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21st Century Business Herald reporter Gao Jianghong and intern Chen Shiyu

On August 6, InterContinental Hotels released its 2024 semi-annual performance report.

The company's operating profit was $525 million, up 10% year-on-year. RevPAR (revenue per available room) increased by 3.0% in the first half of the year, with a 3.2% increase in the second quarter, a 1.7% increase in the Americas market, and a 2.6% decrease in Greater China.

In addition to InterContinental Hotels, Marriott International, AccorHotels and Wyndham International have also recently released financial data for the first half of 2024.

Judging from the performance of several well-known international hotel groups, the overall revenue of the international market is considerable, but the competition among Chinese local hotel companies is fierce, which has caused the revenue of international hotels in the Chinese market to encounter a bottleneck.

Regarding the performance of international hotel groups in the Chinese market, Zhao Huanyan, a senior economist in the tourism and hotel industry, said in an interview with a reporter from 21st Century Business Herald: "The Chinese hotel market is oversupplied, and international brands are powerless. With fewer new hotel investments, international hotel groups will also sign fewer new contracts."

China lags behind

According to the 2023 global hotel rankings previously released by the authoritative American hotel industry magazine "HOTELS", Marriott International ranked first again, with more than 8,500 hotels in 141 countries and regions around the world, and a high coverage of the hotel industry; InterContinental Hotels ranked fourth in the world. The financial report showed that the group's performance was strong, with the reporting department's operating profit increasing by 12% and adjusted earnings per share increasing by 12%. It is expected to return more than US$1 billion to shareholders and is confident in the long-term growth momentum.

A comparison shows that Marriott and InterContinental, as the world's leading hotel groups, have achieved considerable revenue growth in the international market, but their profits in the Greater China market have declined.

The semi-annual performance report disclosed by InterContinental Hotels Group shows that the total revenue of the group in the first half of 2024 was US$2.322 billion, a year-on-year increase of 4%. The global market RevPAR (revenue per available room) increased by 3.0%, the European, Middle Eastern and African market RevPAR increased by 7.5% in the second quarter, and the American market RevPAR increased by 3.3%. The Greater China market RevPAR (revenue per available room) decreased by 2.6%, of which the second quarter decreased by 7.0%. The Greater China market was the only market in the world to see a decline in revenue.

Marriott International released its semi-annual report on July 31, showing that the company's operating profit increased year-on-year in the first half of the year, but the company subsequently lowered the rate of profit increase. In the second quarter of this year, Marriott's total revenue was about US$6.439 billion, a year-on-year increase of 5.99%; net profit was about US$772 million, a year-on-year increase of 6.33%; after the downward adjustment, the net profit was about US$716 million, a year-on-year increase of 3.77%.

Looking at all regions around the world, Marriott's hotel RevPAR (revenue per available room) in the second quarter fell by 4.2% year-on-year only in Greater China. Marriott's official website shows that due to the weakness of the Chinese market and travel hesitation before the US election, the full-year revenue growth forecast for available rooms has been lowered. Marriott's RevPAR (revenue per available room) in Greater China fell by 4% year-on-year, which is one of the main reasons for the profit reduction.

Zhao Huanyan told reporters that international hotel groups rely on brands to obtain management fees. The global tourism industry is recovering and the occupancy rate has increased. The supply of hotel rooms in China exceeds the demand, and the increase in the number of room supply is greater than the increase in consumer demand, so the performance of international hotels in Greater China has declined.

According to the financial report data on the official website of AccorHotels International, France, driven by the increase in occupancy rate and price, RevPAR increased by 6% compared with the first half of 2023, the group's total revenue was 2.677 billion euros, and earnings per share increased by 11%. Looking at its business, the revenue per available room for high-end, mid-range and economy hotels has achieved steady growth, and the luxury and lifestyle business has increased by 22%.

