Content area
Full text
The hotel industry in China is currently going through fundamental reform in ownership structure and development. A SWOT (strengths, weaknesses, opportunities, and threats) analysis as reforms go forward reveals development opportunities as well as vulnerabilities to internal organizational and external environmental changes. Notable strengths include a growing market and the government's push to upgrade all hotel standards. Weaknesses include an overleveraged industry that has long been operated inefficiently by government entities. New and reinvigorate operators have great opportunities in this situation, as do those who offer ancillary services and management education. The greatest foreseeable threat is an economic slowdown or other event that interferes with tourist growth. With the 2008 Olympiad to be held in Beijing and a World Expo slated for Shanghai in 2010, such a downturn would most likely be temporary-meaning that the Chinese hotel industry has excellent prospects overall.
Keywords: hotel reform; ownership transfer; financial performance; SWOT analysis
China's dynamic economic growth has attracted business and investment interests from around the world over the past decade. Corporate demand for travel and lodging services will increase as additional international corporations establish operations in China. Increasing corporate demand will put great pressure on four- and five-star hotels to maintain international service standards. In addition, China's long history and diverse tourism resources will attract both international and domestic leisure tourists to visit different parts of China, creating demand for different types of hotel products and services. The 2008 Beijing Olympics and the 2010 World Exposition in Shanghai will drive and sustain tourism and hotel development in this decade.
Since China's accession to the World Trade Organization (WTO) on December 11, 2001, China has been gradually opening its hotel market to international development and competition.' By December 2005, China will completely open its market to international investors for hotel, restaurant, and other mixed-used real estate development projects.2 Intensified competition from international developers and operators will pose great challenges to domestic hotel operations, of which 57 percent are owned by various government entities. The performance of many domestic hotels lags behind that of internationally managed operations due to management inefficiency, a lack of corporate governance, and inferior service quality.3 To prepare domestic hotels-particularly state-owned hotels-for global competition, the Chinese government has initiated fundamental reforms in...