International hotel chains are taking a highly strategic approach to strengthening their relationships with China. Firstly, they are focused on expansion there, driving their Asian pipeline and signing up new flags not just in Beijing and Shanghai but across a variety of second and third tier cities.
Secondly, many are opening sales offices in China, increasing their direct contact with the customer base. And thirdly, their hotels elsewhere in the world are gearing up to cater for the influx of Chinese guests — 100 million outbound travellers are predicted from China by 2015 — and attempting to get ahead of the game so as to capitalise on this significant potential.
Granted, opening hotels in an emerging market as part of a wider strategy to help attract that guest base globally is nothing new, but as far as China is concerned, the sheer size of the country and its population — which stands at in excess of 1.3 billion — makes it a massive undertaking.
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The projections are staggering: China is forecast to be the world’s fourth largest outbound market by 2020, with 57.39 million outbound trips made in 2010, according to statistics from the World Trade Organisation.
In particular, increasing prosperity in China is driving a taste for more exotic travel. It is estimated that 55% of the population will be “middle class” by 2020, with 78% of city dwellers and 30% of those in rural areas reaching that status.
Starwood president of global development Simon Turner commented: “When we opened our first hotels in China, we were basically an outpost for Western travelers.
“Today, more than 50% of our guests in China are Chinese. The Chinese are beginning to become a major global travel force as well, and by 2015 China will have 100 million outbound travellers.
“For perspective, that is more people than visit France each year, which is the number one international tourist destination in the world.
“When they travel abroad, the Chinese will stay with the hotel brands they know from home, which underscores the significance of our growing footprint of flagship hotels in China and its halo effect on Starwood’s hotels around the world,” he said.
Turner’s words should be heeded; Starwood Hotels and Resorts is arguably leading the way when it comes to courting Chinese travellers. It has dedicated numerous resources to the market and, last month, the senior leadership was uprooted from, New York, and headquartered in Shanghai from June 8 through to July 11.
The intention, said Starwood president and CEO Frits van Paasschen, was to fully understand how business is done in China — where Starwood already operates 70 hotels and has another 90 new hotels in the pipeline. In fact, China is now Starwood’s second largest hotel market in the world, behind only the United States, and in 2011, Starwood will open one hotel every two weeks in China.
“With properties in nearly 100 countries, Starwood is no longer an American company that happens to run some hotels overseas. Today, we’re a global company that just happens to be based in New York,” said van Paasschen.
“Eighty percent of our future pipeline is outside of North America, and nowhere is more emblematic of our global growth than China, where we will open one hotel every two weeks this year. China’s spectacular transformation is hard to grasp unless experienced firsthand — it’s the proverbial, ‘you can’t really understand a culture until you buy groceries there’”.
Aside from the unconventional, temporary head office shift, Starwood runs what it claims is the largest customer contact centre of any international hotel company operating in China. Located in Guangzhou, the center employs more than 160 staff to support Chinese-speaking customers traveling worldwide, offering 24-hour customer support, 365 days a year.
Starwood’s efforts in China thus far have been well rewarded; the country is the richest source of new loyal travellers for Starwood, with Chinese enrollment in Starwood Preferred Guest, Starwood’s loyalty programme, jumping 71% in 2010.
In 2010 Starwood hotels in gateway cities around the world saw double and triple digit growth year-over-year by Chinese travellers — Chinese business at the W New York — Times Square grew by 173% and Chinese business at the St. Regis Monarch Beach in Southern California increased 140%.
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