How’s your Mandarin?

Marketplace Staff May 3, 2006

MARK AUSTIN THOMAS: A recent report from the World Travel and Tourism Council predicts that within a decade, China will become the world’s second largest tourism market after the US. Many hotel chains are pouring millions into new construction in China. But commentator Rudy Maxa says much of the investment seems to run counter to China’s official Communist philosphy.

COMMENTATOR RUDY MAXA:
As Paris Hilton might say, “China is HOT.” Sure, you’ve got your obligatory Ritz-Carltons and Toronto-based Four Seasons in China’s two most modern cities, Hong Kong and Shanghai. But the Ritz folks are putting a second hotel in Hong Kong, and Four Seasons is opening a second one in Shanghai. And with the next summer Olympics scheduled for Beijing, there will be two Ritz-Carltons there–including one on what China hopes will be its third international center of commerce, called Financial Street. A Westin will open nearby, too. Oh, and hang on to your worker’s cap, Chairman Mao–also coming to Beijing . . . a new Four Seasons and a new Conrad, the luxury line owned by Hilton.

Equally interesting are the hotels going up in Chinese cities most Americans can’t find on a map–a Ritz-Carlton Shenzehn and a Ritz-Carlton Shenzehn Guangzhou, a Ritz-Carlton Shenzehn resort on the island of Sanya. There’s a Sheraton about to open in Guiyang and another in Xiamen. By the end of a€˜07, Marriott will have about 40 hotels in China, including new ones in Ningbo, Nanning and Nanchang. This is just the beginning, because there are about 20 cities in China with a population of more than three million people. In the US? Two.

All these pricey hotel rooms aren’t unique to China, of course. Dubai can’t build expensive and dramatic hotels fast enough, and there are at least five new companies building hotels whose rooms will cost north $500 a night. The man who built Starwood, Barry Sternlicht, is launching an international luxury chain named after the Crillon in Paris. The former president of Ritz-Carlton, Horst Shultze, is launching Solis and Capella hotels. He says the luxury market has let its standards down. Then there are Armani and Missoni hotel chains in the works, brands using the names of designers who, investors hope, will give their projects some high-end mojo. And let’s not forget the hotels named after a jewelry chain, the $1,00 a night Bulgari in Milan and, later this year, Bali.

High-end hotels are enjoying banner years after the 9/11 travel slump. Hoteliers like to say the cycles go this way: Six or seven great years, two or three bad ones. Well if that’s true, we’re just a couple of years into the new bull cycle, and maybe therea€™ll be enough affluent travelers who can fill these expensive rooms.

But just as hoteliers are looking toward China as a way of expanding their markets, they may soon be looking for the Chinese to help fill their hotels elsewhere. That’s not just because the Chinese are starting to make money. Theya€™re also starting to get out and about.

Today, when it comes to international travel, Germans are the world’s biggest travelers by numbers, followed by the Japanese and then us. The Chinese are in fourth place, but in four years, China will be in first place. Which may prompt hotel execs to ask new hires: “How’s your Mandarin?”

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