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Shakeup ahead for China’s glutted luxury hotel market

01/16/2015| 8:48:09 AM| ChinaTravelNews 中文

Luxury hotels in China are bracing for fierce competition as supply soars - the glutted market had a total of 800 five-star hotels in 2014.

Luxury hotels in China are bracing for fierce competition as supply soars - the glutted market had a total of  800 five-star hotels in 2014.  

The proliferation of China’s star-rated hotels is inextricably linked with the rapid economic development of the past decade, and also driven by domestic, inbound and outbound tourism growth. The well-established tourism regions Guangdong, Zhejiang, Jiangsu and Shanghai have the highest concentration of star-rated hotels, and the western regions of China are the fastest growing areas maintaining a 6% annual growth in hotel supply.

Yet there have been concerns in recent years of a glut in the booming luxury hotel market. As the rapid growth of luxury hotels is believed to be closely linked to local government demands, the sector will have difficulty sustaining healthy development if s government demand wanes. In 2013, 56 hotels requested to lower their star-rating sparking fears of growth limits for over-standardized hotel chains.

China’s star-rated hotels' total capacity has increased 10% from 2000 to 2012 with five-star hotel capacity increased 20%, according to the China Tourism Institute.

The market was heated up further when China National Tourism Administration introduced platinum-star hotels in 2006. Only the Beijing China World Hotel, Portman-Ritz Carlton Shanghai, Guangzhou Garden Hotel and Jinan Shandong Hotel qualified after the initial round of rigorous selection. These establishments are now facing keen competition from the top ten global hotel groups, who are prepared to venture into inland regions like Tibet and Yunnan after firmly securing footholds in first-tier cities.(Translation by David)

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