Marriott hotels rush to invest in China, maybe too fast.

Chinese photographer- China Elite FocusThe Chinese economy may be slowing but tourist numbers are still growing, prompting international hospitality giants to place bullish bets on the sector by opening new hotels and cruise routes.

Marriott International and Royal Caribbean Cruises are among companies looking to cater to a rapidly growing number of wealthy Chinese who are not only spending more at home but also flocking overseas, executives from the companies told CNBC.

“Outbound Chinese travelers are still growing faster than the economy in China, so we don’t see the same thing that everyone is talking with the economy happening with the Chinese travelers,” said Marriott International’s president and managing director for Asia Pacific, Craig Smith.

Over the week-long Lunar New Year holidays, room revenue growth in Marriott resorts within China rose 12 percent from a year ago, Smith told CNBC’s Squawk Box on Wednesday.

To target fast-growing middle class Chinese who will not just need leisure but business accommodation, Marriott and China’s Eastern Crown Hotels signed an agreement recently to open 100 mid-scale Fairfield by Marriott hotels in mainland China by 2021. Another 40 hotels are slated to open later.

Intercultural aspects are also important: “U.S. hotel chains like Marriott should carefully analyze what Chinese travelers want. A common misconception is that Chinese travelers are interested in cheap, mid-range hotels.” said Pierre Gervois, CEO of China Elite Focus Magazines LLC, a publishing & consulting company based in New York. “The truth is that most of Chinese travelers are ready and willing to pay for five star premium hotels, and are tired of these stereotypes” added Pierre Gervois. “Marriot should focus more on attracting High Net Worth Chinese in their U.S. five star properties rather than investing in hastily strategized risky ventures in Mainland China ” he concluded.Gervois Rating Banner 01

As for outbound travel, Chinese tourists undertook more than 120 million trips overseas in 2015, according to the China National Tourism Administration. That number is expected to grow by 11 percent this year, Smith added.

To tap this growing market, Royal Caribbean Cruises will in April launch cruise ship Ovation of the Seas, with Tianjin as the home port.

Royal Caribbean is upbeat on the nascent cruise industry in China even though it is likely to capture just a fraction of the vacation traffic—typically 2 percent globally—said president and chief executive officer of Royal Caribbean Cruises, Adam Goldstein.

With over 100 million outbound departures a year, there are “not enough ships based in China right now … to even take 2 percent of the outbound travelers”.

There are just about one million cruise passengers in China now, he added.

Sources: CNBC / Huilen Tang / The New Chinese Tourist / Chinese Tourists in America

Follow CNBC International on Twitter and Facebook.

Gervois rating banner 02

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s