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China is The Future of Tourism

China's citizens are earning more than ever before. And they are craving U.S. hotel experiences. Here’s why.

Wednesday, September 04, 2013
Glenn Haussman
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The U.S. lodging market may be going gangbusters, but it seems that China is grabbing many of the headlines these days. Between the incredible bounty of new development and its rising middle class, China is one market that’s on a major winning streak.

The other big winner after the domestic Chinese travel market is of course U.S. based hotel developers who have seen seemingly countless projects get approved. But equally important are U.S. hotel operators who are starting to see an influx of visitors to the Americas from the Chinese mainland. And they’re are all too happy to spend some to their new found money at their hotels.

According to John Tisch, Chairman of Loews Hotels, and quite possibly the biggest advocate for the travel industry, the global tourism market will be booming for decades to come, and China will be one of the largest suppliers of new tourists.

“Between 2000 and 2012, international trips by Chinese travelers grew more than eight-fold. By 2016, China will add another 34 million international passengers to the market,” said Tisch during a speech last month at the 35th Annual NYU International Hospitality Industry Investment Conference. “Last year alone Chinese travelers spent a whopping $102 billion, making China the largest spender in the international tourism market.”

That’s a pretty heady statistic.

“In 2012 China alone saw 70 million people leaving the country for outbound travel. That’s 10 million more than just two year’s prior,” explained John Foley, VP of sales with Safemark, a company that designs, installs and maintains in-room safes. “Better yet, the United States is the fastest growing destination for Chinese citizens visiting other countries. Hoteliers need to get prepared and educate their staff in regards to how to take care of Chinese customers.”

Tisch also said according to the World Tourism Organization, China has become the fastest-growing tourism source market globally. And the entire Asia Pacific region will be a hotbed of tourism generating consumers for decades to come. “Looking out to 2030—not really all that far for our planning purposes – the consulting firm Ernst & Young predicts the global middle class will expand by another 3 billion people. Two-thirds of those will come from the Asia-Pacific region,” said Tisch.

To help leverage this potential profit source the U.S. government has started to do its part. They’re helping Chinese tourists obtain visas more quickly than ever before. In a process that used to takes months is now down to days as more personnel have been dedicated to the approval process.

“In China, waiting times for obtaining a visa now average just five days, down from 120. In Brazil, we’ve cut the wait by 98 percent—from a high of 140 days down to about two days. Our success in improving the visa process provides an effective model for action. As an industry, we came together to identify a problem … highlighted ways to fix it … and committed ourselves to working toward a solution,” said Tisch, who also noted the customs process on arrival in the U.S still needs a lot of improvement and that it’s inefficiency may be costing the country up to $95 billion a year in lost tourism revenue.

On the flip side, U.S. companies operating hotels in China are seeing massive opportunity for many decades to come.

“China – and India as well -- are 10-30 year markets that along with other areas will come into focus in next decade,” said W Edward Walter, President &CEO Host Hotels.

He sees the future as more likely to create financial success than the present because he says deal dynamics are still challenging to find the right deals that make sense from an owner’s perspective. But he sees that changing during the next decade.

A lot of investment in China has cooled off, but as the country’s infrastructure continues to expand, there will be many more hotels developed in segments beyond Luxury and Upper Upscale, which have been the leaders in Chinese product development.

That’s because as Chinese travel more within their own country for the first time they will be seeking alternative for lodging at a more affordable price-point.

InterContinental Hotels Group is playing right into this burgeoning market with the development of a HUALUXETM Hotels and Resorts. Rather than adapting an existing product, they’ve created a product specifically geared to the Chinese middle class traveler. According to IHG, the hotel brand will focus on “the unique aspects of Chinese etiquette, the importance of rejuvenation, status recognition and enabling spaces that reflect local customs and heritage”.

“Since we entered this market in 1984, we’ve been evolving our operating standards and services to ensure all our Chinese guests feel welcome and comfortable.” said Keith Barr, chief executive officer, IHG Greater China, said last year after signing a deal to develop the first eight hotels. “HUALUXE Hotels and Resorts marks an innovation in this industry. Our three decades of experience has given us deep consumer insight that we’ve now used to create a brand where every element has been fashioned to suit the tastes and sensibilities of our Chinese guests. This has never been done before and it’s immensely rewarding to see so many owners and business partners understand, support and sign up to our vision.”

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Glenn Haussman    Glenn Haussman
Editor in Chief
Hotel Interactive®, Inc.

Bio: Glenn Haussman is Hotel Interactive®'s Editor-In-Chief, where he manages all editorial content for the hotel industry’s leading online information resource. In addition to publishing the daily magazine, he hosts a weekly on demand radio shows and develops educational content for the company’s BITAC® and HI Connect® Design ...
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