Page 278 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
of reaching such a sensible accommodation with China’s expansions in midmarket brands including Hampton
airlines are low (EIU, Chinese Aviation). and Hilton Garden Inn, a substantial investment over
the 117 hotels the company had in 2017. China is one
China’s civil aviation authorities have vowed to of its largest markets outside of the United States and
increase penalties against carriers that violate rules its business will be tripled if they meet the development
or refuse to accept inspections. The CAAC is urging all goal. So far, the Chinese market takes up about 4.5
civil aviation companies and foreign airlines operating percent of its global revenue, half of what comes from
in China to fully understand the significance of the the Asia-Pacific region. Nassetta said they expect to
regulations and improve safety operations. A new raise China’s contribution to 10 to 15 percent by 2025
amendment to the operations certification: Foreign Air through developments including loyalty programs,
Transportation Carriers (CCAR-129-R1) places stricter digital technology and services (Wang).
requirements on the on-board terrain awareness and
warning system and traffic collision avoidance system, China’s hotel market has grown rapidly in recent years
demands rigorous recording of compliance violations, and, as Beijing continues to restrict overseas investment,
and raises the upper limit of punishment for refusal Chinese investors are starting to look at opportunities
to accept inspections. Li Jian, deputy director of the closer to home. China’s State Council and the National
administration, said the regulation, as the localized Development and Reform Commission re-categorized
version of standards of the ICAO, is important to ensure overseas investments in line with state policy initiatives
the safety of people’s lives and property and improve and priorities in 2017. The reforms restricted investment
the operations of foreign air carriers. Foreign carriers into certain industries including real estate and hotels.
under the jurisdiction of CCAR-129 operated 547,000 As a result, outbound capital from mainland China
flights in 2017, which accounted for 48 percent of China’s have declined in comparison to the rest of the region.
total international flights, and transported 72.6 million The restrictions are forcing mainland investors to look
passengers, about 51 percent of total international inwards at the domestic market for opportunities, says
flight passengers, Li said (Xiang). David Marriott, from JLL’s Hotels & Hospitality team
in China. According to JLL data, approximately US$4
Hotels and Accommodations billion worth of deals changed hands last year in the
domestic market, and the majority of the buyers were
Boosted by the emerging middle class, international local Chinese groups. Beijing registered the highest
mid-end hotel brands have expanded quickly through amount of transactions, but the most notable deal
franchising in the country. As at the end of 2017, China was the acquisition of 77 hotels by Guangzhou’s R&F
had 2,342 mid-end hotels, up nearly 34 percent year- Properties from Dalian Wanda Group for $2.9 billion.
on-year. The number of budget hotels reached 21,808, In a number of instances, mixed use sites have been
up 10.5 percent from the previous year, according to tendered requiring a hotel component to enhance city-
the China Hospitality Association (Zhu). The China profiles and meet expected future lodging demand, he
Hospitality Association claims mid-end hotels have explains. This has led to an oversupply of rooms and
become the new popular destination for investment subdued trading performance, particularly in a number
funds because of the increased demand. Yeste Hotel of Tier-2 and Tier-3 cities. Marriott sees opportunities for
Group, founded in Shenzhen in 2011, has more than investors in Tier-2 cities, such as in the mature tourism
7,500 guest rooms in 91 hotels nationwide, ranking markets of Hangzhou or Suzhou, “where pricing will be
it among the top 10 of China’s mid-end hotel brands. more competitive compared to Tier-1 cities” (Marriott).
Founder and CEO Hu Jingxuan said business expansion
will be the future trend in the mid-end hotel segment.
Previously, budget hotels used to offer limited services,
while in the future, mid-end hotels will improve and
increase their services to meet the growing demand for
them from that segment of the hospitality sector (Cao).
According to president and CEO Christopher J.
