Insights into the #brand offerings and #asset performance of #hotels, resorts and serviced apartments in China
At the recent Real Estate Investment World China 2012 conference Hospitality Panel Discussion on 21 March at Beijing, China, Hans Galland of Jones Lang LaSelle Hotels, Willie Ooi of Gloria Hotels & Resorts, Zhang Bin of Jin Jiang Inn Co. Ltd | Shanghai Jinjiang International Hotels (Group) Company Limited and Max Ng of Interstate (Shanghai) Hotels & Resorts Co. Ltd were involved in an interactive discussion on:
- Relooking occupancy, RevPAR and asset yields for hotels, serviced apartments and resorts across China
- Where do conventional and luxury hotels stand against the booming economy segment?
- Levelling competition among global and homegrown brands – Are international players localising sufficiently?
- Advancing entry modes and marketing platforms through quality joint-ventures and franchising
In summary, the panelists had come to agreed that the real estate market rebound can be reflected in increased occupancy rates and property prices of first-tier cities. Thus, the outlook for hospitality in China is positive.
When investing in hotel properties, investors should conduct deal due diligence to identify the customer base and understand the market environment to better position themselves. And budget hotels are the major component of China’s hospitality market.
According to high-end brands, managers’ capabilities are not limited to their own investments. Apart from running their branded hotels, they also assist other owners in hotel operations. This new business model requires professionalism and demanding management skills in order to operate and value-add for individual owners, which is also a great way to branding.
Hence, hotel management companies are more flexible in operations. They can either help an owner to run a hotel or to build a brand from start. As a service provider, they have extensive local and international resources that enable them to build business models and design solutions, such as management systems and operating platforms for their customers.
In today’s hospitality market, the number of buyers exceeds sellers. The focus of many investors remains the short-term profits and they will exit the market in the next few years. By collaborating with hotel managers, many wealthy individuals make investments through turning empty properties into branded hotels. As short- term investors, their goal is not watching the business grow but realising profits through selling appreciated properties. As the market matures, the property turnover rate should rise but investors should also consider withdrawals or disposals when entering such ventures.
Mid-scale hotels will be the dominant player in the next three to five years. As living standards and purchasing power rise, the demand for mid-scale hotels will also increase. Both budget and high-end operators are in the process of designing mid-scale hotel brands to meet customers’ needs.
From a macro perspective, the economy hotel sector will not be affected by market fluctuations. Luxury hotels on the other hand, will be affected by market movements. However, most high-end operators are still targeting a 6 to 8% growth.
More updates for developers and investors on the risks and opportunities for various hospitality asset classes in Asia Pacific at Real Estate Investment World Asia 2012, taking place from 26 – 28 June at Marina Bay Sands, Singapore. Hear from Pontiac Land Group | Patina Hotels & Resorts, Frasers Hospitality and Lebua Hotels & Resorts as they give 20 minutes fast-track presentations on Hotels, Serviced Apartments and Branded villas and Resorts. Visit www.reiwasia.com or download conference brochure for more information.