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Premium Hotels - China - July 2019

Covered in this report

This report covers classified and unclassified hotels, guesthouses, hostels and other transient accommodation for visitors. Travel accommodation comprises dedicated, serviced establishments which offer overnight accommodation for a fee for business/tourist reasons but not residents only.

Included

All establishments which offer overnight accommodation (for holiday/business use only) dedicated, self-catering, apartment/ extended-stay hotels which offer some element of hotel service, such as housekeeping, for a fee.

Hotels included

  • Marriott International, Inc
  • Hilton Worldwide Holdings, Inc
  • Hyatt Hotels Corporation
  • InterContinental Hotels Group plc
  • Wyndham Hotels & Resorts, Inc
  • Accor Hotels
  • Shangri-La Asia Limited
  • Zhejiang New Century Hotel Management Co., Ltd.
  • Jinjiang Hotels

“The premium hotel segment has seen steady growth over the past five years. The segment outlook is positive and it is estimated to grow at a CAGR of 6.0% between 2019-24. Premium hotels are harnessing unique designs, smart rooms and wellness to differentiate. Premium brands may also differentiate themselves by developing services that respond to consumers' desire to connect with others offline. There is also an opportunity for premium hotels to cash in by retailing products with creative designs that source ideas from hotels’ unique designs.”

–    Saskia Zhao, Research Analyst

This report will look at the following areas:

  • As premium hotels expand into retail, themed hotels can sell products based on their creative hotel designs
  • Consumers’ need for authentic connections offers a touchpoint for premium hotels
  • Responding to consumers’ hobbies: another way to enhance experiences

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What's included

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this report
        • Included
          • Excluded
            • Definitions
              • Figure 1: Hotel segmentation
          • Executive Summary

              • The market
                • Hotel market as a whole returns to rational growth
                  • Figure 2: Market size of total hotel market in China, by hotel units, 2013-18
                • While premium segment has expanded at a stable rate
                  • Figure 3: Market size of premium hotel segment in China, by hotel units, 2013-18
                • Mid-scale hotels serve as key market growth driver
                  • Figure 4: Market size of mid-scale segment and economy segment in China, by hotel units, 2013-18
                • Positive market condition for premium hotels
                  • Challenges for premium hotels
                    • Companies and brands
                      • Premium segment is fragmented
                        • Figure 5: Premium hotel market share of major hotel groups in China, by guest room units, 2017-18
                      • Hotel groups in premium segment have increased market share through aggressive hotel expansion
                        • Figure 6: Premium hotel units and guest room units in China market, 2017-18
                      • Premium hotels penetrate lower tier cities and Mid-West China
                        • Premium hotels seek to improve direct sales channels
                          • Premium hotels make effort to differentiate via wellness and high-tech services
                            • Premium hotel’s new 2.0 loyalty programme
                              • The consumer
                                • Average spending on hotels
                                  • Figure 7: Premium hotel spending, March 2019
                                • Luxury hotels: direct sales channels achieved same penetration as OTA
                                  • Figure 8: Hotel reservation channels – official hotel websites vs travel websites/apps, by hotel types, March 2019
                                • Scenic views and brand fame are important for premium hotel choice
                                  • Figure 9: Important factors for premium hotels choices, March 2019
                                • Post-90 consumers define premium as more than just having a unique look
                                  • Figure 10: Characteristics of premium hotels, March 2019
                                • Three key areas for hotel innovation are smart rooms, themes and activities that boost local experiences
                                  • Figure 11: Attractiveness of innovative ideas, March 2019
                                • Surveyed consumers have wide ranging loyalty programme enrolment
                                  • Figure 12: Loyalty programme enrolment, March 2019
                                • What we think
                                • Issues and Insights

                                  • As premium hotels expand into retail, themed hotels can sell products based on their creative hotel designs
                                    • The facts
                                      • The implications
                                        • Figure 13: St. Regis Boutique by St. Regis Hotels & Resorts
                                        • Figure 14: lifestyle products sold on Marriott Hotels’ online retail shop
                                      • Consumers’ need for authentic connections offers a touchpoint for premium hotels
                                        • The facts
                                          • The implications
                                            • Figure 15: The Kimpton Stay Human Project by Kimpton Hotels and Restaurants
                                          • Responding to consumers’ hobbies: another way to enhance experiences
                                            • The facts
                                              • The implications
                                                • Figure 16: Marriott Hotel partnered with TED, 2018
                                            • The Market – What You Need to Know