Nassetta, Hilton Worldwide Holdings Inc is expected to
reach 1,000 hotels in China by 2025, driven mostly by
278
of reaching such a sensible accommodation with China’s expansions in midmarket brands including Hampton
airlines are low (EIU, Chinese Aviation). and Hilton Garden Inn, a substantial investment over
the 117 hotels the company had in 2017. China is one
China’s civil aviation authorities have vowed to of its largest markets outside of the United States and
increase penalties against carriers that violate rules its business will be tripled if they meet the development
or refuse to accept inspections. The CAAC is urging all goal. So far, the Chinese market takes up about 4.5
civil aviation companies and foreign airlines operating percent of its global revenue, half of what comes from
in China to fully understand the significance of the the Asia-Pacific region. Nassetta said they expect to
regulations and improve safety operations. A new raise China’s contribution to 10 to 15 percent by 2025
amendment to the operations certification: Foreign Air through developments including loyalty programs,
Transportation Carriers (CCAR-129-R1) places stricter digital technology and services (Wang).
requirements on the on-board terrain awareness and
warning system and traffic collision avoidance system, China’s hotel market has grown rapidly in recent years
demands rigorous recording of compliance violations, and, as Beijing continues to restrict overseas investment,
and raises the upper limit of punishment for refusal Chinese investors are starting to look at opportunities
to accept inspections. Li Jian, deputy director of the closer to home. China’s State Council and the National
administration, said the regulation, as the localized Development and Reform Commission re-categorized
version of standards of the ICAO, is important to ensure overseas investments in line with state policy initiatives
the safety of people’s lives and property and improve and priorities in 2017. The reforms restricted investment
the operations of foreign air carriers. Foreign carriers into certain industries including real estate and hotels.
under the jurisdiction of CCAR-129 operated 547,000 As a result, outbound capital from mainland China
flights in 2017, which accounted for 48 percent of China’s have declined in comparison to the rest of the region.
total international flights, and transported 72.6 million The restrictions are forcing mainland investors to look
passengers, about 51 percent of total international inwards at the domestic market for opportunities, says
flight passengers, Li said (Xiang). David Marriott, from JLL’s Hotels & Hospitality team
in China. According to JLL data, approximately US$4
Hotels and Accommodations billion worth of deals changed hands last year in the
domestic market, and the majority of the buyers were
Boosted by the emerging middle class, international local Chinese groups. Beijing registered the highest
mid-end hotel brands have expanded quickly through amount of transactions, but the most notable deal
franchising in the country. As at the end of 2017, China was the acquisition of 77 hotels by Guangzhou’s R&F
had 2,342 mid-end hotels, up nearly 34 percent year- Properties from Dalian Wanda Group for $2.9 billion.
on-year. The number of budget hotels reached 21,808, In a number of instances, mixed use sites have been
up 10.5 percent from the previous year, according to tendered requiring a hotel component to enhance city-
the China Hospitality Association (Zhu). The China profiles and meet expected future lodging demand, he
Hospitality Association claims mid-end hotels have explains. This has led to an oversupply of rooms and
become the new popular destination for investment subdued trading performance, particularly in a number
funds because of the increased demand. Yeste Hotel of Tier-2 and Tier-3 cities. Marriott sees opportunities for
Group, founded in Shenzhen in 2011, has more than investors in Tier-2 cities, such as in the mature tourism
7,500 guest rooms in 91 hotels nationwide, ranking markets of Hangzhou or Suzhou, “where pricing will be
it among the top 10 of China’s mid-end hotel brands. more competitive compared to Tier-1 cities” (Marriott).
Founder and CEO Hu Jingxuan said business expansion
will be the future trend in the mid-end hotel segment.
Previously, budget hotels used to offer limited services,
while in the future, mid-end hotels will improve and
increase their services to meet the growing demand for
them from that segment of the hospitality sector (Cao).
According to president and CEO Christopher J.
Nassetta, Hilton Worldwide Holdings Inc is expected to
reach 1,000 hotels in China by 2025, driven mostly by
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