Luxury Hotel Overcapacity in China? Starwood Opening “1 Hotel Every 2 Weeks”!

Starwood is opening one hotel in China every two weeks, Hilton plans to go from 39 to 150 properties, and InterContinental is doubling its hotels in China to 400 over the next three to five years. Overcapacity or just fueling business need? From the Asian Review:

In the northeastern port city of Dalian, a Ritz-Carlton, a Grand Hyatt, a Langham and an MGM are all under construction. The Starwood group alone is preparing three hotels simultaneously. That is on top of a Shangri-La, a Conrad, a Hilton and a Furama already open and within walking distance of one another.

As per the Review, occupancy rates at luxury hotels in mainland China are significantly lower than in other countries. While the rates in Hong Kong and Singapore hover around 80% and break-even is said to be in the 70% range, China is falling well below that at a rate of 57.6% reported in May 2013. However, it’s important to note that hotel brands like Starwood and IHG reduce their risk by simply agreeing to manage the hotels without having to invest their own capital in the projects.

Check out the full article from the Review for some insight at to why it still might make sense from a brand recognition standpoint to grow in China despite these occupancy rates.

beijing st regis

Comments

  1. I went to Nanjing City, China (100 miles west of Shanghai) and I found hilton and starwood but no marriott hotels. In Auckland, New Zealand, one hilton but no marriott or starwood. Marriott needs to strengthen its international presence to compete with hilton. Its lack of international hotels will force me to maintain my hilton diamond status (30 stays per year) which I could give to marriott had Marriott stood up wherever hilton stands. So, it is important for hotels to maintain global existence in order to attract domestic customers.

  2. Fortunetely, marriott has quite a few choices from ritz to renaissance so that I could enjoy my entire week at Shanghai marriott hotels. that justifies my 100+ night stays at marriott each year.

  3. I work 100M away from that Intercontinental in Dalian. Conrad and Hilton here are ok, not fantastic, just a pretty lobby and usually empty, not within decent walking distance of anything either. Most of these hotels here are more like 4 stars when compared to HK. Can’t wait to see the new Hyatt as I’ve talked to the GM of amenities purchasing for Hyatt who says they use the same amenity kit throughout the world (true?)

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