Closer to nature, Yunnan Province attracts hotel investors

With the hotel markets in China’s top tier cities increasingly crowded, investors are now shifting their focus to the more nature-friendly and idyllic locales.

Since 2000 a number of international luxury resort brands have arrived in Yunnan Province, which is roughly the size of California and home to China’s greatest geographic, biological and ethnic diversity, as well as some of its most pristine nature.

Brands that include Banyan Tree, Pullman and Anantara have all opened properties in the province while local brands led by Tibetan-themed Songtsam have also built up a strong presence.Intercontinental has recently moved into the market, as have numerous domestic players such as Wanda Group.

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Near the center of Yunnan and not far from neighboring countries such as Vietnam, Laos, Thailand and Myanmar and home to one of China’s busiest airports, Yunnan’s capital of Kunming has benefited from leisure tourists passing through on their way to other destinations across Yunnan and taking advantage of the city’s growing role as a China-Southeast Asia business hub.

“Kunming will continue to be perceived as a valuable option for both leisure and business travel for FIT and MICE groups due to its pleasant climate, natural beauty, improving accessibility - both nationally and internationally - and much better air quality compared to many other cities in China,” said Mark van Leeuwen, general manager of the Wanda Vista Kunming, in the city’s downtown.

To capitalize upon its natural advantages, Kunming needs to leverage its strengths into new areas, van Leeuwen said.

“It is important that Kunming, as a destination, further increases the opportunities and competitiveness to host large events to establish itself even stronger as a city able to successfully host national and international sports, cultural and/or government events,” he said.

Challenges Remain
Despite its numerous advantages compared to less pleasant and more polluted parts of China, Yunnan’s hotel industry has still felt some of the pinch from recent shifts in the Chinese hotel space.

“Yunnan’s tourist numbers are growing each year, but high-end tourist numbers for the five-star luxury hotels are growing relatively slower,” said van Leeuwen, citing figures from the Yunnan Hotel Association. “What is certain, however, is that there will be an increasing number of 5-star luxury hotels from different international hotel groups in the coming years, which will increase the competitive pressure among those hotels.”

In early November, China International Travel Mart (CITM), China’s largest annual tourism and hospitality exhibition, concluded in Kunming, capital of the southwestern province of Yunnan. During CITM, more than RMB80 billion ($12.5 billion) in contracts targeting tourism in China were signed.

Much of the investment announced at this year’s CITM was focused on Yunnan’s growing role as China’s strategic bridgehead into Southeast Asia. A high-speed rail network linking Kunming and Singapore that is under construction will eventually transform Kunming into China’s gateway for overland travel to Vietnam, Laos, Thailand, Myanmar, Cambodia, Malaysia and Singapore.

The tropical border prefecture of Xishuangbanna in Yunnan’s south has been a major focus of hospitality investment recently. It made headlines this year with the opening of Wanda International Resort Xishuangbanna, a massive $2.4 billion theme park and resort development featuring three resort hotels. Wanda Group chairman Wang Jianlin, Asia’s richest man, said that his company plans to invest an additional RMB95 billion in tourism and other businesses in Yunnan in the coming four years.

With 13 million tourist visits annually, Xishuangbanna is but the newest rising star in the constellation of popular travel destinations in Yunnan province. Cities including Kunming, Dali, Lijiang and Shangri-la attract millions of visitors each year, from both China and abroad. Other destinations including Tengchong and Lugu Lake are well known to Chinese but still off the beaten path for international tourism.