared with other countries, employee turnover
example, that“by the end of [2006], 37 international hotel at hotels in China is very high” (Lu 2012).
management companies had entered Chinese market
with 60 brands of 502 hotels. The top five that have Furthermore, as the industry as a whole expands the
opened the most hotels in China are Wyndham with 159, talent pool is not growing apace, leading to a situation
Inter Continental with 69, Accor with 43, Starwood with in which “many hotels urgently need professional
37 and Marriott with 31” (China Hospitality News 2007), staff members, but are finding it even more difficult to
and the leading international brands are, collectively, recruit excellent employees as the demand for hotel
expanding not only in tier 1 cities but also into tier 2 and professionals increases” (Lu 2012).
tier 3 cities as well (China Daily 2011a).
282
China 2010b). Statistics from the National Tourism Budget hotels, however, seem to be proliferating
Administration reported a number of 134 million faster and further than luxury brands. China Daily
international visitors attracted to mainland China in 2010, reported in mid-2008 an estimation that by the end of
which is expected to reach 153 million by 2015 (Wang 2007 there were more than 100 budget hotel brands
2011). A 0.93 percent increase was recorded for overall operating approximately 1,000 locations across the
visitors between January and September in 2011 (The nation (Ding 2008), whereas one industry report more
National Tourism Administration of China 2011). recently published figures indicating that the number of
locations had grown to 2,800 nationwide by January 2009
In December 2008, China Daily reported a Ministry (Friedlnet 2009). Of the reportedly 1,200 hotels that were
of Commerce release stating that accommodation and under construction in Asia Pacific as of July 2010, 802
catering retail sales between January and November 2008 were said by a China Daily source to be on the Mainland,
had risen 24.9 percent year-on-year to 1.39 trillion yuan, and a quarter of those reported to be in the “lower price
and that there were 591 new foreign-invested companies category” (Moody 2009).
in the sector—31.4 percent fewer than the same period
in 2007—and “the actually utilized foreign funds slipped U.S.-based budget chain Days Inn, for example, is
11.9 percent to $840 million” (China Daily 2008). planning to open 500 new properties over the coming
five to seven years according to the Chinese franchise’s co-
The following year, the Ministry reported even fewer owner (China Daily 2011a); meanwhile, a tourism expert
new foreign-invested projects in the accommodation from the Shanghai Academy of Social Sciences predicts
and catering industries (41 and 90 fewer than that more than 1,500 new hotels over all categories will
2008, respectively); utilized foreign capital in the open on the Mainland every year from 2010 to 2015
accommodation sector predictably declined (by 20.6 (Yang 2011).
percent, in this case), although utilized capital in the
catering sector actually increased by 7.2 percent (Invest Despite impressive growth, some challenges remain
in China 2010a) (Invest in China 2010b). in the “China Market”, including “a mismatch in China
between what was needed in the market and the desire
It is possible some part of this decrease in foreign of often public sector investors to build statement
investment is related to the 2007 revision to the Catalog five star hotels”, (which we read as government vanity
for the Guidance of Foreign Invested Enterprises, which projects) and, according to China Daily, “the poor level of
beginning December 1, 2007, prohibited foreign direct staff training” (Moody 2009).
investment in hotels. While the majority of western“name
brands”primarily manage properties for local developers, Another issue attached to the conspicuous production
the revision also affected non-Chinese Asian developers, of high-end hotels is that, according to one analyst, they
who have been more directly invested in development are often built to drive up the prices of attached offices,
(Scott 2007). residential apartments and retail spaces (China Daily
2011a).
Another factor to consider is the already-high
saturation of major international Hotel brands, Employee acquisition and retention continues to be
particularly in the high end of the market; it was reported problematic. According to “experts” quoted by China
in 2007 by trade publication China Hospitality News, for Daily,“compared with other countries, employee turnover
example, that“by the end of [2006], 37 international hotel at hotels in China is very high” (Lu 2012).
management companies had entered Chinese market
with 60 brands of 502 hotels. The top five that have Furthermore, as the industry as a whole expands the
opened the most hotels in China are Wyndham with 159, talent pool is not growing apace, leading to a situation
Inter Continental with 69, Accor with 43, Starwood with in which “many hotels urgently need professional
37 and Marriott with 31” (China Hospitality News 2007), staff members, but are finding it even more difficult to
and the leading international brands are, collectively, recruit excellent employees as the demand for hotel
expanding not only in tier 1 cities but also into tier 2 and professionals increases” (Lu 2012).
tier 3 cities as well (China Daily 2011a).
282
