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6 White Paper on the Business Environment in China
2.8 Hospitality
“In 2009, the State Council added tourism as another not included in the 130 million total.3
pillar industry in the 12th Five-Year Plan,” Xinhua reports. This large number of Hong Kong- and Macau-related en-
“[Tourism] is widely believed to be the major factor that pro-
pels the country’s hotel industry.”1 What is today a competitive tries may account for the disproportionately high number of
and lucrative industry on the Mainland comes from humble be- visitors to Guangdong (being adjacent to both Hong Kong
ginnings, however: prior to the “opening-up” of China in 1978, and Macau)—in 2008, Guangdong received nearly five times
the hospitality industry consisted primarily of government-run as many overall visitors as Shanghai and more than five times
guest houses and associated services. After the decision to the number of visitors to Beijing. Guangdong’s total number of
provisionally open China’s economy to outside participation 25.6 million visitors dwarfs Shanghai’s total of 5.2 million and
in 1978, the government administration at the time responsi- Beijing’s 3.7 million.3
ble for tourism arranged eight joint venture hotels in Beijing,
Shanghai and Guangzhou.2 More recent visitor statistics from the National Tourism Ad-
ministration indicated that entries had again declined in 2009,
While the official title of ‘first hotel in China’ is apparently with a total of 126.5 million in that year, with the largest ad-
contested, the White Swan Hotel in Guangzhou and the Ji- justment being a 9.82 percent growth rate in the “foreigners”
an’Guo Hotel in Beijing are the earliest-established joint ven- category.4
ture hotels in the country. Notably, the White Swan Hotel is
credited as running a profit in its first year of operation, 1983.2 The first three months of 2010 appeared to show a recovery
from this downward trend, with the largest gain, an increase of
Significantly, foreign management companies have held a 21 percent, again being in the “foreigners” category.5Statistics
role in the industry since the beginning—Hong Kong Peninsu- from the National Tourism Administration reported a number
la Hotels was contracted to manage the Jian’Guo Hotel from its of 134 million international visitors attracted to mainland Chi-
opening, after which Sheraton Hotels & Resorts was brought na in 2010, which is expected to reach 153 million by 2015.6 A
in to manage what became the Sheraton Great Wall Hotel (also 0.93 percent increase was recorded for overall visitors between
in Beijing) after two years of unsuccessful operation under its January and September in 2011.7
former management.2
In December 2008, China Daily reported a Ministry of
Beginning in the 1980s, construction of hotels beyond the Commerce release stating that accommodation and catering
original government-run guest houses began in earnest. Be- retail sales between January and November 2008 had risen
tween 1980 and 1990, 1,784 new hotels were built, and in the 24.9 percent year-on-year to 1.39 trillion yuan, and that there
decade following 8,494 more were opened for a reported total were 591 new foreign-invested companies in the sector—31.4
of 10,481 ‘tourist hotels’ with nearly 950,000 rooms in 2000.2 percent fewer than the same period in 2007—and “the actually
In 2001 a nomenclature change from ‘tourist hotels’ to ‘Star-rat- utilized foreign funds slipped 11.9 percent to $840 million.”8
ed hotels’ saw the total number of reported facilities shift to
only 7,358 in 2001, growing to 13,583 in 2007.3 The following year, the Ministry reported even fewer new
foreign-invested projects in the accommodation and catering
Between 2004 and 2007, mean growth in the number of industries (41 and 90 fewer than 2008, respectively); utilized
“Overseas Visitor Arrivals” (including residents of Hong Kong foreign capital in the accommodation sector predictably de-
and Macau Special Administrative Regions and Taiwan) was clined (by 20.6 percent, in this case), although utilized capital
approximately 11 percent (although year-on-year growth de- in the catering sector actually increased by 7.2 percent.9,10
clined from approximately 10 percent in 2005 to only 5 percent
in 2007).3 From 2007 to 2008, however, the total number of It is possible some part of this decrease in foreign investment
foreign fell by approximately one percent—a somewhat surpris- is related to the 2007 revision to the Catalog for the Guidance
ing result considering that the Summer Olympics were held in of Foreign Invested Enterprises, which beginning December 1,
Beijing that year.3 2007, prohibited foreign direct investment in hotels. While the
majority of western ‘name brands’ primarily manage properties
That year there were a reported 130 million recorded “Over- for local developers, the revision also affected non-Chinese
seas Visitor Arrivals” in the PRC, of which 26.1 million were Asian developers, who have been more directly invested in de-
foreign passport holders (excluding Hong Kong and Macau res- velopment.11
idents). 101.3 million were “Chinese Compatriots From Hong
Kong and Macao”, 4.4 million from Taiwan and an additional Another factor to consider is the already-high saturation of
approximately 53 million “Overnight Tourists” were apparently major international Hotel brands, particularly in the high end
of the market; it was reported in 2007 by trade publication Chi-
