GZ Hospitality 2H 2014.indd

2H 2014
Savills World Research
China
Asian Cities Report
Guangzhou Hospitality
2H 2014
savills.com.hk/research
savills.com.hk/research 01
Asian Cities Report | Guangzhou Hospitality
MAP 1
Supply
Distribution of five-star hotels in urban
districts
Since 2012, thanks to the entrance
of several renowned luxury hotel
brands, Guangzhou’s hospitality
sector has experienced a period
of remarkable development. The
Four Seasons, Mandarin Oriental
and W Hotel launched their
Guangzhou locations within that
time, all in Tianhe district. Prior
to this, there was only one hotel
which could be categorised as a
luxury five-star hotel – The RitzCarlton Guangzhou, established
in 2008. The entrance of the Four
Seasons and Mandarin Oriental
has undoubtedly undermined the
Ritz-Carlton’s edge in Guangzhou’s
luxury hospitality sector.
Additionally, Guangzhou’s W Hotel
was the first W Hotel in mainland
China as well as the first boutique
hotel in Guangzhou, bringing
consumers an alternative hospitality
experience.
Source: Savills Research & Consultancy
GRAPH 1
Five-star hotel supply, pre-2000–2016E
Local
International
4,000
3,500
No. of room
3,000
In addition to the aforementioned
hotels, Grandview Marriott in
Tianhe, DoubleTree by Hilton
in Yuexiu and Langham Place
in Pazhou were also launched
between 2012 and 1H/2014. In all,
six five-star hotels have entered
the market in the past two and a
half years, expanding Guangzhou’s
upscale hotel stock by about 20%.
2,500
2,000
1,500
1,000
500
0
Source: Savills Research & Consultancy
GRAPH 2
International five-star hotel stock, 2014 vs
2016E
2014
2016E
K.Wah
Langham
Tianhe district, which includes both
Tianhe Bei and Zhujiang New Town,
became a hub for five-star hotels
with over 30% of the stock located
here. This can be attributed to the
fact that Tianhe Bei and Zhujiang
New Town are the most mature and
important CBDs in Guangzhou.
Nikko
Kempinski
Rosewood
Mandarin Oriental
Jumeirah
Four season
Hilton
Intercontinental
Marriott
Hyatt
Starwood
Shangri-La
Accor
0
500
1,000
Source: Savills Research & Consultancy
02
1,500
2,000
2,500
3,000
No. of room
There are currently 12 five-star
hotels in Tianhe district – eight in
Tianhe Bei, and four in Zhujiang
New Town. The hospitality market
in Zhujiang New Town will reach
maturity by 2016, with seven
five-star hotels expected to enter
the market between 2H/2014 and
2016. Half of the projected new
supplies in Zhujiang New Town
are considered luxury brands,
such as Jumeirah, Conrad, Nikko,
Kempinski and Rosewood Hotel.
15 new five-star hotels are
expected to enter Guangzhou by
2016, a 40% increase of current
stock. The market will likely
continue to feel supply pressure
over the next few years as it
continues to see new additions.
Demand
In the current market and with the
projected influx of stock, demand
is not keeping pace with supply.
Due to the global economic
slowdown and the expensecutting policies imposed by the
Xi government, demand from the
meetings, incentives, conferences
and events (MICE) sector, State
Owned Enterprises (SOEs) and
the government, which accounts
for a large share of demand within
Guangzhou’s hospitality market,
has witnessed a noticeable
decrease. As a result, revenue
generated by the MICE sector,
whose drivers were large MNCs
and SOEs, registered a decrease of
over 10%.
To lessen the impact of this, many
five-star hotels began to set their
sights on the wedding market.
Exhibitions of wedding products
and services were held and hotels
began offering different wedding
banquet packages.
In terms of overall performance,
average occupancy rates remained
above 60%, while occupancy rates
in Q1/2014 reached only 59.3%,
due to the traditional slow season.
