RESEARCH 研究报告 GREATER CHINA HOTEL REPORT 2016 大中华酒店报告 2016 OVERVIEW In 2015, along with a further rise in the per-capita income of Chinese residents, domestic tourists continued to dominate China’s tourism sector. Domestic visitor arrivals grew 10.6% year on year (YoY), accounting for over 96.7% of total visitor Hotel development in China arrivals. The overall number of international visitors is set to benefit from the strong upsurge in domestic also rose, but by a more modest 4.1% YoY, reaching tourism in the medium 133.8 million, 56.9 million of them overnight visitors, to long term. Meanwhile, up 2.3% YoY. international operators are expected to launch aggressive expansion The uptrend continued in the first half with over 1,000. Macau and Shanghai drives across China. of 2016 (1H 2016), with the number of were the most active in 1H 2016, adding international visitors to the Mainland over 900 rooms each. By mid-2016, DAVID JI growing 3.8% YoY, while overnight Beijing continued to have the largest Director, Head of Research & international visitors increased 4.3% stock of five-star hotel rooms among the Consultancy, Greater China YoY to 28.9 million, mainly as a result six cities, with over 38,000, followed by of efforts by the Chinese government Shanghai with over 28,000 and Macau in recent years to modernise transport with over 20,000. infrastructure and upgrade tourist sites. In 1H 2016, Guangzhou was the only Encouraged by the growing number of city that recorded positive Average tourists, international hotel operators Daily Rate (ADR) growth among the have continued to increase their foothold six cities, gaining 2% YoY, mainly in China. Among the six cities covered because of stable demand from the in this report, Macau led in terms of Canton Fair. The other major cities new supply in 2015, adding about saw downward pressure on the ADR 2,200 five-star hotel rooms, followed by of five-star hotels. Macau suffered Guangzhou with over 1,300 and Beijing from the largest decline in ADR, down TABLE 1 Economic indicators Period Beijing Shanghai Guangzhou Hong Kong Macau Taipei GDP growth 0.8% (2016 -13.3% 2016 1H 6.7% 6.7% 8.0% 1.2% (year-on-year) Q1) (2016 Q1) RMB103,100 HK$328,117 MOP574,790 GDP per capita 2016 1H RMB52,586 RMB134,000 TW$354,230 (2015) (2015) (2015) MOP14.7 Retail sales value (billion) 2016 1H RMB497.63 RMB524.8 RMB420.4 HK$219.7 TW$2,012 (2016 Q1) Retail sales value growth 2016 1H 3.8% 7.6% 8.4% -5.1% -11.2% 2.0% (year-on-year) Foreign direct investment 2016 1H 1.8% 0.8% 20.6% 10.7% (2015) 15.5% (2014) 178.2% growth (year-on-year) Unemployemnt rate 2016 1H 1.5% 4.0% 2.4% 3.4% 1.9% 3.9% Inflation 2016 1H 1.2% 3.1% 2.6% 2.4% 3.2% 1.5% Source: Local statistics departments / Knight Frank Research 2 GREATER CHINA HOTEL REPORT 2016 RESEARCH 12.3%, because of abundant supply and however, the number of short-haul and intense competition, followed by Hong long-haul overnight visitors improved, CHART 1 Kong where the ADR fell 5.3%, owing thanks to the government’s Matching International overnight visitor to fewer Mainland visitors. The ADR in Fund Scheme (MFTA) and Hong Kong arrivals (2016 forecast) Shanghai, Taipei and Beijing dropped Family Fun promotion. Given the limited Million people only 1-2%. However, Hong Kong’s ADR supply of five-star hotel rooms, both the 30 still remained the highest of the six cities, occupancy level and ADR of five-star reaching US$277, followed by Macau at hotels are expected to remain stable in US$212 and Taipei at US$153. the short term. 25 The slow global economic recovery With the continuing efforts of the Macau 20 led to a slight decline in international government and the industry to transform tourist arrivals in Beijing. However, the city from a gambling centre to a 15 the performance of Beijing’s five-star leisure and entertainment destination, hotels remained stable, thanks to the number of international overnight 10 stronger domestic spending as well as visitors has shown improvement starting increased demand for domestic business from 2H 2015. However, both the accommodation and conferences. occupancy rate and ADR of five-star 5 The authorities are planning a series of hotels have fallen significantly because 0 policies to tackle unfavourable factors, of a surge in room supply, which has Beijing Shanghai Guangzhou Hong Kong Macau Taipei such as chronic air pollution and traffic intensified competition. In the medium congestion, which have a negative and long term, the synergistic effect Source: Knight Frank Research impact on tourism. These initiatives are of the completion of the Hong Kong- set to provide a better travel experience Zhuhai-Macau Bridge and the Macau for visitors, which will eventually result airport expansion as well as the effects