American Marketer


Hotel brands rush to harness China’s travel boom: L2

October 9, 2014

St. Regis Beijing St. Regis Beijing


Hotel brands are trying to fill the awareness vacuum in China as many travelers consider international and domestic travel for the first time, according to a new report by L2.

Many Chinese consumers depend on digital resources for travel guidance, making it imperative for brands to increase visibility on social media, search engines and online travel agencies. Indeed, six out of 10 Chinese consumers regularly consult OTAs for travel advice, according to BCG, essentially making these sites gatekeepers of commerce.

"The Chinese travel and tourism market is very dynamic and the consumers fueling its growth have few loyalties to hotel brands," said Eleanor Powers, lead researcher of L2's report, New York. "Prestige hotel brands which have been in the Chinese market for the longest, like Sheraton Hotels and Resorts, which has been in China since 1985, and Hilton Hotels and Resorts, which has been in China since 1988, have had the most consumer exposure and experience to leverage in building loyalty.

"They are also doing well using multiple digital touch points to reach the consumer with both having invested in Chinese language sites, mobile sites and apps and social media," she said.

"Hilton Worldwide is also using this experience in Huanying, or 'Welcome' program to help drive its business with outbound Chinese tourists by providing a range of culturally-specific amenities.

"The impact of these efforts can be seen in the high rankings which Sheraton Hotels and Resorts and Hilton Hotels and Resorts receive on the Baidu Index. Hilton as well is doing well in terms of reviews on Ctrip, another indicator of the consumer's high regard."

L2's "Prestige Hotels: China Insights Report" assesses the digital competence of 66 "luxury," "upper upscale" and "upscale" hotels in China.

Bigger pie
China is now the fastest growing travel market. The country sends out more outbound tourists than the United States, according to ATKearney, and will have the largest domestic travel market by 2030, BCG projects.

For many brands, however, setting up shop in China is like starting with a blank slate. Many consumers are unaware of or do not have affinities with international brands.


The Peninsula Hotel Hong Kong

Consequently, brands have to improve their digital performances to build up recognition and loyalty. A strong digital presence will influence both domestic and international travelers.

A third of the brands studied by L2 have no Chinese Web site and 18 percent have no digital presence in China at all.

However, the majority of brands are investing heavily in a Chinese Web sites, mobile sites and and social platform.

The report delves into brand Web sites, mobile sites, mobile apps, social media, search and OTAs and metasearch to provide brands with a comprehensive view of the country's digital landscape.


Video still from The Ritz-Carlton's Web site redesign last year

"The Chinese tourist is reliant upon multiple digital resources, so it is hard to choose one as being the most important," Ms. Powers said. "The recent surge in the use of mobile devices for travel, however, makes investments in mobile sites with rich travel-related features especially important.

"Chinese consumers are accessing the Internet more now through mobile devices than through the desktop," she said. "Qunar has reported that over half of its hotel bookings are on mobile devices, Ctrip over 40 percent.

"At this stage, a third of Index brand Chinese sites are not mobile optimized."

Global outlook

Luxury hotel brands are ramping up mobile investments to regain sales lost to online travel agencies, according to an associated L2 report.

According to Business Insider, OTAs account for 64 percent of mobile hotel bookings, and are poised to maintain their advantage (see story).

Hotel brands are increasingly squeezed by the metasearch dominance of online travel agencies and Google, according to another related report by L2.

The Metasearch Insight Report argues that hotel brands must invest heavily in the big metasearch players, TripAdvisor, Kayak and Google, in order to stay relevant (see story).

With all six of its indexed brands netting top 10 rankings in L2′s primary prestige hotels report, Starwood Hotels and Resorts demonstrates that portfolios can evenly employ digital innovations across brands.

The report depicts the increasingly complex digital landscape that hotel brands must navigate and argues that digital proficiency is a major differentiating factor (see story).

Final Take
Joe McCarthy, staff writer on Luxury Daily, New York