Does the hotel industry make money?

First, the development of hotel industry in some first-tier cities has approached or exceeded the peak period of development.

Since 2000, the boom cycle of the hotel industry has lasted for seven years, during which high-star hotels have developed rapidly. In 2007 alone, before the end of the year, there were 1 107 four-and five-star hotels to be evaluated, under construction and under construction in China, equivalent to 554 five-star hotels, which was 1.9 times of the total number of five-star hotels in 2007. According to Haohua data analysis, in the past five years, the price growth rate of five-star hotels in China was faster than that of four-star and three-star hotels. From 2002 to 2006, the average room rate of five-star hotels increased by 6% every year, while the average room rates of four-star hotels and three-star hotels were 5% and 4% respectively, so the room rate gap between five-star hotels and other star hotels further widened.

In our opinion, the construction and opening of high-star hotels will still maintain the inertia growth trend, and there is the possibility of further development in some second-tier cities, but from the overall development point of view, high-star hotels have entered or will soon enter the peak period. In addition to the three platinum five-star hotels approved by the National Tourism Administration in 2007, a large number of international boutique hotels will also appear, which will greatly enrich the high-end hotel market. Jumeirah announced that its first hotel in the Asia-Pacific region, Jumeirah Hantang Xintiandi Hotel, Shanghai New World, opened on August 1 2008, and the average room rate will be around 400 dollars. Banyan Tree Holdings Limited recently announced that it will enter the high-end hotel market in China for the first time, and the first city hotel will open in Beijing next year.

The hotel industry in Beijing will reach its peak in 2008, when the arrival of the Olympic era will directly test the operation and development of the high-star hotel market.

In 2007, there were 23 five-star hotels in Shanghai, with a year-on-year increase of more than 25%, far exceeding the average growth rate of star hotels. From the management point of view, the average occupancy rate of tourist hotels in Shanghai decreased from 65.64% in 2005 to 6 1.48% in 2007, while the occupancy rate of five-star hotels decreased from 72.33% to 68.23%. With the construction of new tourist hotels from 2008 to 20 10, the signs of oversupply in the hotel industry indicate that the development of Shanghai hotel market will reach its peak in one or two years.

In addition, the development of hotel industry in first-tier cities such as Guangzhou, Suzhou, Chengdu and Hangzhou shows that these cities will enter the peak period of hotel industry development in the next few years, and the high-star hotels in these cities will take the lead in entering the saturation period. Take Guangzhou as an example. Before the 20 10 Asian Games, the number of star-rated hotels in Guangzhou will increase to 300, of which about half are high-grade hotels with four or more stars. So far, luxury high-star hotels such as Shangri-La Pazhou, Westin Tianyu, Courtyard by Marriott and Ritz-Carlton have opened. About 80% of these high-star hotels that have been opened or under construction are located in Tianhe District of Guangzhou, with Zhujiang New Town, Tianhe Road and Pazhou as the center, and Tianhe Road will become the most densely populated area of luxury hotels.

According to the statistics of Haohua Company, the development of high-end hotel market in Dalian, Qingdao, Sanya and Shenzhen is expected to continue to maintain a rapid development trend in 2008 and 2009.

Second, there is still room for the development of budget hotels, but the brand will be consolidated quickly.

Capital has always been the main driving force to promote the development of China's economy hotel industry, and the characteristics of economy hotel chain, such as light assets, high return on investment, standardization and easy replication and expansion, have become the key factors to attract capital investment.

In recent years, budget hotels have developed rapidly, forming three camps: first, national domestic budget hotel brands, such as Home Inn, Jinjiang Inn and Seven Days Chain; Second, regional domestic economy hotel brands, such as Shanghai Motel 168, Nanjing Jinyi Village, Zhengzhou Zhongzhou Express, Chongqing Changjiang Hotel, etc. Third, international budget hotel brands, such as Super 8 under Windham Group in the United States and Ibis under Accor Group in France.

Although there are many budget hotel brands, according to the statistics of budget hotel network, among the more than 100 budget hotel brands in China at present, there are only 7 with a chain scale of more than 50 and only 25 with a chain scale of more than 10. In 2007-2008, the market share of the top 10 budget hotel brands dropped from 85% to 38%. The main reason is that excessive development leads to intensified competition, especially for the purpose of short-term speculation, and the participation of investors who expect enterprises to go public or cash out quickly has deepened the unknown development of the economy hotel industry.

Due to the impact of the subprime mortgage crisis in the United States and the tight monetary policy, the economy hotel industry generally encountered the actual situation of tight funds in 2008. At the same time, Star Cruises, the third largest cruise company in the world, enters the mainland market at a fixed price every night. The appearance of "low-cost hotels" in 99 yuan also makes the competition in the economy hotel market more intense and the competition result more unpredictable.

We believe that Home Inn will increase the number of cases and the scale of acquisition. In the next 3-5 years, on the one hand, the economy hotel market will still be dominated by the competition of capital and development speed. At the same time, the competition of hotel brand building, service quality and comprehensive management ability will dominate the competition more and more. Those enterprises with weak capital strength and only focus on scale without core competitiveness will face the fate of being merged. From a static point of view, there is still a broad room for hotel development in the domestic second-and third-class and even rural markets, and a large number of low-end and widely distributed brand-free tourist star hotels also provide a broad market for the merger and acquisition of dominant brands. From the dynamic point of view, the future market structure will be dominated by 10 well-known hotel brands, with a market share of over 50%.

Third, the capital market is active, and hotel mergers and acquisitions are surging.

Shao Qiwei, director of the National Tourism Administration, pointed out at the 2007 China Tourism Investment Fair that by 20 15, there will be about 200,000 new accommodation facilities in China, including about 100 star hotels and more than 500 five-star hotels, and the demand for leisure and holiday hotels will also increase exponentially. A large amount of international and domestic capital flows to the hotel industry. At present, enterprises account for the largest proportion of investment in China's tourism industry, and a considerable part of them are private enterprises. The proportion of foreign investment in China's tourism industry is also increasing year by year. It is estimated that the investment in tourist hotels in China will reach 340 billion yuan during the 11th Five-Year Plan period.

In addition, the development of hotel industry in first-tier cities such as Guangzhou, Suzhou, Chengdu and Hangzhou shows that these cities will enter the peak period of hotel industry development in the next few years, and the high-star hotels in these cities will take the lead in entering the saturation period. Take Guangzhou as an example. Before the 20 10 Asian Games, the number of star-rated hotels in Guangzhou will increase to 300, of which about half are high-grade hotels with four or more stars. So far, luxury high-star hotels such as Shangri-La Pazhou, Westin Tianyu, Courtyard by Marriott and Ritz-Carlton have opened. About 80% of these high-star hotels that have been opened or under construction are located in Tianhe District of Guangzhou, with Zhujiang New Town, Tianhe Road and Pazhou as the center, and Tianhe Road will become the most densely populated area of luxury hotels.

According to the statistics of Haohua Company, the development of high-end hotel market in Dalian, Qingdao, Sanya and Shenzhen is expected to continue to maintain a rapid development trend in 2008 and 2009.