China Hotel Market Shows the Strain, but Future Continues to be Bright

By On 12th October 2012

Hong Kong, October 12th 2012

The Chinese hotel market has been showing the strain, especially in the Luxury and five star markets, but burgeoning demand and the incredible demographic advantages in a country the size of China will help ease operating conditions and improve performance. This was one of the conclusions from a panel of China hotel experts at the 23rd Hotel Investment Conference Asia Pacific (HICAP) being held in Hong Kong today. Zoe Wu, Director of Horwath HTL China, moderated the panel, entitled “The China Story, is it too much too soon?”

The panel looked at whether the Chinese market has grown too fast and was in danger of overheating. To answer the question, Andrew MacGeoch, Partner Mayer Brown JSM, Lily Ng, President, Caesars, Global Living Asia, Leo Yen, VP and Head of Select Service Hotels, Hyatt Hotels and Resorts and Robert Zhang, VP Starwood Hotels and Resorts, joined Zoe Wu.

The consensus of the group was that although mistakes had been made, developers were learning the lessons and building across a much broader range of market segments, rather than only building full service and five star luxury properties.

Zoe Wu said “What we learned today was that even if the transactional market is extremely challenged through a combination of increased legal barriers to foreign investment and a gap between buyer and seller expectations, hotel development in China is still robust. The demographics in a country that has over 170 cities with a population of a million or more, means even over supplied markets like Shanghai pick up the slack quicker than normal. This combined with a government requirement for hotel components in new mixed-use developments means a steady stream of projects will continue to be developed. What is encouraging though is the desire of some developers to look outside of narrow luxury segment and build hotels that appeal to other market segments that have yet to be seen in China. Segments that have demand a huge potential for growth.”

About Horwath HTL

Horwath HTL (Hotels Tourism and Leisure) is one of the world’s pre-eminent consulting specialists in the Hotel, tourism and leisure industries, providing unequalled experience and expertise for client projects around the world through a combination of detailed local knowledge and international understanding. Horwath HTL is currently the world’s largest consulting organisation specialised in hospitality, with 50 offices in 39 countries.

Horwath HTL is a member of Crowe Horwath International, a professional association of accounting and management consulting firms founded in New York in 1915. Crowe Horwath International is currently ranked among the top ten international professional service groups with offices in close to 586 cities in 108 countries.

If you have any questions, please contact James Chappell, Global Marketing Director at jchappell@horwathhtl.com or Zoe Wu on zwu@horwathhtl.com .

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