China's internal Hospitality Market

China's internal Hospitality Market - China Tourism Report...

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China Tourism Report Q2 2011 © Business Monitor International Ltd Page 27 Market Overview – Hospitality Hotels China’s hotel industry began to recover slightly in 2010, as more visitors began to return. Occupancy rates continued to fluctuate across the country, with major cities such as Beijing and Shanghai experiencing greater increases. For example, occupancy rates in Beijing rose by 25% year-on-year (y-o-y) in August 2010, although this appeared to be well above standard rates of growth. Occupancy rates look set to continue improving in 2011, although the massive oversupply of rooms created by the major hotel construction ahead of the 2008 Olympic Games means that rates are likely to remain lower than their pre- 2008 levels. However, reflecting the stagnation of the tourist industry in 2008-2009 room rates continued to fall, with the revenue per available room (revPAR) falling by 47.5% y-o-y to a national average of CNY360. The authorities are concerned that there is an oversupply of hotel rooms, in Beijing in particular following major construction ahead of the Olympics. The slow pace of recovery continued into 2010, with the China Industry Hotel Study published by Horwath HTL showing that profits were still well below 2005 levels. In particular, profits per room had fallen by 39% from 2005, with occupancy rates at only 47%. This may reflect still-overvalued room prices in cities such as Shanghai and Beijing, with a revival in the sector unlikely to take strong root until the economic recovery has been consolidated. Much of the construction and investment activity in the Chinese hotel industry up to 2008 could be attributed to preparation for the Olympics. However, a separate increase in the popularity of China as a tourist destination for foreigners, in tandem with the rising disposable income of the country’s affluent upper and middle classes, are also important explanatory variables. The number of star-rated hotels in China as a whole had reached 14,000 by 2007, an increase of nearly 420% since 1997. In Beijing, there were 700 star-rated hotels in 2007, with 160,700 rooms, and local estimates put the number of rooms at 151,000 by early 2008. This represents growth of nearly 40% in two years, primarily attributable to the pre-Olympics construction boom. In Shanghai, in 2007 there were 352 star-rated hotels with 78,300 rooms. According to the most recently issued evaluation standard of hotels, there are 288 five-star hotels, 1,307 four-star hotels, 4,747 three-star hotels and more than 6,500 one and two-star hotels in China. There were 14,100 hotels in China by 2009, up from 7,400 in 2001, not including those related at below one star. Of these hotels, approximately 10% are foreign owned.
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China Tourism Report Q2 2011 © Business Monitor International Ltd Page 28 One company with big expansion plans in China is , which has about 30 hotels being developed across the country. Among its flagship hotels are the Four Points by Sheraton
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This note was uploaded on 01/27/2012 for the course CHINESE 10 taught by Professor Staff during the Spring '08 term at University of California, Berkeley.

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China's internal Hospitality Market - China Tourism Report...

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