Midscale Leads the way in China
Date: July 12, 2019
The number of contracts signed in China by global brands in the midscale and above segments reached 566 in 2018, a 26% year-over-year increase buffeted predominantly by midscale deals. Domestic tourism has vastly expanded the customer base for midscale brands as the so-called consumption upgrade shifts preference from local budget hotels to internationally branded, higher-quality midscale properties.
At the same time, decelerating economic growth and tightening real estate regulations have made investors more cautious about developments. So the investment focus has shifted from upscale and luxury to the midscale segment, which typically delivers much stronger returns.
International hotel chains licensing local partners also contributed to the segment’s boost. With the push from both supply and demand sides, and despite the slightly lower year over year growth rate of midscale brands in 2018, the segment will maintain its prevalent position due to the strong market demand and the pursuit of higher financial returns.