                                              • Total market returns to rational growth
                                                • Premium segment saw stable growth in the past five years
                                                  • Mid-scale hotels replace economy hotels as growth engine
                                                    • Driven by treating oneself, consumers spent more on holidays
                                                      • Over half of consumers intended to spend more on domestic travel accommodation
                                                        • Possible competition from mid-scale segment due to same key target consumers
                                                          • Premium segment in future: growth slightly slower but still steady
                                                            • Challenges ahead
                                                            • Market Size and Forecast

                                                              • Premium hotels expanded at a stable rate
                                                                • Figure 17: Market size of premium hotel segment in China, by hotel units, 2013-18
                                                              • Key tourism cities are not saturated with premium hotels
                                                                • Figure 18: Premium hotel density in 50 key tourism cities in China market, 2019
                                                              • Positive market conditions for premium hotels support future growth
                                                                • Figure 19: Market size forecast for premium segment, by hotel units, 2019-24 (est)
                                                            • Market Segmentation

                                                                • Total hotel market: end of wild market expansion through opening new hotels
                                                                  • Figure 20: Market size of total hotel market in China, by hotel units, 2013-18
                                                                • Growing travellers in China market
                                                                  • Figure 21: Number of travellers in China market, in million person-times, 2013-18
                                                                • Total market will see more hotels opened at a slower rate
                                                                  • Figure 22: Market size forecast for total hotel market, by hotel units, 2019-24 (est)
                                                                • Mid-scale hotels boost growth
                                                                  • Figure 23: Market size of mid-scale hotel segment in China, by hotel units, 2013-18
                                                                • Mid-scale segment expected to reach fast growth
                                                                  • Figure 24: Market size forecast for mid-scale segment, by hotel units, 2019-24 (est)
                                                                • Economy hotels give ways to mid-scale ones
                                                                  • Figure 25: Market size of economy hotel segment in China, by hotel units, 2013-18
                                                                • And economy segment growth cools down
                                                                  • Figure 26: Market size forecast for economy segment, by hotel units, 2019-24 (est)
                                                              • Market Factors

                                                                • Increased spending on holidays
                                                                  • Figure 27: Consumer expenditure by sector, 2017-18*
                                                                • Treating oneself rather than price rises motivates consumers to spend more on travelling
                                                                  • Over half of consumers willing to spend more on accommodation
                                                                    • Families become key premium hotel users, while competition may come from mid-scale segment
                                                                      • Figure 28: Penetration of economy hotels, mid-scale hotels and premium hotels*, by three types of leisure travel, 2018**
                                                                    • Ctrip adopts flagship model to cooperate with premium hotels
                                                                      • Premium hotels are short-handed
                                                                        • Figure 29: Labour force in China’s Hotel Industry, 2014-17
                                                                    • Key Players – What You Need to Know

                                                                      • Premium hotels compete in a fragmented market
                                                                        • Domestic hotel group’s improved market share
                                                                          • Premium hotels deepen penetration in China market
                                                                            • Focus on direct sales channels
                                                                              • Wellness and high-tech services grow in popularity
                                                                                • Innovation highlights
                                                                                • Market Share

                                                                                  • Premium hotels compete in a fragmented market
                                                                                    • Figure 30: Premium hotel market share of major hotel groups in China, by guest room units, 2017-18
                                                                                  • Domestic players catching up by opening more hotels
                                                                                    • Figure 31: Premium hotel units and guest room units in China market, 2017-18
                                                                                • Competitive Strategies

                                                                                  • Leading premium hotel brands are expanding to lower tier cities which have rich tourism resources or more developed economies
                                                                                    • Figure 32: Percentage share of new premium hotels opened by four hotel groups, by administrative division in China, 2017-19*
                                                                                  • New premium hotels are entering economically fast growing Mid-West region
                                                                                    • Figure 33: Percentage share of new premium hotels opened by two hotel groups, by region, 2017-19
                                                                                  • Introducing new premium brands to China market
                                                                                    • Figure 34: Hualuxe hotel by InterContinental Hotels Group plc
                                                                                  • Wellness claims tagged to premium hotels
                                                                                    • Figure 35: Wellness programme of Westin Hotel, 2019
                                                                                  • Technology enabled lodging experiences
                                                                                    • Strengthening direct sales channels, reducing reliance on third parties
                                                                                      • Reshaping loyalty programs
                                                                                      • Who’s Innovating?

