PiPeline : China and india
Limited-service : The bulk of growth in the limited-service sector is new construction in China ’ s secondary and tertiary cities . Management deals for new hotels in China ’ s limited-service sector tend to be either lease agreements spanning 10 to 15 years or “ manchising ” arrangements in which the operating company provides a general manager and collects franchising fees . Acquisitions are typically of existing operational assets , and the main buyers are local companies such as Home Inns and Shanghai Jinjiang International Hotels .
FuLL-service : China could see an increase in the construction of hotels for the midscale and upscale segments . “ Most of China ’ s hotel development has been skewed toward the 5-star and budget segments — the missing part has been the 3-star to 4-star segments , which have missed out on the development boom . That will start to change now ,” says Nigel Summers , director , Horwath HTL , Hong Kong .
Developer profile :
Dalian WanDa
Deal activity in china
Although in Taiwan this is not the case , in Mainland China global brands are signing only third-party management deals for full-service hotels largely due to local management companies ’ perceived lack of expertise in operating under franchise arrangements .
Luxury : Despite China ’ s luxury segment ’ s operational woes , a luxury pipeline and acquisition market remains fueled by domestic developers such as the privately held Dalian Wanda Group and numerous state-owned competitors such as China Jin Mao Group Co ., Shanghai . As with the budget segment , the most opportunities for new luxury properties are in the secondary and tertiary markets . “ Most developments of 5-star hotels tend to be components of large complexes and are developed to engineer synergies with other components and in order to meet planning requirements ,” says James McDonald , head of Savills Research , China .
Its press-averse stance does not signify a lack of ambition — the privately held Dalian Wanda Group , Dalian , China , is not just the largest hotel developer in China , but also the world , as it is investing billions of dollars in properties both inside and outside China . In its native land , Wanda continues to invest in massive mixed-use developments that include multiple hotels . A recent example is the Qingdao Oriental Movie Metropolis , a US $ 8.1 billion film and television industry development project that will include one 6-star hotel , one 5-star hotel , two 4-star hotels and four 3-star hotels with a total of 4,000 guestrooms .
While earlier developments featured hotels operated by the global brands , Wanda is now utilizing its own management company and three brands : Wanda Reign , Wanda Vista and Wanda Realm . ( Wanda ’ s hotel development competitors like Greenland Group , Shanghai , Country Garden , Guangdong , and Luneng Group , Jinan , have also created their own management companies and brands .)
In addition to having seen how the global brands manage their properties , Wanda ’ s hotel management team includes many international staff . “ They have learned the business from the brands and are still using the brands in certain cases ,” says Nigel Summers , director , Horwath HTL , Hong Kong . “ The management team Wanda has put together is very international , and that is expensive to do and sets them apart .”
China ’ s pipeline
Through Q4 , 2013
●●China has the second-largest construction pipeline globally and leads the Asia Pacific region with 1,687 projects / 433,491 guestrooms , a year-on-year increase of 4 % by projects and 6 % by guestrooms .
●●China accounts for 22 % of all projects and 32 % of guestrooms globally .
●●53 % of projects and 63 % of guestrooms are in the luxury , upper-upscale and upscale chain scales .
●●The markets that lead the China pipeline by projects are Shanghai with 87 projects / 17,059 guestrooms , Hong Kong with 68 projects / 11,448 guestrooms and Beijing with 65 projects / 11,048 guestrooms .
●●The top three franchise companies leading the China pipeline include Hilton Worldwide with 133 projects / 44,648 guestrooms , Marriott International with 100 projects / 31,645 guestrooms and Starwood Hotels & Resorts Worldwide with 98 projects / 31,084 guestrooms .
●●The brands with the most projects in China ’ s pipeline include Hilton Hotels & Resorts with 56 , DoubleTree by Hilton with 50 , Marriott Hotels with 41 , InterContinental Hotels & Resorts with 36 and Sheraton Hotels & Resorts with 36 .
Source : Lodging Econometrics
42 HOTELS April 2014 www . hotelsmag . com