Beijing Hotel Market Overview

Introduction to Beijing

Beijing is the capital city of the People's Republic of China and along with Shanghai, Tianjin and Chongqing, is one of the four centrally administered municipalities of China. This allows it increased autonomy in economic, financial and administrative decision-making. The city is situated in the north of the Huabei Plain and covers a land area measuring 16,808 square kilometres.

According to the Beijing State Statistical Bureau, the population of Beijing is 13.8 million, making it a smaller city than the Chongqing and Shanghai municipalities. In terms of Gross Domestic Product (GDP), Beijing ranks second in the country, behind Shanghai. During 2000, Beijing's GDP recorded 246.1 billion renminbi, which represented an 11.0% growth whilst Shanghai recorded a GDP of 455.1 billion renminbi or a 10.8% growth from the previous year.

During 2000, foreign investment in Beijing increased significantly. The city attracted a total of 1,145 foreign investment projects worth US$3.5 billion during 2000, which represents 77.5% and 94.4% respective growth over the previous year.

Tourism Overview

International Visitor Arrivals

International visitors to Beijing experienced growth of 11.8% to reach 2.8 million arrivals during 2000. During the first half of 2001, further growth in visitor arrivals was witnessed, up 5.3% from the corresponding period in 2000 to record 1.3 million visitor arrivals. Significant source markets include Hong Kong and Taiwan who respectively represented 8.9% and 6.3% of arrivals during 2000. As a high proportion of international visitor arrivals originate from Taiwan and the Special Administrative Regions of China of Hong Kong and Macau, foreign visitor arrivals to Beijing excluding these markets are also analysed separately. During 2000, foreign visitor arrivals to Beijing showed strong growth of 16.1% to reach 2.4 million for the year, up from 2.1 million in 1999. During the first half of 2001, foreign visitor arrivals to Beijing continued to grow, recording an increase of 3.3%. Average length of stay recorded 4.4 days in 2000, which resulted in visitor nights of 10.3 million during the year. Visitors from Hong Kong tend to stay for shorter periods of time, recording an average length of stay of 2.9 days during 2000, compared to visitors from Taiwan, who, on average, stay for 5.4 days. Key foreign source markets include Japan (23.0%), Europe (15.3%), United States (12.0%) and Korea (9.1%).

International Visitor Spending Patterns

During 2000, international visitor receipts earned in Beijing totaled US$2.77 billion, up by 10.9% from 1999. The average international visitor to Beijing had a daily expenditure of US$229 in 2000. Foreign visitors to Beijing had a marginally higher daily expenditure of US$230 compared to visitors from Hong Kong and Taiwan, who had daily expenditures of US$224 and US$227 respectively in 2000. According to the China National Tourist Administration (CNTA), 13.6% of international visitor spending across China was on accommodation, which was the third highest source of tourist revenue after long-distance transportation (30.0%) and shopping (20.0%).

Demand Generators

As the political centre of China for several dynasties, Beijing is renown for its rich history and culture. . The city has a great variety of tourist attractions such as the Great Wall of China, the Forbidden City, Tiananmen Square, the Summer Palace, Temple of Heaven and the Mao Mausoleum. In addition to these historical attractions, Beijing also has busy shopping districts such as Wangfujing, Xidan and Chaoyang. In addition to its appeal to leisure travellers, the city has also developed rapidly as a bustling business gateway to China, with two established business districts developed in the western financial district and the eastern central business district. The key demand drivers in the short to medium term are:

• Olympics 2008 - Beijing has won the bid to host the 2008 Olympic Games. In preparing for the Games, the government has pledged to invest over 180 billion renminbi to improve the physical infrastructure of the city, such as its railway, road and telecommunication networks. In addition, the government is developing the Olympic Park in the northern part of the city and embarking on major environmental protection projects to develop Beijing as a garden city. The event will thus not only raise the international profile of the city but also help develop the infrastructure to support its status as a world class tourist destination.
• World Trade Organization membership - The general consensus is that Beijing's entry into the WTO will bring in trade benefits and improve economic relations between China and major global trading partners, thus enhancing the scope for corporate travel to China.

Hotel Overview

Hotel Supply

As at December 2000, Beijing had 522 lodging facilities including star-rated and non star-rated establishments with 76,699 rooms. Star-rated hotels, which represented 81.4% of Beijing's lodging facilities, increased by 53.4% during 2000 to reach 425 establishments. The increases to supply were largely concentrated in the one to three star hotel segments. The room supply of five star hotels was relatively stable with the exception of the opening of the Radisson Plaza State Guest House.

Hotel Demand

Despite a 12.0% increase in room supply, star-rated and non star-rated lodging supply improved its occupancy rate from 56.0% during 1999 to reach 60.9% during 2000.

Five Star Hotel Performance

After a period of strong supply growth in the early 1990s, room stock in the five star-graded segment remained relatively constant during 1998.The addition of the Kerry Center Hotel increased the room stock from 4,400 to 4,870 rooms during 1999, and during 2000, the opening of the 519-room Radisson Plaza State Guest House resulted in room supply reaching 5,389.

Five star hotel supply remained stable during the first three quarters of 2001. However, the 600-room Grand Hyatt and the 300-room Marco Polo are expected to open in October and December respectively.

After a period of strong supply growth in the early 1990s, room stock in the five star-graded segment remained relatively constant during 1998.The addition of the Kerry Center Hotel increased the room stock from 4,400 to 4,870 rooms during 1999, and during 2000, the opening of the 519-room Radisson Plaza State Guest House resulted in room supply reaching 5,389.

Five star hotel supply remained stable during the first three quarters of 2001. However, the 600-room Grand Hyatt and the 300-room Marco Polo are expected to open in October and December respectively.

• The five star hotels in Beijing continue to achieve stable occupancy and average daily rates. During 2000, room nights demanded (RND) reached 1.3 million in 2000 and occupancy levels rose from 67.9% in 1999 to 68.5% in 2000. During the nine months to September 2001, occupancy rates remained strong at 69.1%.
• Average daily rates improved by 12.7% to reach US$102 in 2000 and revenue per available room (revpar) rose by 13.7% from US$62 in 1999 to US$70 in 2000. During the nine months to September 2001, average daily rates reached US$98, thus resulting in a revpar of US$67.

Outlook

The hosting of the Olympics Games in Beijing during 2008 and increased international scrutiny have spurred the Chinese authorities to push ahead with major plans to improve the image of the city. The authorities have pledged to spend 180 billion renminbi (US$21.4 billion) to revamp the city infrastructure and curb environmental pollution, amongst others. Apart from beautifying the city, these plans are expected to create an estimated 1.5 to 2 million jobs nationwide, of which around 15% are expected in Beijing. There has been greater foreign interest in China, particularly focusing on key cities such as Beijing and Shanghai due to more liberalization in foreign equity regulations and China's entry into the World Trade Organization (WTO). International visitors to Beijing are thus likely to experience strong growth over the medium to long term.

Fiona Cregan
+612 9220 8786
JLL