212 na Hospitality News, for example, that “by the end of [2006], 37
2.8 Hospitality
“In 2009, the State Council added tourism as another not included in the 130 million total.3
pillar industry in the 12th Five-Year Plan,” Xinhua reports. This large number of Hong Kong- and Macau-related en-
“[Tourism] is widely believed to be the major factor that pro-
pels the country’s hotel industry.”1 What is today a competitive tries may account for the disproportionately high number of
and lucrative industry on the Mainland comes from humble be- visitors to Guangdong (being adjacent to both Hong Kong
ginnings, however: prior to the “opening-up” of China in 1978, and Macau)—in 2008, Guangdong received nearly five times
the hospitality industry consisted primarily of government-run as many overall visitors as Shanghai and more than five times
guest houses and associated services. After the decision to the number of visitors to Beijing. Guangdong’s total number of
provisionally open China’s economy to outside participation 25.6 million visitors dwarfs Shanghai’s total of 5.2 million and
in 1978, the government administration at the time responsi- Beijing’s 3.7 million.3
ble for tourism arranged eight joint venture hotels in Beijing,
Shanghai and Guangzhou.2 More recent visitor statistics from the National Tourism Ad-
ministration indicated that entries had again declined in 2009,
While the official title of ‘first hotel in China’ is apparently with a total of 126.5 million in that year, with the largest ad-
contested, the White Swan Hotel in Guangzhou and the Ji- justment being a 9.82 percent growth rate in the “foreigners”
an’Guo Hotel in Beijing are the earliest-established joint ven- category.4
ture hotels in the country. Notably, the White Swan Hotel is
credited as running a profit in its first year of operation, 1983.2 The first three months of 2010 appeared to show a recovery
from this downward trend, with the largest gain, an increase of
Significantly, foreign management companies have held a 21 percent, again being in the “foreigners” category.5Statistics
role in the industry since the beginning—Hong Kong Peninsu- from the National Tourism Administration reported a number
la Hotels was contracted to manage the Jian’Guo Hotel from its of 134 million international visitors attracted to mainland Chi-
opening, after which Sheraton Hotels & Resorts was brought na in 2010, which is expected to reach 153 million by 2015.6 A
in to manage what became the Sheraton Great Wall Hotel (also 0.93 percent increase was recorded for overall visitors between
in Beijing) after two years of unsuccessful operation under its January and September in 2011.7
former management.2
In December 2008, China Daily reported a Ministry of
Beginning in the 1980s, construction of hotels beyond the Commerce release stating that accommodation and catering
original government-run guest houses began in earnest. Be- retail sales between January and November 2008 had risen
tween 1980 and 1990, 1,784 new hotels were built, and in the 24.9 percent year-on-year to 1.39 trillion yuan, and that there
decade following 8,494 more were opened for a reported total were 591 new foreign-invested companies in the sector—31.4
of 10,481 ‘tourist hotels’ with nearly 950,000 rooms in 2000.2 percent fewer than the same period in 2007—and “the actually
In 2001 a nomenclature change from ‘tourist hotels’ to ‘Star-rat- utilized foreign funds slipped 11.9 percent to $840 million.”8
ed hotels’ saw the total number of reported facilities shift to
only 7,358 in 2001, growing to 13,583 in 2007.3 The following year, the Ministry reported even fewer new
foreign-invested projects in the accommodation and catering
Between 2004 and 2007, mean growth in the number of industries (41 and 90 fewer than 2008, respectively); utilized
“Overseas Visitor Arrivals” (including residents of Hong Kong foreign capital in the accommodation sector predictably de-
and Macau Special Administrative Regions and Taiwan) was clined (by 20.6 percent, in this case), although utilized capital
approximately 11 percent (although year-on-year growth de- in the catering sector actually increased by 7.2 percent.9,10
clined from approximately 10 percent in 2005 to only 5 percent
in 2007).3 From 2007 to 2008, however, the total number of It is possible some part of this decrease in foreign investment
foreign fell by approximately one percent—a somewhat surpris- is related to the 2007 revision to the Catalog for the Guidance
ing result considering that the Summer Olympics were held in of Foreign Invested Enterprises, which beginning December 1,
Beijing that year.3 2007, prohibited foreign direct investment in hotels. While the
majority of western ‘name brands’ primarily manage properties
That year there were a reported 130 million recorded “Over- for local developers, the revision also affected non-Chinese
seas Visitor Arrivals” in the PRC, of which 26.1 million were Asian developers, who have been more directly invested in de-
foreign passport holders (excluding Hong Kong and Macau res- velopment.11
idents). 101.3 million were “Chinese Compatriots From Hong
Kong and Macao”, 4.4 million from Taiwan and an additional Another factor to consider is the already-high saturation of
approximately 53 million “Overnight Tourists” were apparently major international Hotel brands, particularly in the high end
of the market; it was reported in 2007 by trade publication Chi-
212 na Hospitality News, for example, that “by the end of [2006], 37
