In a fast-growing market, what actions are major hotel groups taking to assert their presence in China?
Growth in supply in China has been very significant in recent years: from 2012 to 2017, China’s hotel supply grew by +47%, a very strong figure that can also be measured in terms of growth in occupancy. And while domestic clientele is exploding, international demand is also dynamic: in 2016, the number of international tourists setting foot on Chinese soil is estimated at 59.3 million, a 4.2% increase. Although the supply is growing even faster, the outlook remains very favorable.
In this context of strong growth in supply as well as tourism revenues (up 12.5%), what actions are major groups taking in the Middle Kingdom?
Marriott: a partnership with Alibaba
In 2017, the American hotel group and the Chinese e-commerce platform Alibaba formed a joint venture. Marriott's stated goal: to make its supply more visible to domestic customers and to give an opportunity to Alibaba to develop its travel agency “Fliggy”.
Initially, the Fliggy platform will offer the Chinese market the country's 124 properties and 600 American properties in the Asia Pacific region. In a second phase, the platform will give access to reservations at all Marriott properties (6,431 hotels as of January 1, 2018).
The collaboration between the two giants will continue with the deployment of Alipay payment services in nearly a quarter of hotels by the end of the first half of 2018. This payment solution already present in properties in China will mainly develop in Europe and the Middle East considered as high demand markets.
Hilton: strong growth expected for Hilton's Hampton Inn & Suites
The Hilton Group, which will celebrate its 100th anniversary next year, opened its 100th hotel in China in 2017. The American hotel group continues to develop in the Middle Kingdom with its Hampton Inn & Suites brand, which has 164 hotels and over 25,000 rooms in its pipeline.
The mid-range brand Hampton Inn & Suites posted very strong growth in 2017, with 14,220 additional rooms worldwide, i.e. 6.4% growth, followed in the group by Garden Inn, which grew by 8,652 rooms, i.e. growth of 8.4%.
Also, worth noting is the partnership established this year between Hilton and the Chinese hotelier Country Garden Hotels Group. Among the first acts of this merger: 6 hotels owned by Country Garden have been placed under the Hilton flag.
IHG: Extra Day Guide to encourage customers to discover Chinese cities
The British hotel group IHG gives Holiday Inn customers in China access to a free guide adapted to the property’s location. The concept of the "Extra Day Guide" is to encourage business guests to stay one more night in the hotel to discover the city where they are staying.
Another highlight for the British group was the strong development of its Holiday Inn Express brand in China with a goal to open 131 hotels for more than 25,000 rooms in the coming years. This year the economy brand posted IHG’s strongest growth in number of rooms with 15,389 new keys, for a 6.2% increase.
Jin Jiang / Louvre Hotels: 1st opening for Kyriad in China
Announced in 2014 and finalized in March 2015, the acquisition of the French Louvre Group for 1.3 billion euros was accompanied by the development of French brands in the Middle Kingdom. In 2017, Golden Tulip and Campanile were established there, in March 2018 a first Kyriad hotel opened in Yangzhou. The group aims to open 22 properties by the end of the year for the economy brand. Campanile's development plan provides for the opening of several hundred hotels (pronounced Campo in Mandarin) on Chinese territory. The group's organic growth is accelerating in its domestic market, which continues to equip itself with properties that meet international standards
AccorHotels: partnerships with Ctrip and alliance with Huazhu
While Marriott formed a joint venture with Alibaba, AccorHotels strengthened its partnership with the Chinese travel agency Ctrip in order to increase the visibility of its hotels for Chinese customers.
"Given the growth in the number of Chinese travelers outside the country, we are constantly looking to improve the services we offer our customers. By strengthening our relationship with AccorHotels, we will be able to offer personalized customer experiences and a wider choice of locations," said Jane Sun, Managing Director of Ctrip.
"We want to make all our know-how and skills available to Chinese customers and thus become their reference hotel group. AccorHotels will also launch a major certification program for nearly 250 of its hotels by 2020, based on Chinese Optimum Standards that ensure Chinese customers are well received. Staff at these properties will be trained to meet the primary expectations of Chinese customers, which is in line with our strong ambition for this market," said Sébastien Bazin, Chairman and CEO of AccorHotels.
AccorHotels also increased its stake in the Huazhu Hotels Group. In 2016, the two protagonists signed an agreement to develop the Grand Mercure, Novotel, Mercure, ibis and ibis Styles brands in China, Taiwan and Mongolia. This already successful agreement had led to the announcement of the development of 200 hotels under the Accor brand by 2020. The merger is therefore continuing with the acquisition of a 4.5% stake in the group's share capital, resulting in the purchase of 10.8 million shares for 489 million euros on May 11.
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