China's hotel pipeline breaks records

The JW Marriott Marquis Hotel Shanghai Pudong opened in mid-August. Photo credit: Marriott International

According to the latest study from Lodging Econometrics, China’s total hotel construction pipeline reached 2,991 hotels and 592,884 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. Analysts at Lodging Econometrics blame the "rocky economic climate" on high debt levels and a trade war with the United States. As such, the study predicts the country's economic growth rate will be 6.2 percent for 2019, the lowest reported since 1990.

Breaking Records

China has 2,174 hotels and 407,594 rooms under construction, the report found, up 20 percent and 5 percent year over year, respectively. There are 411 hotels (with 84,555 rooms) scheduled to start construction in the next 12 months. Hotels in the early planning stage stand at 406 hotels and 100,735 rooms, up 19 percent by hotels and 13 percent by rooms. 

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All stages of the China pipeline have project counts at all-time highs—apart from total rooms—as the average size of pipeline hotels have now dipped to 198 rooms per project, the smallest size that Lodging Econometrics has ever recorded. 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, the analysts claim—a trend that has been visible since the mid-decade.

In first half,China opened 413 new hotels and 62,173 rooms with another 452 new hotels and 69,110 rooms forecast to open by year's end. In 2020, 786 new hotels with 130,614 rooms are slated to open. In 2021, new hotel openings are expected to reach 728 hotels with 135,913 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.

Top Companies, Top Markets

Guangzhou leads China’s pipeline with an all-time high project count of 140 hotels with 27,945 rooms. Shanghai has 125 hotels and 23,361 rooms underway, followed by Chengdu at a record high 115 hotels and 24,328 rooms. Wuhan also is at a record high with 91 hotels and 13,249 rooms. Suzhou follows with 88 hotels and 15,154 rooms.

Topping China’s hotel construction pipeline among franchisors is Hilton, 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 slowdown 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 22,000 rooms into its China pipeline. 

Marriott International has 294 hotels and 80,835 rooms, JinJiang Holdings has 225 hotels and 24,398 rooms and Accor follows with 219 hotels and 37,199 rooms. 

IHG, Marriott and Accor are all setting record pipeline highs for the region by both hotels and rooms, according to the report.

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 100 hotels and 10,580 rooms, while Mercure Hotel has a record number with 57 hotels and 9,793 rooms.

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