According to the latest STR Global
press conference, Guangzhou is
one of the few cities where the
growth of demand exceeded the
growth of hotel supply.
Despite stable occupancy rates,
intensified competition still
affected the room rate. Average
daily rate (ADR) has fallen for two
2H 2014
consecutive years, suggesting
that many operators have resorted
to price discounts to attract
customers.
a substantial number of office
developments. MICE and leisure
groups are also expected to provide
a significant amount of demand.
GRAPH 3
Ratio of local brand hotels to international
brand hotels, 2005 vs 2016E
Local
The Guangzhou Commodity Pricing
Bureau announced the abolishment
of hotel pricing guidance during the
Canton Fair from October 2014.
The policy of hotel pricing guidance
had been in effect for the past eight
years. Its main purpose was to
help avoid irrational price surges
during the Canton Fair. The period
in which the Canton Fair takes
place is usually a peak season for
Guangzhou’s hospitality market.
The profits earned during these two
months tend to make up a large
share of a hotel’s annual profit.
However, due to a large amount of
new supply entering the market,
competitiveness has increased
and has succeeded in curbing
unreasonable pricing. In light of
this, the hotel pricing guidance
policy was rescinded to make way
for a self-regulating market.
Outlook
There are currently 16 fivestar hotels in the planning and
construction stages. In the
remainder of 2014, four five-star
hotels are expected to be handed
over, followed by an additional
five in 2015. This new supply will
increase the number of hotels by
40%.
Seven of the new projects are
located in Zhujiang New Town. With
the completion of these projects,
Tianhe district, including both
Zhujiang New Town and Tianhe
Bei, will have 21 five-star hotels,
accounting for about 40% of
Guangzhou’s total five-star stock.
Vacancy rates are expected to
go up in the short run due to the
amount of new supply entering the
market. Consequently, to cope with
the large amount of new supply
and the increased competition that
brings, five-star hotels are expected
to start relying more on their
advantages and characteristics
that offer customers a unique
experience.
2016E
2005
11%
17%
89%
83%
Source: Savills Research & Consultancy
The large number of internationally
renowned brands entering the
market may start to pose a threat
for domestic five-star hotel brands.
However, this may also prompt
domestic brands to start improving
their service quality. This would
allow them to raise their standards
of operation to more internationally
acceptable levels and, therefore,
compete more effectively with
global brands.
GRAPH 4
Five-star hotel distribution by room
number, 2014 vs 2016E
Baiyun
Nansha
Haizhu
Panyu
Huadu
Tianhe
Huangpu
Yuexiu
Liwan
Zengcheng
2016E
2014
31%
6%
8%
23%
6%
8%
19%
8%
In view of the rapid growth in new
supply, operating costs continue
to rise as do client expectations
of hotels and their products. In
the future, the hospitality market
is expected to focus less on star
rating and price, and more on
service. But for now, transformation
will be necessary, especially for
local five-star hotel brands. 
