Drawn by the Great Wall and the Terra-Cotta Soldiers in Xian, overseas tourists are flooding into the country. And despite the current unrest in Tibet, the draw of the mainland is unlikely to weaken any time soon. Last year’s 132 million visitors spent $42 billion, making China the fourth most popular destination country, behind France, Spain, and the U.S.

By 2015, the World Tourism Organization estimates, it will be No. 1.

Perhaps, even more important is domestic tourism, which makes up three-fourths of total revenues. Propelled by double-digit gross domestic product growth and rising urban incomes — up more than 12% last year — increasingly well-off Chinese are opting to travel within China for fun and relaxation.

Good news for Wyndham Worldwide’s Super 8 franchise (Wyndham also has Howard Johnson and Days Inn properties on the mainland). Since opening its first hotel in Beijing in 2004, the chain has grown to 67 properties in cities across the mainland. By year end, Super 8 plans to double its locations in China.

Mitchell Presnick, Super 8 China’s chief executive, said, ‘When economies experience this kind of growth, one of the first things that happens is people want to travel.’

Treu. But this is not all good news. The writer was in Paris in January and it was bitterly cold. And there were long lines to get into everything. In the end, one gave up in disgust. If that was January what will September be like?
Source: BusinessWeek

Super 8 China of the USA has been named as one of the ‘Best Employers in the China Hospitality Sector.’ This was announced at the China Hotel Industry Annual Human Resources Meeting held in Guangzhou. The event was co-hosted by China Hotel Magazine, Chinese Tourism Newspaper, Chinahotelhr.com, and China Hotel Industry Celebrity Club.

The award was based on national staff surveys, online and short message voting, and third-party expert reviews. Super 8 was recently appointed to the Beijing Olympic Village Management Team.

Mitchell A. Presnick, chairman and CEO of Super 8 China, said , ‘Super 8 China places great importance on contributing to the stable development of the Chinese economy hotel sector.’

Fang Guofan, Super 8 China’s senior vice president, said, ‘Super 8 China operates under three core values: “Super 8 Loves China”, “We Put People First”, and “Trust, Success, and Fairness”. It is gratifying to see the hospitality sector recognize our efforts.’

Super 8 Motels is one of the world’s largest economy lodging operators, with almost 2,100 hotels worldwide. The first Super 8 opened in Aberdeen, South Dakota, USA in 1974, charging US$8.88 per night.

Super 8 entered the China market in 2004 and opened its first hotel in Beijing on June 8, 2004. So far, the company has approximately 130 hotels either open or under construction in more than 70 cities across China.
Source: Earth Times

Early this year Home Inns, a leader economy hotels in China, announced it had 26 chain hotels for RMB340 million from Shanghai Top Star. So far, it is the biggest example of merger and acquisition within China’s sector of economy hotels.

Economy chain hotels are in an era of brand integration in which purchases, mergers and acquisitions wiill become the rule rather than the exception.

As shown in the 2007 Annual Report on China’s Economic Hotel Industry, which was issued by the ministry of Commerce and the China Hotel Association, by the end of 2006, there were nearly 100 economic hotel chain brands in the market for China’s lodging industry and over 1,000 hotels with over 100,000 rooms had been set up.

In the coming few years, the result of competition is likely to be that a large number of minor brands will be merged and acquired by several major brands like Home Inns, Holiday Inn, Star of Jinjiang Group, and Super 8.

As shown in the report, the occupancy rate for economic hotels in China has fallen by nearly 7 percentage points from the annual average of 89% in 2005 to the annual average of 82.4% in 2006.

In the meantime, the average guest room price decreased from RMB328 in 2005 to RMB209.

On the other hand, the property management costs for economic hotels increased by 40% in 2007 in comparison with those in 2006.

These are the problems. Consolidation of brands is possibly the solution.
Source: China Economic Net

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

With the Olympic Games scheduled to hit Beijing next year, major hotel companies have scrambled to get new properties in China open in time.

Hilton Hotels operates six hotels in China (the one in Beijing is shown here), but will more than double that in the next few years. In late August it announced an agreement to manage a new Hilton in the Wangfujing district of Beijing, set to open next year, and also has scheduled to open in 2008 a Doubletree in Beijing, a Conrad in Shanghai and a Doubletree in Kunshan, as well as a resort and spa in Chongqing. Three other Hiltons are set to open in China by 2011. In June, a joint venture of one of Deutsche Bank’s investment arms and private equity firm H&Q Asia Pacific agreed to create and manage more than 25 hotels in mainland China under Hilton’s mid-price Hilton Garden Inn brand.
InterContinental Hotels now has 67 hotels open. IHG plans to nearly double that by next year, and future growth is particularly focused on Crowne Plaza.
Marriott International now has 27 properties in China, according to company spokesman John Wolf, and by 2010 will have 15 more: six under the Marriott brand, three under the Renaissance brand, two under the JW Marriott brand and four under Marriott’s mid-price Courtyard brand. In addition, the company will open six of its luxury Ritz-Carlton properties in China by 2010.
Hyatt Hotels & Resorts has announced plans to open in China 15 new properties — three Park Hyatt hotels, three Grand Hyatt hotels and nine Hyatt Regency hotels. China already has more Hyatt properties than any other country outside of North America.
Wyndham Hotel Group has announced an Asia-focused investment management firm is investing $50 million in the master franchisor of the Super 8 brand in China, Tian Rui Hotel Corp. The franchisor already has opened 49 Super 8 properties in China and has agreements in place to develop 67 more.

Even with all those growth plans in place, however, travel managers said the region would continue to be a challenge as travel to the region increases. Travel managers often have to look outside of hotel offerings when planning Asia/Pacific travel.
Source: Business Travel News Online

When writing about hotels one often finds that there are five layers of involvement and following it can be complicated.

Basically the story is that $50 million is being invested in the Super 8 brand of affordable hotels in China. But to be technically correct the first sentence should read: Wyndham Hotel Group, a subsidiary of Wyndham Worldwide Corporation, of Parsippany, New Jersey (a most splendid name for a town which I plan to visit one day) has announced that Aetos Capital is committed to invest up to $50 million in Tian Rui Hotel Corporation, master franchiser of the Super 8 brand in China, in order to accelerate its hotel development efforts.

Pretty much the same thing but it covers the complex detail. And most hotel chain deal are like that.

Wyndham Hotel Group’s Super 8 brand is one of the largest economy hotel chains in the world. It came to China in 2004. Tian Rui Hotel Corporation has opened 49 Super 8 hotels in China — 4,700 rooms — and has signed agreements to develop an additional 67 hotels. The Super 8 brand already is among the largest economy chains in China.

The World Travel & Tourism Council has predicted that China will become the second largest travel and tourism economy in the world by 2016. For economy hotels which are well run and which have a known brand the direction can only be up.
Source: CNN Money