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The hotel industry, driving economic transformation in China

As the 19th congress of the Chinese Communist Party gets underway, the latest development plan will be launched. Shifting towards a more consumer and service based economy, the hotel sector has given ample reasons for satisfaction; promising growth of the hotel offer and the arrival of Chinese hotel groups at the world summit.

Since 2012 and the launch of a five-year development plan focusing on high-quality growth at the 18th Congress of the Chinese Communist Party, the Chinese economy has attempted to open up to the world and develop. The hotel industry is a key area in China's development. Regardless of whether this is due to the hotel offer in the country, the increase in the number of Chinese tourists abroad (+ 4% travel in 2017), or tourist income (up 12.5%), all are promising signs.

 

 

The growth of hotel supply in China has been very important. From 2012 to 2017, the Chinese hotel market grew by 47%, a very strong metric, owed to a conducive policy. The importance of this growth is also measurable by the growth in attendance. If the number of domestic trips surges, the international demand follows suit: in 2017, nearly 147 million foreign tourists will have visited China, a number up 3.5% compared to last year. If supply increases even faster, the outlook is very favorable.

 

 

The vitality of the Chinese hotel sector, thanks in particular to the development of the supply, has transformed the Chinese hotel groups, compared to a few years ago, into world titans. This dizzying rise to the top of the world rankings was aided by ambitious merger and acquisition strategies, between Chinese groups (Home Inns and BTG, Jin Jiang and Plateno) as well as around the world, including the takeover of Louvre Hotels by Jin Jiang or that of Carslon Rezidor by HNA.

From 2012 to 2017, the Chinese hotel sector has been at the forefront of progress outlined in Beijing's economic growth plan. The opening to the world, which should be the main theme of the 19th Congress, against a backdrop of growing internationalisation of Chinese elites, will probably not spoil things for the hotel groups in the country. But might it unsettle American leaders as in other sectors?

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