Carlson goes mid-market in China, India
HONG KONG – Carlson Hotels, the US group that operates the Regent and Radisson chains, plans to shift its focus in China and India towards developing mid-market hotels in second-and third-tier cities.
Martin Rinck, Asia-Pacific president, told the Financial Times that Carlson would add about 30 hotels in China and another 30 in India during the next three to four years under its Park Inn and Country Inn mid-market brands.
The privately held group currently operates nine such hotels in India and none in China.
Part of the funding will come from a partnership with?Lotus Investment Fund, a London-based investor.
Lotus is raising $1bn for an Asia-focused hotel investment fund that will be leveraged to reach $3bn in size.
A third of the funds will be committed to Carlson. “We are assuming we will have 20 to 25 hotels with them,” Rinck told the Financial Times.
The mid-market sector would become the focus of the company in the two countries, said Rinck. “For Park Inn and Country Inn, it is important to roll out and penetrate the market quickly.”
Carlson is banking on increased domestic travel to drive demand for hotels in fast-developing but internationally less well-known cities such as Shenzhen and Zhengzhou in China and Amritsar and Baddi in India.
Rinck insisted that the group was not shifting its focus because land prices in big cities were too high or because the luxury hotel sector had become too competitive.
“In China, for example, we saw occupancy remaining at 70 to 80 percent despite double-digit rate increases in recent years,” he said.
Mid-range hotels would provide better profit margins as each hotel required less individual and personalised elements, he added.
Nicholas Cho, a Beijing-based director for DTZ, the property advisory firm, told the Financial Times there was a lack of supply of mid-range hotels in China. “Most hotel developers either want to go very high end or very low.
“The demand is there,” said Cho. “The question is: are there developers wanting to link themselves to a mid-range brand name? The financials start to look less attractive if you have to build it yourself.”
Ian Jarrett
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