Market report: Sofitel in China

19Oct2012

Established in 1964 in Strasbourg, France, Sofitel is now one of the world’s most renown luxury hotels. It conducts business in 40 countries and districts, and has 192 locations. It joined the Accor Group in 1997. Other hotel brands of Accor include: Hotel F1, Suite Novotel, Ibis(宜必思), Mercure(美居), Novotel(诺富特), Sofitel(索菲特), Pullman(铂尔曼), among others.

Sofitel in China: current state

Sofitel hotels provide services such as guest rooms, restaurants, entertainment places, leisure places and business events. Its guest rooms are designed and decorated in a humanistic manner with different themes for different rooms. Currently, there are 22 hotels in China’s big cities such as Beijing(北京), Shanghai(上海), Nanjing(南京), Hefei(合肥), Chengdu(成都), Chongqing(重庆), Ningbo(宁波), and Hangzhou(杭州), etc. .

Sofitel upholds very strict standards when choosing where to open a new hotel. The population of the city must exceed at least 800 thousand and the surrounding areas must be safe and secure. The hotel must be placed near or in the downtown area of the city, close to big malls or landmark buildings, and there needs to be enough space to install a parking lot.

Sofitel in China: new market

Over the past two years, about 1,600 new hotels were opened in China each year, amounting to a total investment of about 400 billion yuan. According to estimates made by industry insiders, a mere 20% of these hotels generate about 80% of these hotels’ total profits. Within this 20% of hotels, 80% are from foreign countries. Sofitel, of course, is one of them.

With the world’s top luxury hotels such as the Riz Calton and Hilton entering the Chinese market, what is Sofitel’s plan? Although it already operates 18 hotels in 14 large cities in China, Sofitel plans to open eight more by 2015. Its combination of French style and its high service standards makes it increasingly welcomed by Chinese consumers, and its reputation is growing.

The luxury hotel market in China is nearly saturated in China’s tier one cities, which poses a challenge for hotel companies. Sofitel plans to open eight new hotels in Sanya(三亚), Haikou(海口), Foshan(佛山), Kunming(昆明), Guiyang(贵阳), Wuxi(无锡), Lianyungang(连云港) and Changsha(长沙), all of which are important second tier cities. By investing in growing less-saturated markets, Sofitel should be able to gain more consumers from both international and domestic market. Tourism is growing in these less popular cities and the amount of customers should only grow in second-tier cities. If Sofitel can continue its success and growth in China, the country has the potential to become one of its major markets.

Daxue Consulting Market Report in China

Sources:

Credit Photo:FFW