The rise of China-centric hotel brands

The rise of China-centric hotel brands

International hoteliers are building dedicated brands in China to lure Chinese business travelers
China-centric hotel brands
Likely to be the hotel room model for future -- China tea on the table and enough space to practice tai chi.

China is expected to become the world’s largest hotel market by 2025 and the second-largest business travel market, after the United States, by the end of 2020.

International hoteliers are doing what it takes to secure a foothold in China’s business travel market, and an obvious trend has emerged: building dedicated brands to cater to Chinese business travelers.

Accor re-brands Grand Mercure

French hotel group Accor is re-engineering the Grand Mercure brand in order to appeal to the upscale Chinese market, especially domestic business travelers.

An upmarket version of Mercure, Grand Mercure first entered China in 2005 as Accor’s stand-out hotel brand in a market yearning for high-end accommodation.

Although the brand is not officially starred in the country, all Grand Mercures are tagged as four-star establishments. 

“[Grand Mercure] was formerly more generically positioned,” said Evan Lewis, Accor’s vice president for communications for Asia Pacific.

Grand Mercure Shanghai Zhongya is the first fully tailored Mercure branch in China.“[The brand] has been reworked to focus specifically towards Chinese travelers. This includes a new identity, new service references and a new name domestically."

The brand, now known as Mei Jue (美爵) in China and Grand Mercure internationally, will deliver services that “make sense” to its key audience.

This includes daily tai chi sessions, complimentary head and shoulder massage, a 24-hour congee menu and hotel-organized walking tours to explore the local neighborhood.

The first fully tailored Grand Mercure was unveiled in Shanghai on Feburary 28. And the Paris-based hospitality group is now working with Grand Mercures in other cities such as Beijing, Shenzhen, Xi’an, Jinan, and Dalian on executing the re-branding.

A further 10 Grand Mercures are planned in smaller Chinese cities.

More on CNNGo: International hotels race to woo Chinese market

Accor, which operates 121 hotels under seven brands in 47 cities across Greater China, regards the tailor-made Grand Mercure “one of Accor’s future growth engines” in the region.

This new strategy is also expected to help Accor raise its profile and build hotel membership firstly in China, then around the world as the Chinese outbound market matures.

IHG creates dedicated brand

While Accor is brushing up an established brand to make Chinese travelers happy, InterContinental Hotels Group (IHG) has launched Hualuxe Hotels and Resorts (华邑酒店及度假村), which is an entirely new hotel brand just for China.

[Hualuxe is] going to Shanghai, Beijing, and Guangzhou in time, but not until [it's entered] tier-two and tier-three cities because that’s where the future opportunity is.

-- Keith Barr, IHG Greater China's CEO

The English name Hualuxe translates as "China luxury," while the Chinese name reads Hua Yi. Hua means Chinese, and Yi stands for a city or a capital. Yi is also often associated with cognac, which is a sign of luxury in China.

Positioned between the company's upscale Crowne Plaza and luxury InterContinental brands, Hualuxe will focus on China’s second- and third-tier cities and is geared to please business travelers from domestic companies, state enterprises and government.

IHG has confirmed 20 Hualuxe properties in destinations including Zhangjiajie (张家界), Changsha (长沙), and Lijiang (丽江). 

“[The new China brand is] going to Shanghai, Beijing, and Guangzhou in time, but not until [it's entered] tier-two and tier-three cities because that’s where the future opportunity is,” Keith Barr, IHG Greater China's CEO, told us.

Barr also noted that the plan is to create a Chinese chain that meets international standards but is based on IHG’s insight into Chinese travelers.

The London-based hotel group plans to spread the Hualuxe brand to more than 100 Chinese cities within 15 to 20 years.

The first Hualuxe hotel is expected to open in late 2013 or early 2014, though the location is yet to be confirmed.

One interesting fact is that the brand was named in Chinese rather than English.

“I want this Chinese name to be the essence of what this brand stands for,” added Barr, “and the English name is to be a reflection of that because this brand will go international.”

Potential obstacles

With the new trend of building China-centric brands, international hoteliers seem to have found their new gold mine. But experts have voiced concerns over China’s overheated hotel market.

"The comparison between the hotel occupancy in China and that in other countries shows the potential oversupply of the hotels rooms in China," Zhao Huanyan told China Daily.

According to Zhao, who works for Hotelsolution Consulting, a Shenzhen-based hotel consultancy, the hotel occupancy rate in Amsterdam, Berlin, Hamburg, Munich and Paris reached 75 percent in 2011. The rate for London was 85 percent last year.

But the average number in three-to -five -star hotels in China is around 60 percent.

More on CNNGo: 8 China travel tips from a veteran hotel CEO

While hotel brands are racing to stake a claim in smaller Chinese cities, finding qualified local employees can also be a challenge.

"The famous hotel brands can easily find good locations for their new hotels in smaller cities, rather than in big cities. But there will be not enough young people coming in the labor market,” said Simon Cooper, president and managing director for Marriot International Asia Pacific

“It is also hard to find employees [speaking] English in smaller cities, which is foreign brands' work language," Cooper explained.