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Source: Thailand Hotel News  Aug 31, 2019

China Hotels’ Constructions and Openings Skyrocketing Despite Ongoing US-China Trade War

China Hotels’ Constructions and Openings Skyrocketing Despite Ongoing US-China Trade War
Source: Thailand Hotel News  Aug 31, 2019
China’s total hotel construction pipeline reached 2,995 hotels and 592,889 rooms at the end of Q2, up 19 percent by hotels and 7 percent by rooms year over year. Both project and room count are at all-time highs despite the recent economic slowdown, which many predicts that China’s economic growth rate will be 6.2 percent for 2019, the lowest reported since 1990.


Shanghai-China


China has 2,177 hotels and 407,598 rooms under construction up 20 percent and 5 percent year over year, respectively. There are 412 hotels (with 84,555 rooms) scheduled to start construction in the next 12 months. Hotels in the early planning stage stand at 408 hotels and 100,738 rooms, up 19 percent by hotels and 13 percent by rooms. 

All stages of China Hotels pipeline have project numbers at all-time high ,apart from total rooms,as the average size of pipeline hotels have now dipped to 198 rooms per project. The decline is primarily due to the long-term shift of hotels from luxury and upper-upscale hotels to the upper-upscale and upscale segments, a trend that has been visible since the mid-decade.

In first six months of 2019 ,China opened 414 new hotels and 62,178 rooms with another 453 new hotels and 69,112 rooms forecast to open by year's end. In 2020, 787 new hotels with 130,618 rooms are slated to open. In 2021, new hotel openings are expected to reach 729 hotels with 135,915 rooms. Should all these hotels come online in 2021, then China will open the greatest number of new hotel rooms since the cyclical peak in 2014.

The city of Guangzhou leads China’s pipeline with an all-time high project count of 141 hotels with 27,946 rooms. Shanghai has 124 hotels and 23,359 rooms underway, followed by Chengdu at a record high 116 hotels and 24,334 rooms. Wuhan also is at a record high with 91 hotels and 13,249 rooms. Suzhou follows with 87 hotels and 15,002 rooms.

Hilton Tops as the major franchisors, with a record number of hotels at 428 hotels and 88,778 rooms. Next is IHG with 360 hotels and 80,763 rooms. During its H1 earnings call, IHG reported a downturn in business travel in China, where its hotels in the greater China region reported a RevPAR decline of 0.5 percent in Q2, down from 0.3 percent in Q1. During the quarter, the company signed 22,010 rooms into its China pipeline. 

Marriott International has 293 hotels and 80,635 rooms, JinJiang Holdings has 225 hotels and 24,398 rooms and Accor follows with 218 hotels and 37,006 rooms. IHG, Marriott and Accor are all setting record pipeline highs for the region by both hotels and rooms.

Brands in the pipeline are dominated by Hampton by Hilton with a record 258 hotels and 40,550 rooms. Hilton’s second-largest brand is DoubleTree with 58 hotels and 16,190 rooms. IHG’s primary brands in China are Holiday Inn Express, at a record count of 172 hotels and 30,820 rooms and Holiday Inn with 58 hotels and 15,305 rooms. Marriott International’s top brands are the full-service Marriott Hotels & Resorts, hitting record highs with 69 hotels and 21,023 rooms and Courtyard by Marriott with 37 hotels and 9,570 rooms. Leading brands for JinJiang Holdings are 7 Days Inn with 115 hotels and 9,071 rooms, and Vienna Hotel with 30 hotels and 3,900 rooms. Accor's leading brand, Ibis, also is hitting all-time highs with 98 hotels and 10,280 rooms, while Mercure Hotel has a record number with 56 hotels and 9,670 rooms.

Many industry experts are however not confident that the overall hotel occupancy rates in China will be high enough the next few years and many are already seeing a  rather competitive pricing of average room rates, that seems to be falling. Furthermore there is  a an acute  shortage of properly trained staff to handle international travelers to China at the moment.