China’s Hotel Market Outlook Optimistic In Medium To Long Term

Global real estate and services firm Knight Frank has published the Greater China Hotel Report. The report provides an in-depth analysis of China and the greater China region’s hotel market and forecasts.

In the past year, the main driver of growth for China’s hotel industry shifted towards domestic demand, as the per-capita income of Chinese residents continued to rise, the arrival numbers of domestic tourists recorded strong growth, with a year-on-year increase of 10.7%. However, the number of international tourists fell slightly by 0.4%.

International hotel brands continued to expand in Greater China. Among the six major cities (Beijing, Shanghai, Guangzhou, Hong Kong, Macau and Taipei) analysed in this report, Beijing and Guangzhou led in terms of supply in 2014, with over 2,000 five star hotel rooms added to their stock. In the first half of 2015, Macau became the most active city, with over 1,500 new rooms added. By mid-2015, Beijing had the largest stock of five-star hotel rooms.

In the first half of 2015, four of the six major cities covered in the report faced pressure on their Average Daily Rate (ADR) of five-star hotels, due to the central government’s crackdown on corruption and luxury consumption.

Among the six cities, the ADR in Hong Kong recorded the biggest decline (7.2%). Even so, in the first half of 2015, Hong Kong’s ADR remained the highest among the cities. Although Hong Kong’s hotel industry has slowed along with the softening of local tourism, the number of business and meeting visitors remained stable. With limited supply of ‘High Tariff A’ hotels in Hong Kong, the occupancy rate and ADR are expected to remain stable this year.

David Ji, Director, Head of Research & Consultancy of Greater China at Knight Frank says, “Although China’s hotel market will face challenges in the short term, international hotel operators are still confident in the medium to long term, with the Chinese economy becoming driven by domestic demand and the completion of more tourism facilities.

 

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