Categorized | Hotels

Chinese travelers are influencing hotel rates…

Posted on 24 March 2012

 

Hotel rates in key European cities are rising in part due to an increase in Chinese visitors, Starwood Property Trust CEO Barry Sternlicht recently told Wall Street analysts.

 

His comments – made during the company’s fourth-quarter earnings call on Feb. 29 – are only the latest sign that China’s emerging middle class is going to have a profound impact on the travel industry and, specifically, hotels as they take to the road.

 

In response to an analyst’s question about risks related to the European real estate market, Sternlicht said that Europe’s hotel outlook remains fairly healthy.

“Hotels are doing OK. The economy’s not cratered yet. It probably id going to do what it’s doing. It’s going to muddle along,” he said on the company’s fourth-quarter earnings call. “It’s going to muddle along.”

But “where you’re seeing a big pickup in (revenue per available room) is in cities where the Chinese have an influence and are traveling, because they fill the lower end of hotels and then the whole toothpaste tube fills – from the bottom up.”

 

He noted that the company’s portfolio includes 25 Le Meridien hotels throughout Europe.

 

Sternlicht said that they see Chinese travelers booking Holiday Inns, which then prompts the usual Holiday Inn customers to move “up to the Courtyard” hotels and then the Courtyard customers to “move into the full-service Marriotts.”

“It’s kind of an interesting phenomenon,” he continued. “They are changing the dynamics of this market.”

 

Sternlicht told analysts that he’s seeing the same trend in New York City, and that it’s a long-term trend that will continue. The Marriott Marquis – New York City’s biggest hotel – is a good example of a hotel that has already figured this out and has rolled out the red carpet for Chinese travelers.

 

In an interview Thursday in Washington, D.C., with Hotel Check-In, an executive with a large European tour wholesaler echoed Sternlicht’s comments.

 

Kier Matthews, a vice president of Europe Express, which sells European tours to U.S. travel agents, said:

“What we see in the cities where the Chinese are now traveling a lot in Europe is that (hotel) occupancy is going up – and so are rates. It is forcing everyone to manage their business differently.”

 

At this point, he’s seen the highest number of Chinese travelers in London, Barcelona and Rome and they are frequently booking five-star hotel rooms.

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