However, in the Greater China market, similar to the situation of InterContinental Hotels and Marriott Hotels, AccorHotels' revenue in the Chinese market did not recover as expected. As many Chinese tourists went to Southeast Asian countries for consumption, the company's RevPAR in China also showed negative growth. The semi-annual report released by Wyndham Hotel Group also stated that the overall profit increased in the second quarter, and the net income of the hotel in the first half of the year was US$86 million, an increase of 23% over the same period last year; the net income after the downward adjustment was US$91 million, an increase of 14% over the same period last year. Among them, the company's RevPAR in the Asia-Pacific region fell by 12%, and the occupancy rate fell by 7%. The recovery of the Chinese hotel market was relatively slow.

China's hotel market is highly competitive

On July 30, the official website of the French Accor Group released an interview record of Deputy CEO Jean-Jacques Morin before the opening ceremony of the Olympic Games. AccorHotels Group was positively affected by the Paris Olympics, and the booking volume of French local hotels showed a positive trend. However, there are obvious differences in the markets of different regions. The Chinese market has been strongly promoted by the optimization of cultural and tourism policies this year. All provinces and regions across the country have introduced new measures to promote tourism consumption, and the competition in the domestic hotel market is becoming increasingly fierce.

According to an industry research report released by Shanghai Securities, the average room occupancy rate of star-rated hotels in Shanghai was 66.30% in June 2024, up year-on-year, and has recovered to 98.81% in the same period of 2019. Among them, Jinjiang Hotels and Huazhu Group, as leading companies in the hotel field in the Chinese market, have a good growth momentum.

Faced with the local advantages of the hotel business, foreign hotel industry giants have been impacted to a certain extent. According to an industry research report released by Guolian Securities on July 30, an analysis of Huazhu Group shows that hotels can be divided into domestic and overseas according to their operating areas. At present, the company's core business is still in the country, and overseas hotel revenue accounts for only 20%. In 2023, when there was no interference from the epidemic, the company's self-operated hotel business revenue accounted for 63%, of which the domestic self-operated hotel business revenue accounted for 44%. The attention paid by domestic big brands to the Chinese hotel market has had an impact on international hotels.

There are many hotels to choose from in China, with clear distinctions between economy, mid-range and high-end. In the context of slow recovery in consumption, economy hotels are more popular among consumers. Take Huazhu Group as an example. Its brands such as Hanting Hotel, Four Seasons Hotel and Orange Hotel are deeply rooted in the hearts of the people. Compared with international hotels with more expensive prices, they have more advantages in local customer base.

"China should develop oriental brands such as Shangri-La Hotel and Peninsula Hotel. These brands are more in line with the cultural traditions of oriental peoples," Zhao Huanyan believes.

Moreover, Chinese local hotels have various ways of playing. Some business hotels are also actively dispatching marketing. For example, during the peak season, the stores use the three-step measures of price pre-embedding, traffic monitoring, and supporting support to increase room reservations; during the off-season, they attract customers by maintaining old customers and exploring new customers. In terms of exploring new customers, they attract new traffic by ensuring full-channel connection with consumers, actively responding to online customers, and participating in cloud ladder activities, thereby improving sales quality and promoting performance.

In the selection of HOTELS, an authoritative American hotel industry magazine, a total of 19 Chinese hotel groups ranked in the top 50 of the world's top 221 list this year, with well-known hotel groups such as Jinjiang International Group, Huazhu Group and BTG Home Inns among the top.

With the increasing diversification of consumer demand, my country's local hotel groups pay more attention to the development of characteristics and personalization. Excellent brands continue to emerge in sub-sectors such as parent-child hotels, resort hotels, and homestays. Homestays are also popular with consumers in China's domestic tourism market. According to Qichacha data, in the first half of 2024, my country has registered 51,000 homestay-related companies, an increase of 24.6% year-on-year, and the annual registration volume is expected to set a new record. In terms of corporate stock, there are 287,000 homestay-related companies in my country. The market "cake" is limited, which has increased the competitive pressure on international hotels in the Chinese market. In this regard, Zhao Huanyan said that in recent years, international hotel groups have been taking measures to strive to increase profitability in the Chinese market, and their brand opportunities should be located in other sinking markets.