China’s hotels are setting their sights on expanding globally as the local hotel industry has achieved initial success in upgrading their operations and management and market mechanisms have taken form, according to Huamei Consulting CIO and economist Huanyan Zhao.
He believes that the trend of global hotel groups lightening thier assets is laying the groundwork for Chinese hotel investors to make an aggressive push to overseas markets.
His view is concurred by UK realty Savills, which projects that Chinese investors will inject more than 200 million GBP annually into the global hotel market in the next three years, taking their share of the hotel capital market worldwide from the current 4% to 10% by 2017.
Chinese investment overseas had expanded by close to 40 times within 12 years, from US$2.7 billion in 2002 to US$107.8 billion in 2013. Overseas investment further accelerated since then, with a total of US$43.34 billion invested in 3,224 overseas companies in 146 countries and regions within the first six months of 2014, as per the data of China’s Ministry of Commerce.
Mr. Zhao thinks that future Chinese overseas investment in the commercial and residential real estate will be concentrated in mature markets like New York, San Francisco, Vancouver, London and Singapore while Southeast Asia and Australia will be favored for resort development.
“The prerequisite for the globalization of China’s service industry, which is also China’s national goal for economic transitioning, is to change the mentality of over-emphasizing investment and hardware at the expense of management and software,” Mr. Zhao said.
He thinks the key is for China’s hotel industry to establish brands with intellectual property rights in order to progress from hotel investment to hotel management as they expand overseas and realize China’s goal of for increased soft power.(Translation by David)
