Although major hotel chains first began testing the water in China in the early 1980s, it wasn't until recently that they launched aggressive expansion campaigns.
United Kingdom-based InterContinental Hotel Group (IHG) is the most ambitious player. IHG has a portfolio of 51 hotels in China and plans to develop 74 more by 2008.
Hong Kong's Shangri-La has 20 hotels and plans for 17 more by the 2008 Olympics. While United States-based Marriott has 26 hotels, and plans to swell its portfolio to 35 and 100 by 2008 and 2010.
France-based Accor said this year it has 30 hotels under development in China, all of which are scheduled to open before 2008.
"It is right time to focus on China market," Patrick Imbardelli, chief executive of InterContinental Hotels Group Asia-Pacific, said.
And Imbardelli isn't the only hotel executive enthusiastic about breaking into China.
"China is Accor's most important market," said Brian Deeson, senior vice-president of Accor Asia-Pacific and chief executive officer of Accor Greater China.
By 2008, Accor will add 70 more hotels to its Asia-Pacific portfolio. New projects in China alone account for 43 percent of those additions.
Meanwhile, international hotel groups' expansion initiatives are sounding the alarm for domestic firms.
They pose a great threat to local players as they have many competitive edges strong branding, more extensive sales and marketing networks and advanced management. They are also putting a greater emphasis on localization than ever before.
It will be hard for local players to fend off the competition.
The 2008 Beijing Olympics are the catalyst for foreign hotel groups' growing interest in China's hotel sector since 2005, and the trend is set to continue in the lead-up to the Games and after 2008.
And hotels in Beijing and Shanghai are already enjoying brisk business.
Last year, Beijing's five-star hotels had average daily revenue (ADR) of 1,204 yuan (US$150) and occupancy rate of 75.3 per cent, their highest since 1994. The highest revenue per available room (RevPAR) was 907 yuan (US$113), according to a report issued in May by Jones Lang LaSalle Hotels, a leading worldwide service provider in the hotel and tourism sector.
In 2005, ADR for Shanghai's five-star hotels reached a record high of 1,649 yuan (US$206), as did RevPAR, which climbed to 1,200 yuan (US$150) for the first time since 1993.
Except for Shangri-La, which owns most of its hotels with equity, the other international hotel groups conduct business by managing properties without equity.
Among China's 11,180 hotels, only 14.55 per cent are managed by hotel chains. That compares to 80 and 50 per cent in the US and the Europe respectively. The lack of domination by local chains means international hotel groups have many opportunities to exploit.
Besides major cities, foreign players are also starting to look to China's emerging secondary cities such as Dalian, Tianjin, Guangzhou, Shenzhen and Sanya.
"It was wise of us to choose Marriott at first, and we are very happy to be able to continue the partnership," said Feng Jing, chairman of Guangzhou's China Hotel.
Marriott began managing the hotel in 1998, and the two sides renewed the contract this year.
"Its powerful branding, marketing and talent development strategies have significantly helped us in management and development," said Feng.
Feng's claims echo the thoughts of many local hotel owners. In February, Chengdu International Exhibition and Convention Group signed a contract with IHG, under which the UK group will manage six properties. And earlier this year, four of Shanghai Greenland Group's properties also became members of IHG.
The reason owners would rather pay higher management fees, which can account for 5 to 8 percent of sales revenues, to partner with international giants is simple the value foreign brands can create.
With their longer history, international hotel chains have well-known names, extensive management experience and well-developed sales and marketing networks, and they are also adding muscle to the localization drive sweeping the industry.
Individual hotels which are part of local groups should try to improve service quality and to bring their own character into play.
Beijing Hotel under BTG is a good example. With an 89-year history and a great location on Chang'an Avenue, the hotel has an impressive reputation and attracts many visiting celebrities.
To boost profits the hotel group could consider expanding into other regions. BTG could move beyond Beijing, while Jinjiang could enter other parts of China besides Shanghai.
Source:佚名