of CHART 2 in increased demand for Beijing’s luxury industry transformation are expected to Five-star hotel stock hotels. benefit Macau’s hotel industry. (2016 forecast) Over the past year, tourist arrivals Taiwan’s hotel industry continued to Thousand rooms to Shanghai, both domestic and benefit in the past year from the opening 40 international, have grown steadily, as of its tourism market to Mainland visitors. Shanghai remains one of the most International overnight visitor arrivals, 35 preferred local destinations for domestic excluding Mainlanders, also recorded 30 tourists. More tourists are anticipated strong growth. Occupancy rates and the following the opening of Shanghai ADR of five-star hotels are expected to 25 Haichang Polar Ocean Park in 2017 remain firm, thanks to the implementation and Ice World in Lingang, Pudong, of “New South Policy”, which has 20 in 2019, boosting demand for hotel simplified administrative procedures and 15 accommodation. However, with the surge offers visa exemptions to attract ASEAN in the supply of five-star hotel rooms in visitors. 10 the next few years, hotel operators are In recent years, China’s hotel market has 5 expected to offer more discounts on faced increasing challenges, including room rates to lift occupancy, resulting in 0 slower domestic economic growth, Beijing Shanghai Guangzhou Hong Kong Macau Taipei a fall in the ADR of five-star hotels. on-going government policies to curb Given the launch of the Guangzhou consumption of luxury goods as well as Source: Knight Frank Research Nansha Free Trade Area and the strategic increasingly fierce competition among positioning of Guangzhou as a hub city in local and international hotel operators the Belt and Road initiative, Guangzhou resulting from increased room supply. CHART 3 continued to generate a steady stream of However, the hotel market in China is set Five-star hotel room rate business as well as Meeting, Incentive, to continue growing and to benefit from a (2016 forecast) Conference and Exhibition (MICE) visitors strong upsurge in domestic tourism in the in 1H 2016. A number of renowned medium to long term, with the domestic ARD (US$) global brands entered the Guangzhou economy becoming increasingly driven 300 market in the past year, including by domestic demand. International Park Hyatt Guangzhou and Hilton’s hotel operators have continued to show 250 Double Tree, and more are expected strong confidence in China’s hospitality to be completed in the next two years, market, pursuing aggressive expansion 200 including Marriot, Conrad and Sheraton plans in the country. For example, hotels. InterContinental Hotels Group, which 150 had 271 hotels in China in mid-2016, has In 1H 2016, the Hong Kong hotel industry 220 more in the pipeline, 180 of which slowed down, with the drop in overnight 100 are scheduled for completion over the visitors from the Mainland as a result of next five years. And Starwood Hotels & the appreciation of the Hong Kong dollar, 50 Resorts, which already has 292 hotels China’s ongoing anti-corruption policy across China, will add six new Sheraton and competition from neighbouring 0 hotels in 2017. Beijing Shanghai Guangzhou Hong Kong Macau Taipei destinations. Excluding Mainland visitors, Source: Knight Frank Research 3 BEIJING CHART 4 International overnight visitor arrivals Million people YOY growth (%) 10 100 International overnight visitors YOY growth 8 80 6 60 4 40 2 20 Overview Outlook 0 0 During the second half of 2015 Looking ahead, it is expected that (2H 2015) and the first half of 2016 three prime hotels, all located in -2 -20 (1H 2016), as the global economic Chaoyang District, will be launched -4 -40 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 recovery fell short of expectations, in 2H 2016, adding 644 new five- 2016E inbound tourism to Beijing declined star hotel rooms to the market. The Source: Beijing Tourism Bureau / slightly by 1.2% year on year (YoY). 303-room InterContinental Beijing Knight Frank Research According to the Beijing Municipal Sanlitun Hotel will open in 3Q 2016. The Bureau of Statistics, the capital 241-room Mandarin Oriental Beijing, received approximately 1.982 million which was set to open at the end of CHART 5 international overnight visitors in 1H 2015, has been postponed and will be Five-star hotel stock 2016. However, the dip was offset by launched in 4Q 2016. The 100-room a steady 3.8% YoY increase in the Beijing Zhonghong Edition Hotel will No of hotel rooms number of domestic overnight visitors, open in December 2016. Meanwhile, 40,000 reaching 135 million. the opening of Sheraton Beijing West 38,000 Mountain Resort, previously scheduled 36,000 Supply and at the end of 2015, will be postponed to 34,000 January 2018.