                                                                                        • Meeting consumers’ need to slow down
                                                                                          • Figure 36: Wonderland Resorts by New Century Group
                                                                                        • Marriott Bonvoy: the next generation of loyalty program
                                                                                          • Figure 37: Marriott Group’s loyalty programme membership redemption at Taobao
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Average spending on hotel stays
                                                                                          • Direct sales channels have achieved a similar usage penetration as travel websites for luxury hotels
                                                                                            • Surveyed consumers define premium hotels using five aspects
                                                                                              • Unique design alone is not enough to attract post-90 consumers
                                                                                                • Capitalise on smart rooms, themes and local activities to innovate hotel experiences
                                                                                                • Hotel Spending

                                                                                                  • Six out of ten surveyed consumers have stayed at hotels priced between RMB1,001-3,000 per night
                                                                                                    • Figure 38: Premium hotel spending, March 2019
                                                                                                  • Surveyed consumers in Shanghai tend to spend more on hotel stays
                                                                                                    • Figure 39: Average hotel spend, by city, March 2019
                                                                                                • Reservation Channels

                                                                                                  • Luxury hotels’ direct sales success: official hotel sites used as much as travel websites
                                                                                                    • Figure 40: Hotel reservation channels – official hotel websites vs travel websites/apps, by hotel types, March 2019
                                                                                                  • More surveyed consumers in tier two and lower cities have booked premium hotels via flagship stores
                                                                                                    • Figure 41: Hotel reservation channels – hotel flagship store on travel platforms*, by city, March 2019
                                                                                                • Important Factors for Premium Hotel Choice

                                                                                                  • Stunning views and brand fame catch potential premium hotel consumers
                                                                                                    • Figure 42: Important factors for premium hotel choice, March 2019
                                                                                                  • Scenic views and brand fame even more important to high spenders
                                                                                                    • Figure 43: Important factors for premium hotels choices – selected items, by hotel spending, March 2019
                                                                                                  • Wellness services appeal more than packaged deals to younger generation
                                                                                                    • Figure 44: Important factors for premium hotel choices – selected items, by generation, March 2019
                                                                                                • Characteristics of Premium Hotels

                                                                                                  • High-quality services and “hardware” define premium
                                                                                                    • Figure 45: Characteristics of premium hotels, March 2019
                                                                                                  • Premium hotels defined for post-90 urban consumers: unique and caring
                                                                                                    • Figure 46: Characteristics of premium hotels, by generation, March 2019
                                                                                                • Attractiveness of Innovation Ideas

                                                                                                  • Consumers are interest in smart rooms, themes and activities with local experiences
                                                                                                    • Figure 47: Attractiveness of innovative ideas, March 2019
                                                                                                  • Consumers crave hotels with themes
                                                                                                    • Figure 48: Music theme by Kimpton Hotel & Restaurant Group Inc, 2019
                                                                                                • Loyalty Programme Enrolment

                                                                                                  • Domestic groups reach as many members as international big brands
                                                                                                    • Figure 49: Loyalty programme enrolment, March 2019
                                                                                                  • High spenders are more likely to get enrolled
                                                                                                    • Figure 50: Loyalty programme enrolment, by hotel spending, March 2019
                                                                                                • Appendix – Methodology and Abbreviations

                                                                                                  • Methodology
                                                                                                    • Fan chart forecast
                                                                                                      • Abbreviations
                                                                                                        • New hotels opened by four major hotel groups in China market in 2017-19*

                                                                                                        Premium Hotels - China - July 2019

                                                                                                        £3,486.28 (Excl.Tax)