Checking out the Opportunities for Future Growth
Cushman & Wakefield today released its Hotels in Mainland China — Checking out the Opportunities for Future Growth report.
The hotel market in mainland China has been influenced by a number of factors over the last couple of years, not least by the COVID-19 epidemic and subsequent lockdowns and travel restrictions, but what are the opportunities for future growth? Before we answer this, let’s look at the current market.
The Current Market
First-tier cities – stock and supply
Beijing, Shanghai, Guangzhou and Shenzhen, as gateway cities in mainland China, are the cities which enjoy the highest level of mature hotel industry development, the largest industry demand and the most extensive industry brand coverage.
In 2022, it is estimated that the number of hotels in mainland China’s first-tier cities is over 38,000 and the total number of star-rated hotels in the four cities is estimated to be over 7,300.
Broken down into hotel group subcategories, in these city markets, the largest number of hotels is taken up by the budget hotel category, followed by mid-end hotels, mid-to-high-end hotels and high-end hotels. The COVID-19 epidemic in 2020 has certainly impacted the first-tier city markets. Having said this, the number of hotels opened in these markets is still considerable.
What Is Next?
Several factors are and will increasingly come into play within the hotel sector in mainland China:
1. The changing demographics
Today, the middle-income group in mainland China stands at over 300 million people. To be specific, millennials, (those born between 1981 and 1996) are the main generational group associated with the country’s new middle class and their consumption upgrading has highly influenced the hotel sector. Meanwhile, Generation Z (those born between 1997 and 2012 – an era of economic boom), will become the main consumption force in the future.
2. Changing travel consumption behavior
The hotel stay consumption behavior of travelers in mainland China has undergone tremendous changes, and new segmented groups, such as girlfriends, online gamers, couples and families cannot be ignored. Their new consumption behavior has accelerated the development of some new hotel businesses, such as “E-sports” hotels. Also, the epidemic and related travel restrictions have made staycation vacations more prevalent, thus benefiting hotels nearby large urban populations
3. A greater want for convenience
Technology is and will play an important role in enhancing hotel convenience, with many smart facilities and platforms being used in hotels, including smart front desks, smart housekeeping, smart rooms and smart dining.
4. A heightened awareness of health, safety and cleanliness
As COVID-19 first began to gain a footing in mainland China, people’s criteria for choosing a hotel changed, with hygiene and safety becoming a higher priority.
5. A growing desire for a unique stay experience
‘Daka’ is now a big overall travel trend, which is a type of check-in style travel that is linked to online social media sharing. Therefore, more hotels in mainland China are beginning to place a greater emphasis on local and differentiated elements in their design and services in order to attract younger-generation travelers, who seek unique stay experience and share on social media.
Overall, hotel investors, developers and operators need to be aware of these factors in order to capture any new business opportunities in the future.
Andrew Chan, Managing Director, Head of Valuation & Advisory Services, Greater China, Cushman & Wakefield, said, "With the rapid development of technology, hotel guests in mainland China have increasingly demanded new types of efficient and convenient hotel services which feature high-tech solutions. The hotel industry in mainland China is undergoing rapid changes both in the general market as well as in hotel services. In order to respond to these changes, Cushman & Wakefield offers a full range of real estate-related services to assist hotel clients in better positioning their hotel assets to capture any new and emerging business opportunities.”
Francis Li, International Director, Vice President, Greater China, Head of Capital Markets, Greater China, Cushman & Wakefield, said, “Impacted by macro changes and transformation in guest demographics, preferences and behavior, hotels in mainland China are continuing to evolve in terms of their business offering. Cushman & Wakefield’s full-service advisory keeps our clients continually abreast of these changes to ensure the right investment decisions are made regarding their hotel property assets, at any given time.”
Shaun Brodie, Head of Occupier Research, Greater China, Cushman & Wakefield, said, “The steady growth of mainland China's middle-class group has brought about the upgrading and transformation of consumption, including spending on travel, tourism and hotel stays.”
Please click here to download the report.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
