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Hotel construction pipeline touches new high in China

  • HOTELSMag.com
  • 16 August 2024
  • 2 minute read
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This article was written by HotelsMag. Click here to read the original article

Hotel construction pipeline touched record numbers in the second quarter. The country’s pipeline increased 4% by projects and 3% rooms YOY to close the quarter at 3,815 projects with 699,786 rooms, according to the latest report by Lodging Econometrics (LE).

At 2,743 projects with 498,551 rooms, projects under construction reached unprecedented levels (which constituted 72% of the projects in China’s overall pipeline) and grew 3% by projects and 4% by rooms YOY.

Hotel industry in mainland China saw a steady recovery in 2023, propelled by pent-up demand for leisure travel after the pandemic. This drove demand for hotels and, as a result, pushed up room rates. Business travel also saw an increase after the Chinese New Year last year, but it gradually weakened due to the slowing economy, forcing companies to cut their budgets for business trips, a South China Morning Post news report mentioned.

Midrange and prime hotel chains are lucrative and their volume has been increasing in China for the past few years, the report said. As of December 2022, the number of midrange and prime hotel chains in China soared by 26.3% and 9.2%, respectively, compared to 2019, according to data from the China Hotel Association.

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Demand for new hotel developments is projected to hold steady in the next few months.

Demand for new hotel developments is projected to hold steady in the next few months, according to LE. Projects expected to begin construction in the next 12 months stands at 390 projects/70,520 rooms, increasing by 9% by projects and 10% by rooms YOY. Projects in the early planning stage grew 4% YOY to close the quarter at 682 projects/130,715 rooms.

By the close of the second quarter, 219 projects/37,261 rooms started construction across the country, up 37% YOY by projects and 32% by rooms. A total of 264 new projects (totaling 43,301 rooms) were announced during Q2, increasing 12% YOY by projects. Altogether, renovation and conversion projects touched new highs to stand at 206 projects and 42,084 rooms, showing a 32% YOY increase in projects and a 47% increase in rooms.

The upper midscale segment saw the highest concentration of new projects, claiming 32% of new developments and achieved new highs this quarter. Hotel construction projects in the upscale chain scale also reached new all-time highs. Combined, upper midscale, upscale and the midscale segments accounted for 69% of projects and 65% of rooms in China’s pipeline.

Cities with the highest pipelines:

  • Chengdu: 147 projects/29,951 rooms
  • Shanghai: 126 projects/24,340 rooms
  • Guangzhou: 122 projects/24,977 rooms
  • Hangzhou: 103 projects/20,997 rooms
  • Xi’an: 87 projects/15,813 rooms

A total of 341 new hotels/47,084 rooms opened across the country by the close of the second quarter, with an additional 596 new hotels/92,589 rooms projected to open in the last two quarters. By the end of the year, 937 new hotels and 139,673 new rooms are expected to open, according to LE analysts.

Around 994 new hotels/166,683 rooms are anticipated to open in 2025 and 759 new hotels/146,894 rooms are forecast to open in 2026, LE said.

Please click here to access the full original article.

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