Shanghai, Guangzhou lead China’s hotel construction pipeline

Shanghai, China Image: j.sau / CC BY 2.0 (Hyatt Hotels and Tianfu Minyoun Hospitality have agreed to expand the Hyatt Place, Hyatt House, Unbound Collection by Hyatt and Hyatt Centric hotel brands in China.)

Despite an economic slowdown, a falling stock market and continued concerns about a possible tariff war, China’s hospitality pipeline totals remain at or near all-time highs as the hotel-construction boom continues. According to the latest figures from Lodging Econometrics, the total China construction pipeline stands at 2,523 hotels with 556,645 rooms. 

As of second quarter, the construction pipeline is slightly less than the all-time high of 2,658 hotels and 557,716 rooms set in Q4 2014 and is up 5 percent by hotels year-over-year. Currently, China has 1,814 hotels and 389,328 rooms under construction; hotels starting construction in the next 12 months are at 367 hotels with 78,361 rooms; and hotels in the early planning stage are at 342 hotels with 88,956 rooms.

In first half, 173 hotels with 35,585 rooms opened across China. The LE forecast for new hotel openings expects another 461 hotels and 71,788 rooms to open in second-half 2018, bringing expected new hotel openings to 634 hotels and 107,373 rooms by year-s end. Looking farther ahead, 548 new hotel openings are expected in 2019 and 540 in 2020.

With major global brands developing hotels at a record pace from 2016 to 2020, new hotel openings will have skyrocketed in size from an average of 144 rooms in 2016 to 244 rooms in 2020. This shift is characterized by far fewer small economy-scale hotels in the pipeline and an increase of larger upper-upscale hotels, many of which are part of mixed-use developments.

Top Destinations, Top Companies, Top Brands

Shanghai and Guangzhou continue to lead China’s total construction pipeline with 121 hotels and 24,759 rooms, and 108 hotels with 26,022 rooms, respectively. Guangzhou’s construction pipeline is at an all-time high. The city has shown continued growth, rising to a 300 percent increase in hotels since the pipeline bottomed in second-quarter 2008 with 27 hotels. These cities are followed by Chengdu with 88 hotels and 20,051 rooms; Hangzhou with 79 hotels and 17,904 rooms; and Suzhou with 74 hotels and 14,597 rooms.

Top franchise companies in China’s construction pipeline are all hitting record highs. They are led by Hilton with 375 hotels and 84,964 rooms; IHG with 314 hotels and 74,611 rooms; and Marriott International with 285 hotels and 79,663 rooms. These three companies make up 43 percent of rooms in the total hotel-construction pipeline. (It's worth noting Hilton recently named a new president of development in Greater China and Mongolia. Jerry Huang will oversee the team responsible for the overall development strategy for China.)

The leading brands in the construction pipeline for these companies are Hilton’s Hampton Inn with 185 hotels and 28,590 rooms and DoubleTree with 59 hotels and 19,784 rooms; IHG’s Holiday Inn Express with 137 hotels and 26,402 rooms and Holiday Inn with 61 hotels and 16,412 rooms. The leading brand for Marriott International is the full-service Marriott Hotel & Resort with 66 hotels and 20,531 rooms. All of these brands are at record highs.

Radisson's China Growth

While Radisson Hotel Group did not lead Lodging Econometrics' list, the company has been making strong inroads in China recently. Earlier this week, Radisson Hotel Group announced plans to bring its Radisson Blu brand to Hainan. Developed by Hainan Daye Industry Co., the 48-story Radisson Blu Haikou is scheduled to open in Q2 2020. The company also plans to bring its Radisson Blu and Radisson brands to central China with the Radisson Blu Wuhan ETD Zone and the Radisson Wuhan Optics Valley in the city’s high-tech business and development zones. And in June, RHG announced that it would open the Radisson Ningbo Beilun in Ningbo, Zhejiang province.

The company's focus on China is understandable: In August, Hainan-based HNA Group agreed to sell its holdings in Radisson Hospitality AB and Radisson Holdings to a consortium headed by Jin Jiang International Holdings, which is controlled by the Shanghai government.