Hotel Industry in China

Hotel Industry in China

Global economy:

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014 at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain.

General Facts about Chinese Economy:

China's GDP grew 10.0% in 2003, 10.1%, in 2004, and even faster 10.4% in 2005 despite attempts by the government to cool the economy. Chinese economy is significantly affected by the 2008-9 global financial crisis due to the export oriented nature of the economy which depends heavily upon international trade. However, government economic-stimulus has been hugely successful by nearly all accounts.

China's economy expanded 7.7 percent in 2013, overshooting the official target of 7.5 percent. Beneath the headline number, several pleasant changes were seen spreading across the economy amid the country's rebalancing efforts.

As of 2013, China's nominal GDP by Expenditure approach is 56.88 trillion Chinese Yuan or 9.2 trillion US dollars.

Table 1 - China's quarterly GDP 2012-2013 (in millions of US $)

Year Q1 Q2 Q3 Q4 Sum

GDP ($) Growth(%) GDP Growth(%) GDP Growth(%) GDP Growth(%) GDP Growth(%)

2013 1,940,292.71 9.6 2,108,433.61 8.1 2,270,259.29 10.6 2,966,786.72 9.7 9,285,772.32 9.5

2012 1,770,685.59 11.3 1,951,214.05 9.7 2,052,542.05 8.5 2,705,336.28 9.9 8,479,777.97 9.8

China's service sector accounted for 46.1 percent of the country's gro...

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...f the future new supply in China.

Most luxury hotels in China cannot attain an occupancy rate of 70 percent, which is the break-even point for the hotel industry, he said. Statistics from the NTA show that the average occupancy rate for five-star hotels was only 50.1 percent in the first quarter.

The structure of China's hotel industry is unhealthy, as high-end and budget hotels outnumber middle-level hotels. As of July, high-end facilities accounted for 56 percent of China's hotel rooms and budget hotels took up 22.6 percent, according to STR Global.

"The main clientele of hotels should be middle class," said James Lyu, executive director of the Hong Kong Hotels Association. Lyu said that four-star facilities should be the most numerous. However, high-end hotel operators are still optimistic about China's market over the long term and are still adding new rooms.