All about China
Many hotel executives have compared today’s China to the United States of the 1950s. Infrastructure is being developed at a breakneck pace, economic and social optimism abounds and GDP growth remains very strong with only limited signs of inflation to date. While some are worried about an economy that could potentially overheat, and other shrewd investors are stating the hotel real estate market is already overpriced, China remains THE story for the hotel business — both from a development perspective and as an outbound travel opportunity.
Starwood Hotels & Resorts has gone as far as to send its senior executive team to China this summer for a month to better understand the culture, as today some 30% of its 300-hotel pipeline is there. CEO Frits van Paasschen has been quoted as saying something to the effect that you don’t really know a market until you buy groceries there. He even took it a step further yesterday when he was quoted as saying he would consider listing Starwood on China’s stock exchange if it were an easier process.
Starwood execs also used the occasion of their visit to announce their new amenities package tailored to Chinese travelers, who are increasingly being courted as the new globetrotting traveler who can fill the coffers of hotel companies for years to come. Take note, however, as Chinese travelers have also been identified as typically preferring less than luxurious accommodations so their money can be better put to use in retail stores.
Comically, considering the growing rivalry between the two companies — either real or media contrived — on the very same day that Starwood launched its Chinese amenities program, Hilton Worldwide sent out its press releasing announcing its almost identical program called Hilton Huanying, which takes its name from the Chinese word for “welcome.” Everyone has been talking about courting Asian travelers and now the big boys have stepped up and delivered. I expect just about everyone to follow in one form or another.
What does this all mean? To me it means the top story for today and years to come is going to be China. For all of those jumping in there — with the middle and budget segments generating the next big opportunity — I only hope the market maintains its sanity and equilibrium as it will undoubtedly go through growing pains. Until — and even if — that pain surfaces, step right up, find your local partners and pass the congee.