BEIJING: With less than 500 days to go before the 2008 Beijing Olympics, Standard & Poor’s Equity Research has identified the international hotel groups that it expects will take home the gold medals.
Beijing is expected to receive about 500,000 to 550,000 overseas visitors as it hosts the summer Olympics, according to chinadaily.com.
And that raises a question for investors: Are there attractive growth opportunities for hotel companies in China?
S&P’s Pearl Wang, writing in US Business Week, says yes.
China has the largest development pipeline for hotels in the world after the U.S. China’s room count is 63 per cent of all the rooms in the Asian pipeline, according to Lodging Econometrics.
Wang notes, “Today in China there are about 5,000 hotels with star ratings, holding about 701,700 available rooms. In comparison, the U.S. has about 50,000 hotels.
“This suggests to S&P that the market in China appears to have a lot of room for growth. How much? It’s hard to say. By way of comparison, the U.S. hotel industry has annual revenues of about $90 billion.”
S&P believes one good investment opportunity lies with InterContinental.
“InterContinental is among the three largest hotel companies in China,” says S&P equity analyst William Mack. He points out that the company has more than 55 hotels in China, most of which are managed or franchised. InterContinental plans to have about 125 hotels by 2008; many will likely be Holiday Inns.
“The company is expanding its China brand presence—in terms of number of rooms—by about 20 per cent a year,” says Mack, with about 30 new contract signings in 2006.
Other good stock picks identified by S&P because of their growing presence in China are Hilton Hotels, Marriott International, and Starwood Hotels & Resorts
Other U.S industry players making strides in China are Best Western, which will have around 25 hotels by the end of this year, and Wyndham.
