Corporate Q&A

Lap of luxury

“Domestic tourism’s going to take off like crazy”

Lap of luxury

Ho Kwon Ping: luxury hotelier

Banyan Tree, the internationally famous luxury hotel group, has one of the most expansive plans for China’s burgeoning tourism sector. Its founder and executive chairman, Ho Kwon Ping talked to WiC:

What are the key tourism trends you see in China?

From my perspective I have seen a fundamental shift in the Chinese government’s thinking about the importance of tourism. I believe this is as a result of the Sichuan earthquake and the global recession. The government has now recognised that rural tourism is a huge source of economic stimulus. Every dollar invested in a rural resort – such as the one we opened in Lijiang – has huge spin-offs in the local communities. The hotels buy food from local farmers. Tourists spend on taxis, on gifts and so forth.

The government didn’t realise this before and was more focused on export-oriented industries. It now wants to encourage local Chinese to travel more, and stimulate domestic consumption.

So that’s a big opportunity?

At the moment you can go to beautiful places in China like Guilin, Huangshan and Jiu Zhiagou, and they only have two star hotels. There is a big pent-up demand to see these beautiful locations. The government’s eyes were opened by Banyan Tree Lijiang, because they saw for the first time that we could get Chinese nationals to pay $450 a night to stay at a resort in rural China. We are basically replicating that model in other parts of China. We have raised a fund to finance this expansion.

So how many Banyan Tree projects are slated for China?

We have three – Lijiang, Ringgha, and Sanya. Hangzhou is opening this year. Through the fund we will build and own eight additional projects in places such as Lhasa, Guilin, Huangshan and Jiu Zhiagou.

Your Sanya resort in Hainan is very much modelled on the original Banyan Tree in Phuket. Why would the Chinese choose to go to that resort rather than Phuket?

Hainan is not necessarily superior to Phuket or Bali, but it is easy for Chinese to get to: both in terms of travel restrictions, and distance, and also the cultural familiarity. The convenience factor is a big reason why Hainan has taken off. But Hainan is a one-off. It is the only tropical beach resort in China. My broader strategic interest – which our China fund is geared towards – is the fact that China has thousands of well known places. Just take the mountains, or the ancient cities like Pingyao. The potential for domestic tourism is huge.

I look at what happened in America when Eisenhower built the highway system, and in Japan when high speed trains were developed. China is currently doing both, and over the next 10 or 15 years, you are going to see domestic tourism take off like crazy – just as you saw with the US in the 1950s and Japan in the 1970s. Take Hangzhou: it used to be four hours from Shanghai; with the new high speed train it is 50 minutes. The whole country is being linked together.

Any other trends?

There are many affluent Chinese who want to see more of the world. But we have found they are scared to travel – culturally they feel a bit awkward. This is one reason why we created Banyan Tree Private Collection. It is an assembly of beautiful properties from all over the world – and offers the luxury of a second home without the hassle. It is really taking off in China. The Collection’s Chinese members have visited our local resorts, such as Sanya, and love what they see and trust our brand. Membership allows them to be taken to beautiful, authentic villas – such as in Tuscany – in a cocooned way, so that they feel culturally safe.

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