Turning point for the hospitality industry

Individual business and leisure travelers will provide the much-needed growth momentum for Chinese hoteliers, even as prospects in the high-end segment continue to be bogged down by the government's austerity measures, a new industry report said.

According to the report released by global real estate services firm Jones Lang LaSalle Inc, individual business travelers accounted for about 40 percent of the overall hotel business in China in 2013.

"Individual business travelers will be the mainstay for the hotel industry this year also," said Ye Feng, vice-president of Jones Lang LaSalle's hotel and tourism real estate investment consulting department in China.

The percentage of individual leisure travelers also grew in 2013 compared with 2012, whereas the contribution from business groups declined due to the various government policies, Ye said.

The LaSalle report was based on responses received from 269 hotels and management companies in China. About 53.9 percent of the respondents remained confident in the growth prospects for the industry in China in the long term, compared with just 2.6 percent in 2013. "This is a positive turning point for the industry," Ye said.

Stable growth prospect and favorable policies from the government are the reasons cited by most respondents for the renewed optimism, Ye said, adding that the whole sector was adversely affected by the decline in high-end consumption, especially in the luxury hotel sector.

Zhang Rungang, director of the China Tourist Hotels Association, said the drop in high-end consumption was mostly due to the reduced government spending as a result of the austerity measures. "As a result, the industry had to make changes to survive," he said.

Han Ming, head of China Hotel Association, said the middle- and high -end hotels saw business shrink by 20 to 40 percent in 2013, compared with the levels in 2012.

"Hotel companies must change their business models and way of operation by including supply-chain, energy-saving and functional optimization," Han said.

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