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Star-rated Hotels
Driven by the desire to benefit from an increasingly affluent domestic population as well as the influx of foreign corporate travelers, hotel investors, developers and operators alike are currently scrambling for a presence in the PRC's hotel market. The PRC's entry into the WTO in 2002, Beijing's successful bid for the 2008 Olympic games and Shanghai's successful bid to hold the World Expo in 2010 have provided renewed impetus in the push for market presence, especially for major cities in the PRC such as Shanghai and Beijing. In recent years, many multinational corporations have moved their regional headquarters in Asia to Beijing or Shanghai , which further enhances the volume of international business travelers.
The growth of the PRC's economy and its tourism industry has led to a rapid development in the hotel industry. According to the National Tourism Administration, the total number of Star-rated hotels in the PRC grew from 853 in 1991 to 10,888 in 2004, representing a CAGR of 21.6%.
Star-rated hotels in the PRC are classified in accordance with the Star-Rating Standard Manual issued by the National Tourism Administration. Hotels are classified based on a standard checklist under the Star-rating standard for tourist hotels, which includes the location, structure and design, decor and facilities and services available in the hotel concerned. The highest rating is 5-star and the lowest rating is 1-star. The number of hotels with a star rating in the PRC has increased steadily in the past few years. According to the National Tourism Administration, there were approximately 5,127 3-star to 5-star hotels and 5,761 1-star to 2-star hotels in the PRC in 2004. The average Occupancy Rate in 2004 was 60.6%. The table below summarizes the growth in the number of Star-rated hotels in the PRC with associated Occupancy Rates:
As of 31 December
2000 2001 2002 2003 2004 CAGR
Number of hotels with star rating
6,029 7,358 8,880 9,751 10,888 15.9%
3-star to 5-star hotels
2,368 2,857 3,656 4,091 5,127 21.3%
1-star to 2-star hotels
3,661 4,501 5,224 5,660 5,761 12.0%
Total Rooms
594,678 816,260 897,206 992,804 1,237,900 20.1%
Average Occupancy Rate
57.6% 58.5% 60.2% 55.0% 60.6%
Budget Hotels
In recent years, there has been a rapid growth of budget hotels in the PRC which are very popular with tourists and business travelers on limited budgets. Budget hotels are generally not Star-rated, although some may have one or two stars. The number of budget hotels and budget hotel rooms increased from 6,788 and 659,855, respectively in 2001 to 9,675 and 928,304, respectively in 2004, a CAGR of 12.5% and 12.1%, respectively. The chart below illustrates the growth in number of budget hotels in the PRC during the period from 2001 to 2004:
The total income of all Star-rated hotels in the PRC increased from RMB60.3 billion in 2000 to RMB123.9 billion in 2004, a CAGR of 19.7%. During the same period, the total income of all budget hotels in the PRC increased from RMB33.3 billion to RMB71.8 billion, a CAGR of 21.1%. The income of both Star-rated hotels and budget hotels increased at a faster rate than the CAGR of the PRC's GDP, which was 11.2% in the same period. The following chart illustrates the growth in the total income of Star-rated hotels and budget hotels in the PRC during the period from 2000 to 2004:
The income of budget hotels in the PRC is mainly generated from more developed regions such as Guangdong , Zhejiang , Shanghai and Beijing . In 2004, budget hotels in Guangdong earned RMB21.9 billion, representing 30.5% of the total income of budget hotels in the PRC. Budget hotels in Zhejiang, Beijing, Shanghai and Jiangsu earned RMB6.0 billion, RMB5.2 billion, RMB4.5 billion and RMB3.9 billion, respectively. The chart below illustrates the income earned by budget hotels in ten PRC cities or provinces in 2004:
The average annual income generated from a single room in a budget hotel in Shanghai and Beijing were approximately RMB51,300 and RMB 45,000 respectively, were the highest among all other regions in 2004. The chart below illustrates the average annual income of a budget hotel room in 10 PRC cities or provinces in 2004:
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