Main Photo: JW Marriott Hotel Zheljiang Anji
Date: January 2019
Who: Marriott and Hilton
What did they do: Marriott fell as much as 5.1 percent, and Hilton slipped as much as 5.2 percent. They were down 3.5 percent and 3.2 percent, respectively, at 11:57 a.m. New York time, January 3rd 2019, compared with a 2 percent drop in the Bloomberg Americas Lodging Index. Hyatt Hotels Corp. fell 2.5 percent.
Marriott International Inc. and Hilton Worldwide Holdings Co. led hotel stocks lower after Apple Inc. reported slowing sales in China — giving investors cause to worry about an important source of the travel industry’s future growth.
What do they say: While China accounts for a relatively small share of global lodging companies’ current revenue, it’s an important development market, as the hospitality industry rushes to open hotels for foreign business travellers and the country’s emerging middle class.
Hilton, celebrating it’s 100th year in 2019, is opening one new Hilton each week in China – one third of all developments in hotels in China is under a Hilton brand. Right now of their 6,000 hotels globally, only 150 are in China.
Marriott currently has 326 hotels in China.
“We expect Apple’s guidance reduction yesterday to serve as another sentiment headwind for the brands, despite the stocks already having under-performed in 2018 on fears of slowing macroeconomic growth,” Michael Bellisario, an analyst at Robert W. Baird & Co., wrote in a note to clients.
“While the brands’ current exposure is relatively low, China remains a meaningful portion of the brands’ development pipelines, which could dampen their longer-term growth outlooks.”
As the CEO of Booking Holdings (BKNG), the world’s largest online travel company, Glenn Fogel has the stats on all that. The Norwalk, Connecticut based company makes reservations for millions of its customers at hotels, airlines, homes, apartments, rental cars, and restaurants in more than 220 countries.
It owns Kayak, rentalcars.com, OpenTable, priceline.com, booking.com and agoda.com. All that business adds up to revenues of $12.7 billion and a ranking on the Fortune 500 list of the biggest companies in America.
If you want to know how the U.S. economy will do this year, Glenn Fogel says just go to the airport and look around.
“We see people are traveling. We see the planes are filled. We see that the hotels are filled. We see people pretty happy about going out and getting travel,” he says.
What worries him? “Trade war talk doesn’t help anyone,” he says, referring to big U.S. tariffs on Chinese goods and tough trade talk between the two countries.
Booking has a lot at stake in China where it has a more than a thousand employees working at a dozen companies owned by Booking.
Booking also has significant investments in C-Trip, China’s largest online travel agency, and Didi, the country’s popular taxi-hailing service.
For now, Fogel is hopeful that the U.S. and China will reach a trade agreement. “I believe that in the long run it’s in the interest of everybody to help promote more travel, not less travel,” he says. “So I’m not so concerned about it yet.”
Back in September 2018, Hotel Management reported that the U.S. accounts for 41 percent of hotels in the total global construction pipeline while China accounts for 20 percent, resulting in 61 percent of hotels in the global pipeline being concentrated in just these two countries.
Distantly following are Indonesia with 394 hotels and 66,759 rooms, Germany with 247 hotels and 47,155 rooms, and the United Kingdom with 247 hotels and 36,487 rooms.
and from June 2018: China’s total construction pipeline currently has 2,481 hotel projects with 546,424 guestrooms, up 2 percent year-over-year, according to a report from Lodging Econometrics.
There are 1,725 hotel projects with 368,927 guestrooms under construction, up less than 1 percent by projects YOY. However, the country’s total number of hotel projects scheduled to begin construction within the next 12 months jumped 27 percent by project YOY with 410 hotel projects and 86,995 guestrooms.
Meanwhile, there are 346 projects with 90,502 guestrooms the early planning stage, down 13 percent from last year’s numbers.
Shanghai is the city with the largest hotel pipeline in China with 129 projects and 25,750 guestrooms. Guangzhou ranked second with 106 hotel projects and 25,481 guestrooms.
Chengdu has the third largest pipeline with 89 hotel projects and 19,723 guestrooms. Hangzhou follows Chengdu with 77 hotel projects and 17,255 guestrooms. Suzhou has 75 hotel projects with 14,713 guestrooms while the capital of Beijing has 68 hotel projects with 11,551 guestrooms in the pipeline for the country.
The top hotel company in China’s construction pipeline by project count is Hilton with 347 projects and 80,532 guestrooms. InterContinental Hotels Group follows with 296 hotel projects and 71,191 guestrooms. Marriott International has the third largest construction pipeline in the country with 283 hotel projects and 79,018 guestrooms while AccorHotels Group has 141 hotel projects and 26,756 guestrooms.
Hilton’s Hampton Inn & Suites is the brand with the largest construction pipeline in China with 164 hotel projects and 25,503 guestrooms. IHG’s Holiday Inn Express has the second largest construction pipeline there with 131 projects and 25,194 guestrooms.
Marriott’s full-service hotel follows with 63 projects and 19,361 guestrooms. Accor’s Ibis ranks last with 47 hotel projects and 5,041 guestrooms in the country’s pipeline.
THPT Comment: Trump fuelled trade wars with the US and China are showing some impact on US/Global hotel companies.
First Seen: Fortune.com
The Hotel Property Team (THPT) are a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.