What global brands are doing to capture the Chinese market

The lobby of the Rosewood Beijing. (Lobby at the Rosewood Beijing China)

While outbound hotel investment from Chinese groups, specifically into North America, has been a continuous storyline, global hotel brands have made it a top priority to cater and develop properties toward Chinese travelers.

“China is a big market for us. I’m fairly sure that in a few years, it’ll be No. 1,” Craig Smith, president and managing director Asia-Pacific for Marriott International, told the South China Morning Post

The data support this prediction. In May, we noted that business travel spending by the Chinese reached $291.2 billion in 2015, slightly more than the $290.2 billion spent by American business travelers. And 95 percent of that corporate travel spend occurs inside China.

Domestic Travelers

Cashing on this market has been a key focus for brands in recent years, and even as hotel companies have expanded their brands across China, they have also taken to launching separate brands just for that country alone. AccorHotels has had its luxury Mei Jue brand in China for years, while Mövenpick has been known as Rui Xiang in China since 2012. That same year, IHG launched Hualuxe Hotels and Resorts, which (at the time) was expected to open in 100 cities across Greater China over the next two decades. As of the end of the third quarter, IHG has three Hualuxe hotel open with nearly 800 rooms, and 21 more hotels are in the pipeline. 

Hualuxe Yangjiang City Centre

In early February, Marriott International and China's Eastern Crown Hotels Group signed an exclusive development agreement to bring the Fairfield by Marriott brand to mainland China. The agreement would see as many as 140 hotels brought under the brand in five years, with 100 of them to open by 2021. 

“The rising disposable income of the middle class and development of the consumption-led economy is driving an increased demand for quality mid-range accommodation,” Smith said at the time. “Fairfield will focus on young consumers and business travelers looking for a comfortable and productive stay at a great value.” 

The Value of Midscale

In the spring, Hilton opened the Hampton by Hilton Guangzhou Zhujiang New Town in the Tianhe Dustrict of Guangzhou. The 223-room hotel, managed by Huanpeng Hotel Management and located near the Tianhe Sports Center business zone, was built as part of a deal with Plateno Group, a Chinese developer and operator that is opening and managing Hampton hotels in the country over a five-year period. The Zhujiang New Town property will be the brand's flagship hotel in Guangzhou.

At the time, Bruce Mckenzie, SVP, operations, greater China & Mongolia for Hilton Worldwide, described Guangzhou as one of China's four key cities, and a major development destination for Hilton in the coming years, driven primarily by growth in the midscale segment. "Guangzhou is a huge base for travel within China and internationally, and getting a Hampton in here, in this stage of the brand's life ,is a very strong position for us," Mckenzie said.

Jim Holthouser, EVP of global brands for Hilton Worldwide, said the middle class has grown so quickly in China that the potential growth for Hampton in the country is limitless, in excess of the 400 hotels are planned for the country but not yet under contract. "Guangzhou is a city of 23 million people. Large cities in the U.S., like Chicago, have 7 or 8 million people by comparison," Holthouser said. "When you count the number of cities in China with 5 million people or more, the lights start coming on and the investment to get into the market starts to make sense."

Outbound Travelers

In addition to expansion within China, these companies are looking to build brand awareness with outbound Chinese travelers—a demographic with numbers reaching 64 million in the first half of 2016. Hilton, for instance, launched its Huanying or “welcome” program in 2011 to facilitate travel for Chinese guests around the world, with Chinese-language newspapers, television channels, translation services, hotel slippers, tea and coffee-making facilities provided. The program can now be found in about 130 hotels outside of China.

Similarly, Marriott launched the Li Yu program in September, offering similar amenities as the Huanying program in addition to Mandarin-speaking hotel staff and the ability to connect with hotels via China’s popular messaging and social messaging platform, WeChat. “China is the world’s largest outbound travel market and the new generation of Chinese travelers has a taste for exploration,” Anka Twum-Baah, Marriott’s VP of customer loyalty & content, Asia Pacific, said at the time. “Our study conducted with Hurun Research Institute shows 42 percent of young luxury travelers want personalized experiences and 61 percent of them prefer electronic guest services.” When it launched in September, program was already available at 41 Marriott hotels across the Asia-Pacific region, the Americas, Europe and the Middle East.