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PREMIUM HOTELS - CHINA - JULY 2019

Published By :

Mintel

Published Date : Jul 2019

Category :

Hotels & Restaurants

No. of Pages : N/A

This report covers classified and unclassified hotels, guesthouses, hostels and other transient accommodation for visitors. Travel accommodation comprises dedicated, serviced establishments which offer overnight accommodation for a fee for business/tourist reasons but not residents only.

Included

All establishments which offer overnight accommodation (for holiday/business use only) dedicated, self-catering, apartment/ extended-stay hotels which offer some element of hotel service, such as housekeeping, for a fee.

Hotels included

  • Marriott International, Inc
  • Hilton Worldwide Holdings, Inc
  • Hyatt Hotels Corporation
  • InterContinental Hotels Group plc
  • Wyndham Hotels & Resorts, Inc
  • Accor Hotels
  • Shangri-La Asia Limited
  • Zhejiang New Century Hotel Management Co., Ltd.
  • Jinjiang Hotels

“The premium hotel segment has seen steady growth over the past five years. The segment outlook is positive and it is estimated to grow at a CAGR of 6.0% between 2019-24. Premium hotels are harnessing unique designs, smart rooms and wellness to differentiate. Premium brands may also differentiate themselves by developing services that respond to consumers' desire to connect with others offline. There is also an opportunity for premium hotels to cash in by retailing products with creative designs that source ideas from hotels’ unique designs.”

