China has become the hotel feeder market of all feeder markets and is now satisfying appetites in well-established southern coastal destinations such as Hong Kong and driving a development boom in hot new destinations such as the tropical resort of Hainan.


Based on both macroeconomic trends and hotel market data, the future bodes well for the entire region.

Hong Kong

Although it has been a dynamic, healthy international destination for decades, much of Hong Kong's more recent growth has been fueled by business and leisure travel from within China, as well as from across Asia.


"If you look at their occupancy levels, Hong Kong is in a very good position," said Naureen Ahmed, manager of marketing and analysis for STR Global, sister company of Hotel News Now. "They have consistently been 80% or above, with the only exception being 2009, when we were heading into the global financial crisis. And Hong Kong has been a strong growth market across the board this year."

Occupancy in Hong Kong in December 2013 was reported at 90.1%, unchanged from December 2012. Average daily rate was $246.58, down 0.6% from a year prior; and revenue per available room was $222.18, down 0.5%.

Despite the declines, those numbers compare favorably to STR Global data for the Asia/Pacific region, where occupancy was 66.3% (unchanged); ADR was $125.86 (-3.8%); and RevPAR was $83.48 (-3.7%).

"Overall, Hong Kong is just a very solid market, not just from the China side, but also from the regional Asian and international markets," said Symon Bridle, the Hong Kong-based COO of Rosewood Hotel Group, which operates 44 hotels under three brands—Rosewood, New World and Penta—in Asia, Europe and North America.

Those powerful multiple forces are delivering consistently strong year-over-year growth for Rosewood with no abatement in sight, Bridle said. In August, Rosewood opened its first Hong Kong property, the 695-room Pentahotel Hong Kong, Kowloon—the first international-branded hotel in the Kai Tak area of the fast-emerging Kowloon East district.

"And over time," Bridle said, "I'm quite certain we will have a Rosewood and New World hotel operating in Hong Kong as well."

Regal Hotels International, which operates six Hong Kong properties with four more in development, is an example of the market’s relative strength.

"We run a very, very high occupancy for our group of Hong Kong properties," said John Girard, Regal's Hong Kong-based VP of development and area general manager. "For this year, it's 89%. And that's on more than 6,000 rooms."

ADR is up more than 20% over last year, Girard said, and “it will probably go up another 10% for 2014." RevPAR is expected to climb about 8% next year, he said.

The Regal brand has been represented in Hong Kong since 1982 and is strongly established in the lower to mid-tier market, Girard said. A key demand driver is shopping.

"Every brand name under the sun is popping up in Hong Kong," Girard said. "And people from the rest of China only shop in Hong Kong when they shop in Asia. But we also get a lot of business from the rest of Asia."

Hong Kong has recently developed state-of-the-art conference and exhibition infrastructure to cater to the meeting and convention business, which is expected to grow significantly in 2014, sources said.

According to STR Global, as of October 2013 there were three upper-midscale properties totaling 763 rooms and an 85-room independent property under construction in Hong Kong.


While Hong Kong has been putting up impressive numbers, an almost unprecedented buzz has been building for the tropical resort of Hainan, the southernmost and smallest Chinese province highlighted by the Sanya and Haikou cities. Boasting a tropical climate and unspoiled beaches, Hainan, which includes an island of the same name, has been dubbed "the Hawaii of China."


As a result of its unique appeal and an ever-increasing desire for tropical getaways across China, Hainan has provoked one of the biggest hotel development booms in history. Virtually every major global hotelier, from economy to luxury brands, is now represented there, either with properties already open or ones on the drawing board.

Leading the way is Starwood Hotels & Resorts Worldwide, which already operates approximately 10 Hainan properties under the Westin, Sheraton, St. Regis, Le Meridien, Four Points by Sheraton and Royal Begonia brands.

Starwood's newest outpost, the 448-room Westin Sanya Haitang Bay Resort, opened in October. Next to open will be the 400-room Westin Qingshui Bay and the 297-room Westin Haikou in May.

"Hainan is the only tropical island in China," said Linly Heng, director of sales and marketing at the 511-room Sheraton Sanya Resort. "The stable growth of China's (gross domestic product) and the increase in domestic vacation demand are the main reasons why Starwood is so interested in the destination."

As the destination continues to be developed and grow, its primary drivers will be family vacations and meetings, incentives, conventions and exhibitions business from within China, Heng said.

Although the fierce development pace in Hainan cuts across all sectors, major luxury brands are dominating the action. Among the early arrivers was the 296-room Mandarin Oriental Sanya, which opened in 2009. In November 2012, Shangri-La Hotels & Resorts opened the Shangri-La Haikou, located next to the Hainan International Convention and Exhibition Center.

In September, Raffles Hotels & Resorts opened the 299-room Raffles Hainan, which also features 32 luxury beachside villas, a spa and two championship golf courses.

In early 2014, Kerzner International will debut its new One & Only resort on Tufu Bay in Sanya. In the third quarter of 2014, Shangri-La Hotels & Resorts will open its Shangri-La Sanya, Hainan Resort.

In 2015, Outrigger Hotels & Resorts will open the 500-room luxury property Outrigger Clearwater Bay Resort in Sanya, while Hard Rock International will also debut a new property in Haikou.

“When you look at the Sanya beach area, a lot of thought by local authorities is going into how to develop the area properly," said Bridle, who is overseeing Rosewood’s development of a New World hotel in Haikou as well as evaluating other opportunities in Hainan. “They very much want controlled development in terms of creating a leisure destination. And I think that is a very positive thing."

Bridle said despite the hyperactive development in Hainan, he is not concerned about market saturation.

"We certainly feel the demand is there," he said. "Undoubtedly, in any market that is expanding very quickly, what's important is the access-related infrastructure, because you have to be able to facilitate people getting in by plane, by train, by bus. And the current expansion of the international airport is particularly important to the continuing development of the area."

According to STR Global, as of October 2013 there were a total of 41 properties under construction in Hainan, with another 25 in either final planning or planning stages. In total, those 66 new properties would add another 24,715 rooms to Hainan's inventory.

STR Global's Ahmed sees nothing troubling about those metrics.

"If you look at supply and demand numbers, supply year to date has gone up 6.1%, whereas demand has gone up 13.3%," she said. "So when you see those kind of demand level increases, when demand is outgrowing supply, that's quite encouraging in terms of development." 


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