On the 118th floor of Hong Kong’s tallest building, Ritz-Carlton is currently completing a 312-room hotel. Another 285-room Ritz-Carlton is due to open in the Pudong area of Shanghai next month. The group, which had only one hotel in China in 2006, plans to have eight by the end of this year. The Middle East may have seen significant growth in luxury hotels in recent years, but it’s now being outpaced by China.
Four Seasons Hotels and Resorts is targeting China for growth with 11 additional properties around the country to add to its existing three. Shanghai’s iconic Peace Hotel is soon to open after a multiyear renovation by Fairmont Hotels & Resorts, and the Accor group plans to open up to 45 hotels in the Asia-Pacific region this year. Despite jostling for the same customers, these international luxury hotel brands seem unconcerned about over-supply in China.
The reason, it would seem, is that that few places in the world have regained the level of confidence and the willingness to spend on luxury services as much as China. According to data from Nielsen, China’s consumer confidence in Q1 2010 has reached levels not seen since 2007 and hoteliers have echoed this. Accor has said that occupancy is almost back to the levels of two years ago.China is also credited with driving recovery in room rates at InterContinental Hotels Group, with Greater China RevPAR up 22.2% for Q1 this year.
McKinsey has released similarly welcoming information to would-be hoteliers in China, with wealthy households expected to reach more than four million in the next two years, adding that these consumers still trust foreign brands, prize good service and like to display their wealth. The Ritz is exploiting this outside of China by employing Chinese-speaking staff at its hotels in New York, San Francisco and Barcelona. Its new Hong Kong hotel will focus on meeting the tastes in food and amenities of mainland Chinese consumers.
Of course, the number of luxury hotel rooms in China cannot grow exponentially; China’s wealthy cannot grow indefinitely. But if these hotels listen carefully to their target market, and cater to their needs both at home and abroad, signs suggest that the potential gains will remain substantial for some time to come.
Financial Times – 11 May 10
Wall Street Journal – 20 May 10
Forbes – 19 May 10