There Are Currently 23 Hotels In Development In Beijing, Equivalent To 6,300 Rooms#
While Shanghai was in the midst of a hotel construction boom in the run-up to the Shanghai World Expo, it looks like Beijing's pre-Olympics construction boom is still powering ahead. Despite some concerns of overcapacity, recent figures released by STR Global indicate an impressive recovery in Beijing's hotel occupancy rates, which nearly doubled this June from the previous year, up 33.5% to 66.3%, with revenue per available room rising some 41.2% to US$63.52 in that same period. According to STR's Konstanze Auernheimer, the recovery in the Beijing hotel industry comes down to three factors: the recovering Chinese and world economy, the stabilizing supply increase and an increase in demand.
Statistics published recently by the Beijing Tourism Administration seem to indicate that demand is, indeed, there. From January to June 2010, the total number of tourist arrivals in Beijing increased 8.2% year-over-year to a record 80.31 million. Looking to cater to these visitors, there are currently 23 hotels in development in Beijing, which will increase the number of available rooms by nearly 6,300, according to STR Global.
“We have seen a very nice rebound in business in 2010 and are tracking much better than what we had budgeted in both the leisure and business segments,” said Anthony Ross, general manager of 5-star boutique The Opposite House.
The World Tourism Organization predicts China will become the world's most popular tourist destination by 2020 and predicts the next 10 years will be a decade of expansion and growth.
Sarah Keenlyside, founder of travel consultancy Bespoke Beijing, said business is on an upswing.
"We've certainly seen an improvement on this time last year,” she said. “People seem to be shrugging off the recession talk in search of a much-needed holiday. What we have noticed, however, is that more people are asking for better value for money from their hotels than they were before. This means hotels like Hotel G, who have rooms under RMB1,000 (US$150) including breakfast, are doing extremely well."
InterContinental Hotels Group is also confident about China and plans to more than double in size in the next five years. The company has 18 hotels in the Chinese capital and earlier this year signed an agreement for developing InterContinental Beijing City Centre, the third InterContinental hotel in the city.
Keith Barr, managing director for IHG Greater China said Beijing is an important market for the company in part because of its popularity among business and leisure travelers and because of its growing influence after the Olympic Games.
The real question, as hotel construction powers ahead in Beijing, is whether these new hotels are looking at serving low- to mid-range domestic travelers -- who still by and large choose hotels on price more than anything -- or want to get a piece of the international tourist, or growing high-end domestic business traveler, market. This, more than anything, could tip the scales on one side or the other towards overcapacity, even if tourism figures keep going up.