Beijing hotel development is booming

2 years on from the Olympic Games and the city-wide frenzy of hotel building that went alongside it, Beijing hoteliers are celebrating a strong recovery despite fears of oversupply and competition from the Expo in Shanghai.

The hotel market in Beijing and China as a whole has improved significantly since 2009, that has helped galvanise the global hotel sector from crisis mode to slow growth. STR Global report occupancy rates in Beijing nearly doubled during June 2010 from the previous year, up 33.5 percent to 66.3 percent, while revenue per available room was up 41.2 percent to US$63.52 during the same period.

"The increase is due to a number of factors: the recovering Chinese and world economy, the stabilising supply increase and an increase in demand," said Konstanze Auernheimer, director of marketing and analysis at STR Global.

With that recovery has come development. There are a total of 23 hotels in development in Beijing, comprising 6,267 rooms, according to STR Global.

The added supply will be needed if the city’s tourism numbers keep growing. From January to June 2010, the total number of tourist arrivals in the city increased by 8.2 percent year-on-year to a record 80.31 million, according to the Beijing Tourism Administration.

"We have seen a very nice rebound in business in 2010 and are tracking much better than what we had budgeted in both the leisure and business segments," said Anthony Ross, general manager of 5-star boutique The Opposite House.

The World Tourism Organization predicts China will become the world's most popular tourist destination by 2020 and predicts the next 10 years will be a decade of expansion and growth.

Sarah Keenlyside, founder of travel consultancy Bespoke Beijing, said business is on an upswing.

"We've certainly seen an improvement on this time last year," she said. "People seem to be shrugging off the recession talk in search of a much-needed holiday. What we have noticed, however, is that more people are asking for better value for money from their hotels than they were before. This means hotels like Hotel G, who have rooms under RMB1,000 (US$150) including breakfast, are doing extremely well."

InterContinental Hotels Group is also confident about China and plans to more than double in size in the next five years. The company has 18 hotels in the Chinese capital and earlier this year signed an agreement for developing InterContinental Beijing City Centre, the third InterContinental hotel in the city.

Keith Barr, managing director for IHG Greater China said Beijing is an important market for the company in part because of its popularity among business and leisure travelers and because of its growing influence after the Olympic Games. IHG has a long history in Beijing, and the country is the second largest market for the company in terms of rooms and revenue.

"IHG was one of the first international hotel companies to enter China: Holiday Inn Lido Beijing, our first hotel in the country, opened in Beijing in 1984. We continue to expand and see great potential there," Barr said.

In addition to the new InterContinental in the pipeline, Shangri-La’s luxury property China World Summit Wing, Beijing is set to open later this month in the city’s tallest building, and a new Hilton at Beijing International Airport opened in July, the third Hilton property in the city.

"Hilton continues its rapid growth across Asia, and this hotel brings a new dimension to our growing portfolio in Beijing, that already includes the world’s top lifestyle hotel and another of the city’s top metropolitan hotels," said Martin Rinck, area president, Asia Pacific, Hilton Worldwide.