Hotel chains cotton on to Chinese customers

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.

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%.

Come and get your congee
Backed up by the figures, Starwood has now ramped up its focus on overseas travellers.

“As Chinese travellers begin to travel beyond their borders en masse, they — just like their Western counterparts before them — will gravitate towards the hotel brands that they recognise from home, and with Starwood’s leading footprint in China, this gives us a great advantage,” said van Paasschen.

“Just as our hotels in China have historically catered to American and European travellers with familiar amenities from home, now our hotels globally will provide the same services to Chinese travellers.”

Van Paasschen was referring to Starwood Personalised Travel — a set of initiatives which are designed to serve the unique preferences of Chinese travellers.

Under this new programme, being trialled at 19 Starwood hotels in gateway cities, guest rooms will feature in-room tea kettles, slippers, instant noodles, toiletries and translated welcome materials, restaurant menus will be made available in Chinese and feature familiar items such as congee, noodles and rice, and hotels will recruit an in-hotel Chinese specialist.

The programme is expected to be rolled out across all Starwood hotels and resorts by the end of 2012.

Co-incidentally, on the same day last month that Starwood announced Starwood Personalised Travel, Hilton Hotels and Resorts, unveiled its own global programme for Chinese travellers, Hilton Huanying.

A tailored experience, Hilton Huanying. takes its name from the Chinese word for ‘welcome’.

Thirty hotels are already enrolled in the programme, which debuts on August 16 in San Francisco, and features three signature hospitality touch points for Chinese guests — at arrival, in-room and breakfast.

For example, each hotel will have a front desk team member fluent in Chinese, rooms will offer tea kettles, a selection of Chinese tea upon request and dedicated television channel broadcasting Chinese programming, and breakfast will provide two varieties of congee with condiments as well as chopsticks, Chinese spoons and a soy sauce dish.

“Every experience we share with our guests begins with a welcome. Hilton Huanying is an extension of our brand promise to ensure every guest feels cared for, valued and respected,” said Dave Horton, global head, Hilton Hotels & Resorts.

“As the world prepares to welcome the growing number of Chinese travellers, we continue to lead and give our guests compelling reasons to choose Hilton.”
InterContinental Hotels Group — which actually beat Starwood to launching in China back in 1984 (Starwood opened The Great Wall Sheraton Hotel in 1985) — is another of the big boys making strides in China.

“I think we’re teaching everybody about that,” asserted Kirk Kinsell, formerly president EMEA and now president, the Americas for IHG.

“As a company, we’ve been in China longer than other global brands and we’re the largest global hotel company in China. The Holiday Inn name is seen as a Chinese hotel, they don’t know that it was started in Memphis necessarily. Part of our emphasis in building in China is recognising there’s going to be an outbound customer looking for our brands,” said Kinsell.

“The second emphasis is making sure our hotels across the world are ready to receive those customers and being savvy about the Chinese customer in terms of what they are going to be looking for from their stay.

“The Chinese are very curious people,” observed Kinsell. “They want to experience more, they like to travel, so it’s how you accommodate them and their needs, which we’re doing with our hotels. Certainly, we will continue to invest behind our technology and our central reservations systems and our online systems etc —all of those are important.”

Kinsell said hotels didn’t need to have a Chinese name to operate, but warned that the Chinese will translate your name.

“Holiday Inn Express wouldn’t be translated literally but it would be very close to that,” said Kinsell.

“In our last earnings call we spoke to analysts about work underway in China to create a China brand for the Chinese, which is a project underway today. That doesn’t mean that it would only be in China, but ultimately as the Chinese travel they’ll be looking for something that is differentiated for them as well,” he said.

Middle East perspective
Starwood, Hilton and IHG are focused on rolling out initiatives worldwide, and many other chains will likely follow suit, but how far have hotels operating in the Middle East considered — and acted upon — the Chinese potential? And how aware are Chinese travellers of Middle Eastern destinations?

Currently in its pre-opening period, St. Regis Doha has already identified China as a market of great importance. As the country’s economy continues to grow, the number of tourists seeking upscale, bespoke service in attractive locations is also set to rise — which is where St. Regis Doha has seen an important opportunity.

General manager Tareq Derbas and senior executives recently visited Shanghai to promote Doha as an up-and-coming global destination and St. Regis Doha as the ideal vantage point for travellers seeking luxury and bespoke service.

“The global hospitality industry sees China as an exciting emerging market, where tastes are changing and an increasing number of travellers are seeking new and unique experiences. There is already strong interest in visiting Qatar and we believe that we can leverage the history and heritage of the St. Regis brand to attract a distinct new audience to Qatar in the future,” said Derbas.

And like IHG, Mövenpick is focused on increasing its presence physically in China in order to bring travellers out to this region.

Mövenpick Hotels & Resorts Middle East and Asia chief operating office Andreas Mattmüller said that following the signing of the group’s first hotel in Shanghai the company is now registering there — even registering a new name following consultation with a feng shui expert.

“It’s very important, everything has to be in Chinese if you want to do business there,” said Mattmüller. “We have representation there, so once the company is registered we are building our team there in order to go after this outbound market.”

Already, he said Mövenpick’s hotels in Dubai, such as Ibn Battuta Gate, had noticed a growth in Chinese travellers over the Chinese New Year Period and observed: “They pay some top rates, by the way”.

Home-grown hotel brands have also taken action to capitalise on China’s potential.

Jumeirah Group has benefitted from a strong Chinese customer base for a while — over Chinese New Year in mid-February, 80% of the occupancy at Burj Al Arab for a few days was Chinese, reported Jumeirah executive chairman Gerald Lawless.

Chinese customers now represent about 5% of guests for Jumeirah, up from less than 1% three years ago.

Lawless attributed the growth to increased airlift — Emirates Airline, Etihad Airways and Qatar Airways have all increased their routes — and the signing of Approved Destination Status between the UAE and Chinese authorities in 2009.
Since then, the Chinese can travel freely to the UAE and tour operators can promote the UAE in China.

“That is important, that you make it easy to buy literally,” observed Lawless. “And I think most of the Chinese like the culture here, they like the atmosphere and how Dubai is run and they will continue to come.

“They’re very curious, they want to fly and they want to see things and they want to get around the world plus they’re quite affluent — the ones who have money now, the middle class is quite an affluent middle class,” said Lawless.

Following in Jumeirah’s steps is Rotana: in June the group announced a new outbound sales office in China, as well as in India and Russia.

Omer Kaddouri, executive vice president and chief operating officer of Rotana said: “China, India and Russia are key feeder markets for Rotana and it is important for us to grow the Rotana brand and stature in these respective markets.

“The objective is to increase our market share, whether business or leisure, of outbound travellers to all Rotana properties.

“The main responsibilities of these new offices will be to promote and sell our properties based outside of their physical location. This is in line with the overall expansion of Rotana. The three new sales offices will assist Rotana on its brand awareness,” concluded Kaddouri.

Numbers to know
• In 2010, 57.4 million Chinese travelled out of China to see the world and to spend money on outbound tourism, marking an increase of 20.4%.
• For 2015, the China National Tourism Administration (CNTA) forecasts there will be 100 million outbound travellers.
• The China Tourism Academy forecasts that Chinese international travellers will spend a record US $55 billion in 2011.