Consumers in China plan to pay up when it comes to hotels, a Morgan Stanley survey found in late January.
The research points to growing demand for high-end and luxury hotels in China now that the country has ended domestic travel restrictions — and a Covid wave has passed.
“Consumers appear more willing to increase spending on hotel accommodation for their trips vs. pre-Covid, with 20% citing it as their top travel expense compared to 17% each in 2017 and 2020,” Morgan Stanley analysts said.
The report released Tuesday cited a proprietary survey from Jan. 29 to 31 of about 2,000 consumers across China’s larger cities in 19 provinces.
The report said that “37% of the consumers prefer higher star-rated hotels, up from 18% in 2020, with higher-income consumers showing even stronger appetites for luxury hotel stays (47% vs. 31% in 2020).”
“Mentions of budget hotels and mid-range hotels fell universally.”
Savings soared
An opportunity for international brands
It may be an opportunity for international brands.
“We believe it will be challenging for China hotel groups to enter the upscale market,” UBS said.
InterContinental Hotels Group announced this week it signed two hotel deals in Shanghai, including the first hotel in Greater China under its luxury Vignette Collection brand. The hotels are set to open in the first half of 2024, according to a release.
InterContinental, Marriott International and Wyndham Hotels & Resorts are due to release earnings later this month.
Hilton Worldwide Holdings said in its fourth-quarter earnings report overnight that an industry measure of revenue for China showed business was still down by 37% compared to 2019 levels. China’s Covid controls also prevented the company from expanding as much as it had planned in the fourth quarter.
“You’re already starting to see significant travel within China in terms of uptick,” Hilton Worldwide CEO Christopher J. Nassetta said in an earnings call.
“And we expect, particularly in the second half of the year, you’re going to have a big tailwind from that,” he said, according to a StreetAccount transcript.
“There continues to be broader pent-up demand across all segments. I mean, you could argue in the leisure side … people have been doing a lot of it, but we don’t see them slowing down.”
— CNBC’s Michael Bloom contributed to this report.
Source: https://www.cnbc.com/2023/02/10/chinese-travelers-want-luxury-travel-and-hotels-survey-shows.html