Table of contents
OVERVIEW
What you need to know
Covered in this report
Included
Excluded
Definitions
Figure 1: Hotel segmentation
EXECUTIVE SUMMARY
The market
Hotel market as a whole returns to rational growth
Figure 2: Market size of total hotel market in China, by hotel units, 2013-18
While premium segment has expanded at a stable rate
Figure 3: Market size of premium hotel segment in China, by hotel units, 2013-18
Mid-scale hotels serve as key market growth driver
Figure 4: Market size of mid-scale segment and economy segment in China, by hotel units, 2013-18
Positive market condition for premium hotels
Challenges for premium hotels
Companies and brands
Premium segment is fragmented
Figure 5: Premium hotel market share of major hotel groups in China, by guest room units, 2017-18
Hotel groups in premium segment have increased market share through aggressive hotel expansion
Figure 6: Premium hotel units and guest room units in China market, 2017-18
Premium hotels penetrate lower tier cities and Mid-West China
Premium hotels seek to improve direct sales channels
Premium hotels make effort to differentiate via wellness and high-tech services
Premium hotel’s new 2.0 loyalty programme
The consumer
Average spending on hotels
Figure 7: Premium hotel spending, March 2019
Luxury hotels: direct sales channels achieved same penetration as OTA
Figure 8: Hotel reservation channels – official hotel websites vs travel websites/apps, by hotel types, March 2019
Scenic views and brand fame are important for premium hotel choice
Figure 9: Important factors for premium hotels choices, March 2019
Post-90 consumers define premium as more than just having a unique look
Figure 10: Characteristics of premium hotels, March 2019
Three key areas for hotel innovation are smart rooms, themes and activities that boost local experiences
Figure 11: Attractiveness of innovative ideas, March 2019
Surveyed consumers have wide ranging loyalty programme enrolment
Figure 12: Loyalty programme enrolment, March 2019
What we think
ISSUES AND INSIGHTS
As premium hotels expand into retail, themed hotels can sell products based on their creative hotel designs
The facts
The implications
Figure 13: St. Regis Boutique by St. Regis Hotels & Resorts
Figure 14: lifestyle products sold on Marriott Hotels’ online retail shop
Consumers’ need for authentic connections offers a touchpoint for premium hotels
The facts
The implications
Figure 15: The Kimpton Stay Human Project by Kimpton Hotels and Restaurants
Responding to consumers’ hobbies: another way to enhance experiences
The facts
The implications
Figure 16: Marriott Hotel partnered with TED, 2018
THE MARKET – WHAT YOU NEED TO KNOW
Total market returns to rational growth
Premium segment saw stable growth in the past five years
Mid-scale hotels replace economy hotels as growth engine
Driven by treating oneself, consumers spent more on holidays
Over half of consumers intended to spend more on domestic travel accommodation
Possible competition from mid-scale segment due to same key target consumers
Premium segment in future: growth slightly slower but still steady
Challenges ahead
MARKET SIZE AND FORECAST
Premium hotels expanded at a stable rate
Figure 17: Market size of premium hotel segment in China, by hotel units, 2013-18
Key tourism cities are not saturated with premium hotels
Figure 18: Premium hotel density in 50 key tourism cities in China market, 2019
Positive market conditions for premium hotels support future growth
Figure 19: Market size forecast for premium segment, by hotel units, 2019-24 (est)
MARKET SEGMENTATION
Total hotel market: end of wild market expansion through opening new hotels
Figure 20: Market size of total hotel market in China, by hotel units, 2013-18
Growing travellers in China market
Figure 21: Number of travellers in China market, in million person-times, 2013-18
Total market will see more hotels opened at a slower rate
Figure 22: Market size forecast for total hotel market, by hotel units, 2019-24 (est)
Mid-scale hotels boost growth
Figure 23: Market size of mid-scale hotel segment in China, by hotel units, 2013-18
Mid-scale segment expected to reach fast growth
Figure 24: Market size forecast for mid-scale segment, by hotel units, 2019-24 (est)
Economy hotels give ways to mid-scale ones
Figure 25: Market size of economy hotel segment in China, by hotel units, 2013-18
And economy segment growth cools down
Figure 26: Market size forecast for economy segment, by hotel units, 2019-24 (est)
MARKET FACTORS
Increased spending on holidays
Figure 27: Consumer expenditure by sector, 2017-18*
Treating oneself rather than price rises motivates consumers to spend more on travelling
Over half of consumers willing to spend more on accommodation
Families become key premium hotel users, while competition may come from mid-scale segment
Figure 28: Penetration of economy hotels, mid-scale hotels and premium hotels*, by three types of leisure travel, 2018**
Ctrip adopts flagship model to cooperate with premium hotels
Premium hotels are short-handed
Figure 29: Labour force in China’s Hotel Industry, 2014-17
KEY PLAYERS – WHAT YOU NEED TO KNOW
Premium hotels compete in a fragmented market
Domestic hotel group’s improved market share
Premium hotels deepen penetration in China market
Focus on direct sales channels
Wellness and high-tech services grow in popularity
Innovation highlights
MARKET SHARE
Premium hotels compete in a fragmented market
Figure 30: Premium hotel market share of major hotel groups in China, by guest room units, 2017-18
Domestic players catching up by opening more hotels
Figure 31: Premium hotel units and guest room units in China market, 2017-18
COMPETITIVE STRATEGIES
Leading premium hotel brands are expanding to lower tier cities which have rich tourism resources or more developed economies
Figure 32: Percentage share of new premium hotels opened by four hotel groups, by administrative division in China, 2017-19*
New premium hotels are entering economically fast growing Mid-West region
Figure 33: Percentage share of new premium hotels opened by two hotel groups, by region, 2017-19
Introducing new premium brands to China market
Figure 34: Hualuxe hotel by InterContinental Hotels Group plc
Wellness claims tagged to premium hotels
Figure 35: Wellness programme of Westin Hotel, 2019
Technology enabled lodging experiences
Strengthening direct sales channels, reducing reliance on third parties
Reshaping loyalty programs
WHO’S INNOVATING?
Meeting consumers’ need to slow down
Figure 36: Wonderland Resorts by New Century Group
Marriott Bonvoy: the next generation of loyalty program
Figure 37: Marriott Group’s loyalty programme membership redemption at Taobao
THE CONSUMER – WHAT YOU NEED TO KNOW
Average spending on hotel stays
Direct sales channels have achieved a similar usage penetration as travel websites for luxury hotels
Surveyed consumers define premium hotels using five aspects
Unique design alone is not enough to attract post-90 consumers
Capitalise on smart rooms, themes and local activities to innovate hotel experiences
HOTEL SPENDING
Six out of ten surveyed consumers have stayed at hotels priced between RMB1,001-3,000 per night
Figure 38: Premium hotel spending, March 2019
Surveyed consumers in Shanghai tend to spend more on hotel stays
Figure 39: Average hotel spend, by city, March 2019
RESERVATION CHANNELS
Luxury hotels’ direct sales success: official hotel sites used as much as travel websites
Figure 40: Hotel reservation channels – official hotel websites vs travel websites/apps, by hotel types, March 2019
More surveyed consumers in tier two and lower cities have booked premium hotels via flagship stores
Figure 41: Hotel reservation channels – hotel flagship store on travel platforms*, by city, March 2019
IMPORTANT FACTORS FOR PREMIUM HOTEL CHOICE
Stunning views and brand fame catch potential premium hotel consumers
Figure 42: Important factors for premium hotel choice, March 2019
Scenic views and brand fame even more important to high spenders
Figure 43: Important factors for premium hotels choices – selected items, by hotel spending, March 2019
Wellness services appeal more than packaged deals to younger generation
Figure 44: Important factors for premium hotel choices – selected items, by generation, March 2019
CHARACTERISTICS OF PREMIUM HOTELS
High-quality services and “hardware” define premium
Figure 45: Characteristics of premium hotels, March 2019
Premium hotels defined for post-90 urban consumers: unique and caring
Figure 46: Characteristics of premium hotels, by generation, March 2019
ATTRACTIVENESS OF INNOVATION IDEAS
Consumers are interest in smart rooms, themes and activities with local experiences
Figure 47: Attractiveness of innovative ideas, March 2019
Consumers crave hotels with themes
Figure 48: Music theme by Kimpton Hotel & Restaurant Group Inc, 2019
LOYALTY PROGRAMME ENROLMENT
Domestic groups reach as many members as international big brands
Figure 49: Loyalty programme enrolment, March 2019
High spenders are more likely to get enrolled
Figure 50: Loyalty programme enrolment, by hotel spending, March 2019
APPENDIX – METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations
New hotels opened by four major hotel groups in China market in 2017-19*

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