With more than 225,000 hotels in its database, Cologne-based Hotel Reservation Service (HRS) is one of Europe’s leading hotel reservation portals. HRS arrived in China in 2001 and has since built a roster of more than 6,000 hotels at which rooms can be booked via the HRS website. CHINA ECONOMIC REVIEW spoke with Stanley Wang, managing director of HRS, about China’s oversupply of luxury hotels and other challenges facing the market.
Q: How has HRS’s China operation changed since it arrived in 2001?
A: During the past seven years, we have been working mostly as a contact point or liaison for our head office in Germany so it can communicate with our hotel partners in China and other Asian countries. It was never in our plan to aggressively develop the local market until mid-2007. As our local hotel resources increased, those customers who usually book overseas hotels with us have also started to book local hotels.
Q: Overall, how do most people traveling to China book hotel rooms?
A: You find fewer and fewer group tours from Europe or the US coming into China now, particularly among young people. Unlike Chinese customers, people in Europe and the US are comfortable with online reservation. Today, 55% of internet users in US and 48% in Europe use online reservation portals to book their hotels and plan their trips. In China it is less than 5%. Obviously these figures are only expected to increase.
Q: What trends have you seen among business travelers coming to China?
A: More and more business travelers go online on their own, without assistance from secretaries, travel managers or agencies. Most business travelers only choose three- or four-star accommodation due to company policy. Price is never really a consideration as long as it is within their company budget allowance.
Q: What challenges is China’s hotel industry facing?
A: Sooner or later, the oversupply of four- and five-star hotels will have a serious impact on the hotel business. According to HRS’s statistics, over 75% of bookers want value-for-money accommodation – comfortable, clean, well-located, and with reputable management. These demands can be fulfilled by most three-and-a-half and four-star hotels in China. The lack of personality is another challenge for the industry. Everyone is opening the same type of hotel. It does not really matter what brand it is, you will always find similar designs, similar levels of service and similar products. Hoteliers today find it extremely difficult to position and market their product.
Q: What are the main issues facing China’s hotel-booking infrastructure?
A: Many local hotels are not ready for e-business. They are more comfortable with faxes and telephone calls, and so they refuse to accept and use new technologies. An electronic booking system for pricing and inventory control to manage your channels does not get a particularly warm welcome from many local players especially in the second- and third-tier destinations.
Q: What are your expectations for Chinese hotel-booking websites?
A: Most travel portals in China operate an “online searching and offline trading” model. But the overall trend is online, for sure. It is difficult to imagine in five years’ time how they will be able to afford a continuously increasing workforce. We don’t waste our time on offline business. In a way, this is probably too early or advanced for the China market, but it is the future.