In June, 2008, Xi’an will have a new hotel, Kempinski Hotel Xi’an; a part of Kempinski Hotels.

Kempinski Hotel Xi’an is very much a MICE hotel and is the official site of the bi-annual Euro-Asia Economic Forum.

It has state-of-art audio visual equipment and technology in its 1,400 sqm pillarless (very, very important attribute) ballroom, which can take up to 1,100 persons in theater style seating with separate room for the simultaneous interpretation.

Ten additional meeting rooms are available for small to medium size meetings and functions including the one-of-a-kind circular Rotunda conference room on the 5th floor which would be ideal for a meeting of equals like knights around a round table.

Because it is a new hotel it, but of course, has broadband internet connection, voice mail telephone, and a satellite TV channel in all 355 guestrooms and suites.

Later a spa and fitness center will be added plus a Paulaner Bräuhaus where you can rid of all that fitness immediately you have finished in the spa.

Kempinski Hotels is a luxury hotel group founded in 1897. Kempinski Hotels is the trading name for Kempinski Aktiengesellschaft which is an independent German delisted AG involved in a number of hotel and hospitality related businesses.

Normally we would never use as an illustration the picture at the top of the page of the staff looking pleased with themselves but this one is an exception. It is so genuine it bursts with enthusiasm.
Source: PR Kempinski

Last week an official of Accor said that the future expansion of Accor in China will be with Ibis, the Accor budget line. And the plan is to add another 100 hotels within China in this group. Meanwhile Home Inns, probably the biggest player in the China budget market, is considering expanding outside mainland China, mostly in Asia, within two to three years.

May Wu, its chief financial officer said, ‘Our customers … are by and large domestic business travelers. They are traveling overseas. We want to be where they travel to.’

May Wu said in China Home Inns want to increase so that it has more than 30% within five years as opposed to 20 to 25% at present. It will quadruple its number of outlets to 1,000 in three to five years.

(Whether that it gives it 20% of the market now is open for debate. An informed guess would be it probably has something nearer 18% at the moment although that very much depends on how you define budget motel. In October Home Inns acquired Top Star in a RMB340 million ($45.6 million) deal. It still intends to grow organically but would not automatically reject further acquisitions.

May Wu said, ‘Top Star is one big step and a big milestone for us. We would continue on this path when the right opportunity presents itself.’

A most excellent article by Jon D. Markman analyzes the economy hotel situation in China from an investment perspective. It is totally positive. You can read the whole article by clicking on Source at the end.

He writes that there is a rising need for more hotels. Domestic tourism is growing at 10.4% per year and will amount to 8% of China’s national GDP by 2017, according to government statistics, compared with 5.4% today.

Biggest growth area is budget hotels. 90% of Chinese travelers stay at budget inns where they can find standardized rooms, comfy beds, great locations near business centers, free Internet access, hair dryers and ironing boards for the equivalent of $22 per night.

The leading brand for inexpensive hotels Home Inns and Hotels Management, which reported $95 million in revenue in the past 12 months and $5.4 million in income.

Analysts report that the number of budget hotels has grown from fewer than 100 in 2003 to around 1,300 this year.

Home Inn executives, several of whom were founders of the successful travel agency Ctrip.com International, say that they plan to add 100 hotels a year to achieve that 60% annualized growth rate.

Home Inns is believed to own about 18% of the market, a percentage point above its older but slower-growing arch-rival, the Jin Jiang Inn chain.
Accor, the French chain, has announced plans to open 20 of its Ibis budget hotels over the next year.
Motel 168, a slightly more upscale chain seen in our illustration, is backed by Morgan Stanley.
7 Days Inn is being backed by Warburg Pincus.
The Super 8 hotel chain already has 49 budget hotels in China.

These are all, perhaps, paltry numbers with an industry still in its infancy.
Source: The Street

A series of mergers and acquisitions are possible within China’s budget hotel industry. This was started off when Home Inns announced it had acquired the Top Star hotel chain for RMB340 million ($45.3 million).

According to David Sun of Home Inns this will help it work towards its goal of 330 hotels in more than 80 cities, David Sun Sun didn’t say how long it would take to reach the target.

Within the industry the talk is that the acquisition, the first of its kind in China, might indicate the beginning of mergers and acquisitions among domestic budget hotel operators.

Zhang Minghou, an official with the China Hotel Association, which now represents between 8,000 and 9,000 hotels — from deluxe hotels to budget inns — across the country said, ‘The acquisition may reflect a general trend of more frequent mergers and acquisitions in the future. However, it will still take time to see how Home Inns is going to consolidate the two brands and their cultures to make the deal a success.’

He Jianmin, a professor with Shanghai University of Finance & Economics, agrees that more mergers and acquisition deals would likely occur in the budget hotel industry. He said brands with larger operations and sound capital flows will have a competitive edge.

China’s budget inn industry started in its modern form in 1997 when Shanghai-based Jinjiang Inn opened its first inn in the city.

At present, there are already more than 1,000 budget hotels in the country, operating under some 100 brands. Jinjiang Inn, Home Inns, Motel 168 and 7 Days Inn are the major domestic brands competing with overseas rivals such as Super 8.

Major players in the industry are all very keen to expand. Thus we can expect the budget hotel numbers to go up, and the number of brands to go down.
Source: China.org.cn

Merrill Lynch (often called ‘The Thundering Herd’ and, sometimes, ‘We, the People’) and U.S. private equity firm Warburg Pincus have invested a total of $95 million in the Chinese budget hotel operator 7 Days Inn.

Chief Executive Zheng Nanyan said the company will use the additional capital from the investors to open new hotels. Last year, Warburg Pincus invested $10 million in 7 Days Inn.

The Chinese hotel chain, set up in 2005, has over 100 hotels in the country. It plans to increase its hotels to 150 by the end of this year and to 500 by 2010. To do that it plainly needs outside investment which it now has.
Source: MarketWatch