Hainan luxury hotel development reaching saturation
The relentless luxury hotel boom on Hainan Island has sparked fears of over-capacity in the so-called ‘Hawaii of China.’
Local tourism authority statistics say Hainan has 65 five-star hotels in operation, with another 40 under construction.
This will soon surpass the number of five-star hotels in China’s top-tier cities such as Beijing and Shanghai.
"With so many identical high-end hotels concentrated in one place, it reflects oversupply and a waste of resources," said Wang Jiansheng, head of the Hainan Tourism Development Research Association.
One hotel manager said Hainan is attractive to global hospitality firms because it can take just three years for a new-build hotel to turn a profit on the island, compared to about 12 years in China’s main cities.
However there is evidence the overheated market is impacting average occupancy rates.
Occupancy rates for high-end hotels in Sanya fell to 60% in 2013, down from over 70% in previous years.
"It’s a structural problem. The island still needs more middle-end hotels, youth hostels and family inns to meet the rising travel demand of middle-income earners," said Xia Feng, a researcher from Hainan-based China Institute for Reform and Development.
Official tourism data reported 36 million visitors to Hainan in 2013, up by 10.6% on the previous year.
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