Consumer China

Hotels rush downmarket

  • Published 30 Apr 2009

While China's upscale hotels are set to experience a slump in revenues this year from a fall off in international travel, the budget end of the market is looking assuringly robust.

China is becoming a continental economy, deriving increasing energy from internal rather than external drivers (CC April 17, In Depth). As part of this trend, the economic centre of gravity is moving inland from the big coastal conurbations to smaller second and third-tier cities. The hotel business is following suit. Glitzy, high-end hotels, which are more often found in wealthy coastal cities, are being hit by a fall-off in international travel and a general trend towards bargain hunting. The budget segment of the market, however, remains relatively robust – but that has precipitated a rush downmarket, applying pressure to margins.

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