China to See Hotel Boom Under 12th Five-Year Plan

China will more than double the number of hotel rooms to 6.1 million by 2025, according to a report by InterContinental Hotels Group (IHG) based on data from China’s National Statistics Bureau and the UN World Travel Organization. That number would be about equal to the number expected to be in the US by that time.

By 2039 China will have 9.1 million hotel rooms, four times the current number. The boom is supported by the State Council’s 2009 inclusion of tourism as a pillar industry for the 12th Five-Year Plan (2011-2015). Tourism is expected to contribute 4.5% percent to China’s gross domestic product by 2015, with 12% annual revenue growth.

China is projected to surpass Japan as the world’s second largest tourist market by 2013, with an 8% share of the global tourism market, according to a report by the Boston Consulting Group.

Another factor behind China’s hotel boom is the rapid emergence of a large upper-middle class. In less than 15 years the total number of China’s wealthy and upper-middle class will be twice the number of the US’s, according to McKinsey Insights China and US Census Bureau data.

“Many of China’s biggest cities already have as many wealthy consumers as major US ones,” said Keith Barr, CEO of IHG Greater China. “This is leading to a dramatically increasing demand for leisure travel. Affluent consumers are increasingly willing to spend on luxury experiences and not just on luxury goods.”

IHG, which currently manages 154 properties in China, has 142 in the development pipeline, the largest in China and a quarter of the company’s total globally. It’s joined by other major international hotel chains planning to open new hotels in second- and third-tier cities as well as the top-tier cities.

Hilton Worldwide plans to have 100 hotels in China by 2014, four times the current number. China will then be its number two market behind the US. Starwood Hotels and Resorts, which has 70 hotels in China, has 90 new hotels in development.