Top Biz News

Competition heats up in hotel market

By Ding Qingfen (China Daily)
Updated: 2006-09-27 09:17

Feng's claims echo the thoughts of many local hotel owners. In February, Chengdu International Exhibition and Convention Group signed a contract with IHG, under which the UK group will manage six properties. And earlier this year, four of Shanghai Greenland Group's properties also became members of IHG.

"Sound ownership is what we are proud of. The 125 hotels that will come into operation by 2008 belong to merely 70 owners, which speaks volumes about our strength," said IHG's Imbardelli.

The reason owners would rather pay higher management fees, which can account for 5 to 8 per cent of sales revenues, to partner with international giants is simple  the value foreign brands can create.

With their longer history, international hotel chains have well-known names, extensive management experience and well-developed sales and marketing networks, and they are also adding muscle to the localization drive sweeping the industry.

"China is about China and we are taking as many localization initiatives as possible, recruiting more Chinese management staff, buying our stocks in China and being more responsible here," said Imbardelli.

So what can local hotel groups like Jinjiang Group and Beijing Tourism Group (BTG) do to keep their place in the market?

"Individual hotels which are part of local groups should try to improve service quality and to bring their own character into play," said Li.

Beijing Hotel under BTG is a good example. With an 89-year history and a great location on Chang'an Avenue, the hotel has an impressive reputation and attracts many visiting celebrities.

To boost profits the hotel group could consider expanding into other regions, suggested Li. BTG could move beyond Beijing, while Jinjiang could enter other parts of China besides Shanghai, he said.