7%
7%
12%
4%
24%
87%
5%
13%
5%
10%
13%
2%
Source: Savills Research & Consultancy
GRAPH 5
Five-star hotel performance, 2007–Q1/2014
ADR (LHS)
RevPAR (LHS)
Occupancy (RHS)
1,000
66%
900
64%
800
62%
RMB per room per night
Government guidance
price abolished
International
700
60%
600
500
58%
400
56%
300
54%
200
The supply within these areas is
likely to cater to corporate travellers
and free individual travellers
(FITs) as they are surrounded by
52%
100
0
50%
2007
2008
2009
2010
2011
2012
2013
Q1/2014
Source: Savills Research & Consultancy
savills.com.hk/research
03
ASIA PACIFIC HEADQUARTERS
23/F Two Exchange Square, Central, Hong Kong
Tel: (852) 2842 4400 Fax: (852) 2868 4386
HONG KONG SAR
Savills (Hong Kong) Limited
23/F Two Exchange Square , Central, Hong Kong
Tel: (852) 2842 4534 Fax: (852) 2869 6738
Contact: Raymond Lee E-mail: [email protected]
EA Co. Licence: C-002450
Savills Valuation and Professional Services Limited
28/F Two Exchange Square, Central, Hong Kong
Tel: (852) 2801 6100 Fax: (852) 2501 5810
Contact: Charles Chan E-mail: [email protected]
EA Co. Licence: C-023750
Savills Property Management Holdings Limited
8/F Cityplaza One, 1111 King’s Road, Taikoo Shing, Hong Kong
Tel: (852) 2534 1628 Fax: (852) 2508 1883
Contact: Johnnie Chan E-mail: [email protected]
EA Co. Licence: C-002955
Savills Guardian (Holdings) Limited
7/F Cityplaza One, 1111 King’s Road, Taikoo Shing, Hong Kong
Tel: (852) 2512 1838 Fax: (852) 2887 3698
Contact: Peter Ho E-mail: [email protected]
EA Co. Licence: C-004089
MACAU SAR
Savills - Macau
Savills (Macau) Limited
Suite 1309-10, 13/F Macau Landmark, 555 Avenida da Amizade, Macau
Tel: (853) 8506 6288 Fax: (853) 2878 1805
Contact: Franco Liu E-mail: [email protected]
CHINA
Savills - Shanghai
20/F Shanghai Central Plaza, 381 Huaihai Middle Road, Shanghai 200020, China
Tel: (86) 21 6391 6688 Fax: (86) 21 6391 6699
Contact: Albert Lau E-mail: [email protected]
Savills - Beijing
2101 East Tower, Twin Towers, B-12 Jianguomenwai Avenue, Chaoyang District
Beijing 100022, China
Tel: (86) 10 5925 2288 Fax: (86) 10 5925 2299
Contact: Billy Chau E-mail: [email protected]
Savills - Guangzhou
Room 906, R & F Centre, 10 Hua Xia Road, Zhu Jiang New Town
Guangzhou, 510623, China
Tel: (86) 3892 7168 Fax: (86) 3892 7030
Contact: Woody Lam E-mail: [email protected]
Savills - Shenzhen
Unit A, 5/F, Anlian Plaza, 4018 Jintian Road, Futian District, Shenzhen 518026, China
Tel: (86) 755 8828 5707 Fax: (86) 755 8828 5676
Contact: Woody Lam E-mail: [email protected]
Offices in Chengdu, Chongqing, Dalian, Hangzhou, Nanjing, Qingdao, Shenyang,
Tianjin, Xiamen, Zhuhai
ASIA
Savills - Indonesia
PT Savills Consultants Indonesia
Panin Tower – Senayan City
16th Floor, Unit C
JI. Asia Afrika Lot. 19
Jakarta 10270, Indonesia
Tel: +62 (21) 293 293 80 Fax: +62 (21) 293 293 81
Contact: Jeffrey Hong Email: [email protected]
Savills - Japan
Savills Japan Co., Ltd
CR Kamiyacho Building 10F, 1-11-9 Azabudai, Minato-ku,
Tokyo 106-0041, Japan
Tel: (81) 3 5562 1700 Fax: (81) 3 5562 1705
Contact: Christian Mancini E-mail: [email protected]
Savills - Korea
Savills Korea
11/F Seoul Finance Center, 84 Taepyungro-1-ga
Chung-gu, Seoul, Korea 100-768
Tel: (82) 2 2124 4201 Fax: (82) 2 2124 4188
Contact: K.D. Jeon E-mail: [email protected]
Robert McKellar - CEO, Asia Pacific
Raymond Lee - CEO, Greater China
Chris Marriott - CEO, South East Asia
Christian Mancini - CEO, North East Asia
Charles Chan - MD, Valuation & Professional Services, Greater China
savills.com
Savills - Malaysia
Savills Rahim & Co
Level 17, Menara Uni. Asia, 1008 Jalan Sultan Ismail, 50250
Kuala Lumpur, Malaysia
Tel: (60) 3 2691 9922 Fax: (60) 3 2691 0096
Contact: Robert Ang E-mail: [email protected]
Savills - Myanmar
Savills Myanmar Limited
192 Kaba Aye Pagoda Road, Bahan Township, Yangon
Tel: (95) 9 250 515 035
Contact: Richard Emerson Email: [email protected]
Savills - Philippines
KMC MAG Group
8/F Floor Sun Life Centre, 5th Ave
Bonifacio Global City 1634, Philippines
Tel: (632) 403-5519
Contact: Michael McCullough Email: [email protected]
Savills - Singapore
Savills (Singapore) Pte Ltd.
