Hotel development across China is at an all-time high, as developers and investors bet on the fundamental long term growth prospects of the country’s travel sector.
The confidence remains, despite some short term softness of the market reported in second quarter results from the international hotel brand groups. IHG Hotels & Resorts reported revpar down 7% at its Chinese hotels in the quarter, while Hilton reported a 5% decline, and Marriott reported a 4% fall.
Temporary market weakness
“We expect a continuation of current weak demand and pricing trends in the region, with a third quarter anticipated to see the most meaningful revpar decline, as outbound travel accelerates during summer holidays,” warned Marriott CFO Leeny Oberg. All of the companies pointed out that, while the Chinese are travelling once more, they are travelling out to other destinations in Asia, rather than within China. And, as of now, less foreign visitors are making their way in the opposite direction, inbound into China.
According to consultants Lodging Econometrics, the Chinese construction pipeline now extends to 3,815 projects, representing a potential addition of 699,786 hotel rooms. The hotel number is up 4% year on year.
Of that total, projects actually already under construction are also at an all-time high, with 72% of the pipeline, or 2,743 hotels, at the building stage. During the second quarter, ground was broken as construction started on 219 projects. A further 390 hotel projects are expected to start construction within the next 12 months.
Breaking out the pipeline by market segment, 32% of the hotels on the way are in the upper midscale segment, ahead of the upscale segment with 979 projects listed. Regionally, Chengdu has the greatest volume of hotels on the way, ahead of Shanghai and Guangzhou.
In addition to figures collated by Lodging Econometrics, there are additional hotel projects from domestic businesses that are not included in the numbers. Local operator H World, for example, reported during first quarter results it has a pipeline of 3,138 unopened hotels. Of the total, 1,171 are for its economy brands, which include HanTing, Hi Inn and Ni Hao; and 1,967 are for its midscale and upper-midscale brands including Ji, Orange and Starway.
Brands maintain opening pace
Hilton is pushing hard to keep up with its peers, and recently celebrated the opening of its 700th hotel in Greater China, the Conrad Chongqing which joins a group of Hilton properties in the region that will be more than 15 by the end of 2024. Later this year, it will open a Curio Collection hotel in Chongqing.
Also keen to grow its China business is Wyndham, which in the first half of 2024 increased signings by 22% compared with 2023, adding 104 hotels to its pipeline. The company opened the 88 room Wyndham Garden Qionglai Downtown, and debuted a new look for its Microtel by Wyndham brand. New look hotels launched in Handan New Century, Xishuangbanna Mengle and Qingdao.
