Cutting Edge in Rural China.
By René J.M. Schillings
Wednesday, 30th March 2011
Whenever a hotel company is opening a new property in a certain city, such hotel of course wants to show of the latest technology in their facilities and showcase the latest trends in Food & Beverage.

To enter a market where there are already competitor hotels (there aren't any cities in China were there are no hotels whatsoever), it is common to bring a new and stunning product to the market, to lure away the customers of the existing hotels. China still has plenty of locations or niches to fill with hotel concepts that aren't there yet. So far all this is common practice, generally applied and tested worldwide.

However to be a trendsetter one has to be willing to let the market and the consumer get used to something new and different and that may require a certain time, a gradual acquired taste and sometimes a bit learn-as-you-go adaptation of (inter)nationally accepted standards, practices and also prices in a local, less developed (but fast growing)  market. The hotel industry changes every 5 years with what is considered 5* standard, contemporary and/or the latest in hotel product.

A hotel that was a novelty 10 years ago in a city is now hopelessly outdated, and a hotel that is 5 years is old is generally offering much the same thing as everybody else. But the ‘5-year-old' hotel concepts are generally what is accepted and understood by the public at large and would have less problem selling it's products and facilities as what the public is expecting of a 5* hotel to offer in most cities in China.

With a hotel being a 20-30 year investment/ enterprise, the first 5 years of a hotel should be seen as ‘new' in the market, still finding it's audience. And that is where there may be a problem in China. The majority of China's hotel owners are real estate developers, expecting a return on investment within the first 5 years; nay they even expect a hotel to make a profit in the first year of operation.

Their benchmark is too often the few earliest hotels who were really the first to come to town and who were a success from day one. But as more hotels open every week in China, in ever more cities and not only secondary cities, but even tertiary cities or ‘edge of the city locations', this immediate success is often hard to copy.

Whereas being innovative, trendsetting and being ahead of the market is to be applauded, we can see that in too many cases new hotel openings are too ambitious to start of with a big bang, sporting the top of the bill in everything in a market where hitherto there wasn't any demand for it.

As a result we see many newly opened hotels that have disappointingly low occupancy rates if they want to enter the market with rates double or 20/30% more of what was so far the top the range in town and empty F&B outlets. If that happens, then comes the moment of perseverance.

Can the hotel company/owner afford to stick to the course and allow 4-5 years of maturation and steadily grow their market share, or will they give in to pressure and soon downgrade, alter and substitute all that was built and constructed to a more regular product, at a more acceptable price.

Overall the taste of the public in China is rapidly changing, and so is the spending power. In the 3000 years of Chinese history, the recent 25 years are is a milli-blip, and in the view of a 20-30 years life span of a hotel building and the growing Chinese economy.

Five years after opening is just a phase, a stage of life one has to go through. No hotel became market leader overnight. No F&B concept that was a great success somewhere in the world or in China is a guaranteed success when copied to another city with another similar hotel.

Rather than racing towards being the ultimate market leader and doing something nobody else did in China, it's still safer to start humble and grow your market share and audience over time.

That too is a time-tested and world-wide proven concept in hotel management that is often forgotten and lost in today's China hotel construction boom.

About the Author:
René J.M. Schillings, a Dutch National, is the owner, founder and Managing Director of TOP Hoteliers, the first specialized hospitality recruitment agency to open offices in the People's Republic of China (in 2004). Based in Hong Kong he devotes most of his time managing the 2 offices in Shenzhen and Beijing, where his team of consultants recruit hotel managers for all major international and some local hotel companies in China. His company was very early to recognize the need for local talent, Mandarin speaking expatriates and China experienced expatriates. His knowledge of the China Hotel Industry stems from his career as Hotelier in China that began in 1997. He has a BA in Hotel Management from Stenden University, a.k.a Hotel Management School Leeuwarden, The Netherlands and an MA in International Tourism & Leisure Studies from Metropolitan University in London, England. He is a keen observer of industry trends and has published numerous articles on HR issues in hospitality in China.

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