30 Cecil Street, #20-03 Prudential Tower, Singapore 049712
Tel: (65) 6836 6888 Fax: (65) 6836 2668
Contact: Chris Marriott E-mail: [email protected]
Savills - Taiwan
Savills (Taiwan) Limited
17F-1, Exchange Square, 89 Sung Ren Road
Xin-Yi District, Taipei, Taiwan
Tel: (886) 2 8789 5828 Fax: (886) 2 8789 5929
Contact: Cynthia Chu E-mail: [email protected]
Office in Taichung
Savills - Thailand
Savills (Thailand) Limited
26/F Abdulrahim Place, 990 Rama IV Road
Silom, Bangrak, Bangkok 10500, Thailand
Tel: (66) 2 636 0300 Fax: (66) 2 636 0339
Contact: Mark Price E-mail: [email protected]
Savills - Vietnam
Savills Vietnam Ltd. Co.
18/F, Fideco Tower, 81-85 Ham Nghi Street
District 1, Ho Chi Minh City, Vietnam
Tel: (84) 8 3823 9205 Fax: (84) 8 3823 4571
Contact: Neil MacGregor E-mail: [email protected]
Office in Hanoi
AUSTRALIA
Savills - Australia
Savills (Aust) Pty Ltd.
Level 7, 50 Bridge Street, Sydney, Australia
Tel: (61) 2 8215 8888 Fax: (61) 2 8215 8899
Contact: Paul McLean E-mail: [email protected]
Offices throughout Sydney, Parramatta, Canberra, Melbourne, Notting
Hill, Adelaide, Perth, Brisbane, Gold Coast and Sunshine Coast.
NEW ZEALAND
Savills - New Zealand
Level 8, 33 Shortland Street, Auckland NZ 1010
Tel: (64) 9 951 5910 / (64) 9 951 5911
Contact: Doug Osborne E-mail: [email protected]
Contact: Paddy Callesen E-mail: [email protected]
NORTH AMERICA
Savills - New York
Savills Studley
399 Park Avenue, 11th Floor, New York, NY 10022
Tel: (1) 212 326 8610 Fax: (1) 212 326 1034
Contact: Mitchell Steir E-mail: [email protected]
UNITED KINGDOM / EUROPE / SOUTH AFRICA
Savills - Europe
33 Margaret Street, London W1G 0JD
Tel: (44) 207 499 8644 Fax: (44) 207 495 3773
Contact: Jeremy Helsby E-mail: [email protected]
Offi ces throughout the United Kingdom, Belgium, France, Germany,
Hungary, Italy, Netherlands, Poland, Spain and Sweden. Associate offices
in Austria, Greece, Norway, Portugal, Russia, Turkey and South Africa.
Savills, the international real estate advisor established in the UK since 1855 with a network of over 600 offices and associates globally.
This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute
part of, an offer or contract; interested parties should seek independent professional advice from lawyer, accountant and surveyor and should not rely on the statements or representations of fact but must satisfy
themselves by inspection or otherwise as to the accuracy. No person in the employment of the agent or the agent’s principal any authority to make any representations or warranties whatsoever in relation to these
particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may
not be reproduced in any from or in any manner, in part or as a whole without written permission of the publisher, Savills. © Savills (Hong Kong) Limited. 2014 (VIII/14)