Knight Frank today published the Greater China Hotel Report that provides an in-depth analysis of China’s hotel market and forecasts. Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank, analyses Greater China hotel markets performances.
Highlights:
• Macau was the most active market among the five major cities covered in this report. Macau saw 2,062 five-star hotel rooms added in 2013 first half, followed by Guangzhou with 580 and Shanghai with 380. Macau was also the most active in 2012, with over 2,422 rooms added, followed by Shanghai with 1,739 and Beijing with 958.
• Hong Kong remained the highest among the cities in terms of Average Daily Rate (ADR), in the first half of 2013, with ADR staying at US$305, followed by US$211 in Macau, US$205 in Shanghai, US$200 in Beijing and US$185 in Guangzhou.
• The investment market recorded a major transaction recently, involving Jin Jiang’s acquisition of 21 Smart hotels in 18 cities, through its subsidiary, from Tianjin Huasheng Tourism Equity Investment Partners and China Wallink for RMB710 million. Such deals are expected to grow in the remainder of 2013 on the back of strong investor sentiment in Greater China.
• We expect Macau to remain the focal point of international hotel operators, with major new developments concentrating in Cotai Strip. As Macau's casino industry is transforming into a more entertainment, non-gaming business base, the hotel market will continue to look positive over the long term with possible increases in both visitor numbers and their length of stay.
• Hong Kong's tourism industry outlook will be positive, given a number of tourism-related projects in the pipeline, including the Ocean Park and Hong Kong Disneyland expansions, the opening of more berths in Kai Tak Cruise Terminal in Kowloon East as well as the proposed observation wheel in front of the Central piers. Five-star hotel supply will be limited with a shift toward boutique and resort types. Strong visitor arrivals from China and the increasing number of business travellers will drive hotel demand.
Thomas concludes that "while China's hotel market has seen some straining signals, particularly in first-tier cities' luxury segment, burgeoning domestic demand should improve longer-term operating conditions and performance in a country with demographic advantages. International operators have already cast their votes of confidence with aggressive expansion plans, particularly in second and third-tier cities. Starwood Hotels & Resorts has 100 more hotels in the pipeline for China, of which 20 will open in 2013. Meanwhile, Wydham Hotel, the largest US-hotel operator in China with 543 hotels across the territory, will add eight new Ramada properties in 2014-2015.”