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Asian hotel groups check in to global battle for Chinese tourism
Source: Financial Times / Paul J Davis / 20 May 2013 / Photo by: Bloomberg News



Evaluating Asian Hotel Groups’ Newfound Interest in Chinese Tourism


A sharp rise in Chinese tourism has peaked the attention of Asian family-owned hotel groups, posing a threat to global hotel groups. Chinese tourists spend billions of dollars each year on travel to foreign countries, providing Asian hotel groups with an opportunity to capitalize on the profits. Understanding the facts surrounding Chinese tourism, the opportunities it presents to Asian family-owned hotel groups, and strategies that are being implemented to gain market share are key areas to comprehend when it comes time to evaluate the current situation. 

The Facts

The revenue output of Chinese tourists has been steadily increasing over the past few years. What once was a $102 billion spending industry in 2012 has risen to $129 billion in spending throughout 2013. The mounting number of Chinese tourists is predicted to keep climbing in the coming years. 98.19 million Chinese traveled to a foreign destination in 2013 with the number reaching over 100 million in 2014. The statistics support that Chinese tourists are one of the largest contributors to outbound tourism for many countries, making it important to accommodate to their tastes.

Foreign tourists need a wide variety of accommodations when they travel, accounting for the billions spent by the Chinese each year on tourist activities. Restaurants, hotels, recreational activities, and shopping centres are on the list of desires with many individuals yearning to have a new experience. The typical Ritz stay isn’t cutting it anymore. Instead, tourists want a combination of luxury, functionality, and newness to meet their needs, often willing to pay the high-ticket price tag.

New Strategies to Gain Market Share

Asian family-owned hotel brands understand the shift that is unfolding, taking measures to get in on a portion of the billions being spent annually by Chinese tourists. Market leaders, such as the Cheng family that owns the New World Group and the Kadoorie family that owns the Peninsula Hotel Group, are battling each other to find innovative locations to capitalize on Chinese tourism. One strategy both groups are focusing on is adding locations across the globe with creative features for tourists all while providing a sense of reliability and trustworthiness at the same time. Meticulously planning locations in areas that Chinese tourists frequently visit, such as London and New York, is key to gaining market share.

Nevertheless, there can only be so many hotels that tourists have to choose from, especially with laws limiting the creation of new hotels in Hong Kong, Macau and Singapore, all of which are popular locations. To mitigate this setback, Asian family-owned hotel groups are taking existing hotels and revamping them to fit the luxury brand feel. The grab for hotel market share will be dependent on the ability to add high-value properties to the portfolio at a quicker rate than competitors.

The Future for Asian Family-Owned Hotel Groups

The data supports a positive outlook for the hotel industry, giving Asian family-owned hotel groups confidence going into the next few years. Spending by Chinese tourists will continue to increase, presenting a wide variety of profit opportunities for investors. Only time will tell which Asian family-owned hotel groups will implement viable strategies to gain market share, but the future does look promising.

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