Hoteliers capitalizing on Hainan demand
New projects on both northern and southern tips of China’s island province of Hainan reveal how this region of about 9 million people is dead-center when it comes to international hoteliers’ efforts to capitalize on expanding Chinese tourism spending.
Starwood Hotels & Resorts, Marriott International, Kerzner International and even Hard Rock Hotels are rushing to get a foothold on the island, which is about the size of Maryland and whose lodging demand numbers are bucking China’s overall lackluster results.
By the end of the year, the island’s first two hotels under Starwood’s Westin upper-upscale badge are slated to open: the Westin Sanya Haitang Bay Resort, which will have 448 rooms as well as four restaurants and lounges and five swimming pools, and the Westin Haikou. A third Westin is scheduled to open on Lingshui’s Qingshui Bay just northeast of Sanya by mid-2014. Those properties follow on the Royal Begonia, Starwood’s first Luxury Collection property on the island, which opened in Sanya in September 2012.
The hoteliers are betting on a Sanya market that continues to buck the trend of falling revenue numbers in what is widely believed to be an overbuilt China lodging industry. During the second quarter, Sanya was the only one of China’s 10 largest markets to not have a year-over-year occupancy decline, according to research firm HVS.
And those numbers look even better for luxury operators: Second-quarter revenue per available room (RevPAR) at Sanya’s five-star hotels surged 19% from a year earlier.
Hainan has recently received extensive infrastructure improvements, and the island benefits from its warm weather and scenery, attributes that lure mainland Chinese with disposable income.
“The natural beauty, tropical climate, attractively priced real estate, unspoiled and undeveloped land presents opportunities, and there has been a willingness of farmers to sell their land,” said Elizabeth Winkle, managing director for STR Global.
Winkle estimated that about 90% of Hainan’s visitors are from the mainland, though there is an upswing in tourism from Taiwan, Hong Kong, Russia and a smattering of English-speaking countries.
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