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Luxury Hotels November 2012

In recent years, China has embarked on a five-star hotel construction spree. There has been a rapid expansion in the number of Chinese domestic and international hotel groups entering China’s large, medium and small cities. 

In Shanghai alone, there are at least five, five-star luxury hotels just on the Bund, these include the Peace Hotel, the Peninsula, the Waldorf, the Hyatt on the Bund, and the Bund Indigo, not to mention the Shangri-La, Park Hyatt, Grand Hyatt and Ritz Carlton Hotels across the Huangpu River.

In 2012, 500, five-star hotels will either be, on the drawing board, under construction or recently completed.

New 5 star hotel openings from Feb to Jul 2012

Improving standards

At the National Tourism Bureau meeting held in June 2012 in Shenyang, a clear statement was issued that efforts must be made to improve the level and standard of star hotels in China and build a professional team of high-quality national star inspectors. Last year the Bureau carried out a “special inspection of the 2011 annual star hotel service quality” with unannounced visits to 1727 star graded Hotels, representing 12% of the total stared hotels in China, of which 262 hotels, or 15% received penalties. That year, 806 hotels were removed from the Star Hotels register including 14 five-star hotels.

Operational performance of star graded hotels in the second quarter of 2012

Market trends

High-end tourism is becoming a significant trend in China, and represents another market segment with great development potential; however, we expect that market competition will become increasingly fierce in the hotel industry especially in the luxury hotel market over the coming years.

So how important are HNW consumers? In2011, they traveled on average, between 3.6 and 4.2 times per year domestically, and between 2.4 and 3.4 times per year, depending upon their wealth. Their most popular hotel brands were Shangri-La, which was top of the list once again, Hilton that also maintained its second place, and Ritz-Carlton that has quickly risen to third. The Park Hyatt dropped to tenth from last year’s third place.


According to the National Tourism Bureau, China’s 2011 hotel turnover for all star hotels totaled 235.4 Billion RMB, an increase of 10.8% compared to 2010. A recent statistical bullet in of star graded hotels in the second quarter of 2012 indicated that the operating income of 12,280 star hotels totaled 59.958 Billion RMB, of which 26.269 Billion RMB is from the food and beverage business, and accounts for 43.81% of the total operating revenue, whereas room revenue was 26.656 Billion RMB, or 44.46% of the total.

F&B performs very well in China because dining out at a luxury hotel is seen as a suitable pastime for many wealthy people, specifically in their own hometown. Spending money on a meal with a business associate is also common practice. So hotels benefit as much from local patronage as they do from visitors staying with them.




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