In Bed With China's Traveling Rich
Russell Flannery, 01.11.06, 6:00 AM ET
(Blurbs)
Starwood Hotels & Resorts Worldwide, owner of the Westin and other luxury hotel chains, expects business in China to boom in the next few years as the country’s economic growth spurs spending by well-heeled travelers.
The number of hotels that the company manages will grow by two-thirds, to 40, by the end of 2007, compared with 24 at the end of last year, says Robert Hogenstijn, the company’s China operations manager. And that's not the end of it. Starwood (nyse: HOT - news - people ) has signed contracts for another eight hotels that will open in 2008.
"You can imagine that we have 430 properties in North America, and in a country the size of China, we only have 24 at the moment. So there is some upside there," Hogenstijn says. "You don’t want to even start to think about what is possible."
Starwood has mainland China, Hong Kong, Macau and Taiwan in its China operation. "It’s a booming market," Hogenstijn says. "Our operating hotels are doing very well."
Growth in demand for luxury hotels “is really in line with the economic growth all across the country,” Hogenstijn says. The Summer Olympics in Beijing, in 2008, and the World Expo in Shanghai, in 2010, will stimulate hotel business in those two metropolises. Spreading growth in newer hubs is paving the way for expansion into other cities. This year alone, Starwood will open Sheraton hotels in seven mainland Chinese cities: Xiamen, Guiyang, Changsha, Chongqing, Shanghai, Shenzhen and Urumuqi. It will also add one in Ilan on Taiwan that will be a hot springs resort.
Hotels aren’t the only ones that are getting in on China’s travel boom. Shares in Ctrip (nasdaq: CTRP - news - people ), a Shanghai-based and Nasdaq-listed travel-services company, has gained about two-thirds in the past year amid fast earnings growth.
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