The global hotel chain aims to attract new customers with services that cater to Chinese tastes.
One of the world’s largest hotel companies, Hilton Worldwide operates more than 3,700 hotels around the globe. The company’s flagship brand, Hilton Hotels & Resorts, has more than 540 properties in 78 countries across six continents. In addition to Hilton Hotels & Resorts, Hilton Worldwide operates Waldorf Astoria, Conrad Hotels & Resorts, and DoubleTree by Hilton properties in China.
With China’s tourism market—for domestic and international travel—expected to grow to triple the size of Japan’s by 2020, hotel companies such as Hilton are tailoring their services to Chinese travelers. This year, Hilton launched the Hilton Huanying (“Welcome”) program to address the unique needs of Chinese travelers abroad. The program operates in 61 of Hilton Worldwide’s properties, 48 of which are in the Hilton Hotels & Resorts portfolio.
Dave Horton, global head of Hilton Hotels & Resorts, recently discussed China’s hotel and travel market with CBR Editor Christina Nelson. Horton oversees all aspects of Hilton Hotels & Resorts, including product development, marketing, guest experience, and global development strategies.
When and where did Hilton enter China? How many hotels does Hilton have in China and in which cities?
Hilton Worldwide first entered China in 1988 with the opening of Hilton Shanghai. Today, Hilton Worldwide has 27 hotels operating in China and 85 hotels in its pipeline. The company plans to have 100 properties in China within five years. Our brand, Hilton Hotels & Resorts, has 15 properties open today in China in Beijing; Chongqing; Dalian, Liaoning; Guangzhou, Guangdong; Hefei, Anhui; Nanjing, Jiangsu; Qiandao Lake, Zhejiang; Sanya, Hainan; Shanghai; and Xi’an, Shaanxi.
How would you characterize Hilton Hotels & Resorts properties in China? For example, are they business or luxury hotels?
The Hilton Hotels & Resorts portfolio in China contains a mix of hotels and resorts catering to business and leisure travelers alike. For example, Hilton Shanghai, our first hotel in China, is located in the heart of Shanghai’s business district and caters to business travelers by offering 18 meeting rooms, a premium executive lounge, and incredible restaurants. Though a hotel may cater heavily to business travelers, our hotels in the region also offer much of what local leisure travelers and tourists from around the world look for when choosing a hotel. Hilton Guangzhou Tianhe, one of two hotels we opened in Guangzhou this August, has everything a business traveler would need, but is also opening our first “eforea: spa at Hilton” in China in January 2012. Through our spa offerings, restaurants, bars, event space, and amenities, we help travelers find the right balance between business and leisure.
Our resort properties in China cater more to the leisure traveler, but they also offer outstanding business amenities. Earlier this year we opened Hilton Hangzhou Qiandao Lake Resort, which is set on the shore of Zhejiang’s breathtaking Qiandao Lake. In addition to the signature amenities at other hotels in China, this resort offers extensive leisure amenities such as four pools, a beach volleyball court, and several restaurants. Many of the guest rooms have a balcony to showcase the lake or mountain views. The resort is located in a popular destination for weekend leisure travelers, but it also has several function rooms and a grand ballroom for meetings and events.
What is the brand’s ownership structure in China?
All of our hotels in China are managed by Hilton Worldwide. Our hotels in China are wholly owned by investors other than Hilton, the majority of which are China-based.
What are the top challenges Hilton has faced while opening and operating hotels in China? What has the company done to overcome these challenges?
Today, a key challenge for our brand is the rapid pace of expansion. The rapid expansion means we must hire and train more employees and ensure standards throughout more hotels. We focus on our culture and training programs so that our team members, many of whom may be new to our brand and even our industry, can deliver the hospitality guests expect from us. We ensure that our brand standards are solidly in place at every hotel so that we deliver a consistent experience. These standard brand elements refer to the overall experience for our guests, including the check-in process, overall design, in-room amenities, culinary offerings and service, among other items. These elements are important because many local customers may be staying with us for the first time and this can be an opportunity to educate travelers in China about what we stand for.
What changes did Hilton make to adapt its hotels to the China market? How has the brand’s China strategy changed over time?
We believe in providing a consistent set of standards around the world and experiences that are locally relevant. Guest room design, services, and amenities in China follow our brand standards. At the same time, embracing local culture has helped our properties in China evolve over time.
For example, we have focused great energy and passion on food and beverage at our China and Asia properties. Our customers in China expect great food and beverage offerings from us, and we saw a need for multiple dining options. Our work in China is driving innovation that benefits hotels across our portfolio. As a global brand we benefit from being able to learn from each of our regions. We use recipes for traditional Chinese breakfast items from chefs in our China hotels, as well as in hotels across the globe as part of our Hilton Huanying program. Our restaurant concepts team is able to pull elements from restaurants serving traditional Chinese fare at our hotels in China to create authentic experiences for our guests in other parts of the world. Many interior and exterior design elements at our hotels in China are shaping our approach to design and construction around the world.
How does the brand’s China strategy differ from its strategies in other countries (for example, in the United States or Japan)?
In each region of the world we adapt to cultural norms and nuances, but we hold true to our standards and best practices that benefit our owners, team members, and guests. This impacts our approach to every aspect of our business—from the ways we train and engage our team members to our customer marketing campaigns and service delivery. Our strategic perspective is that a brand is a promise consistently delivered. Equally important, we strive to be culturally relevant. Cultural differences largely come to life in food and beverage and leisure amenities, such as spa offerings. For example, our eforea: spa at Hilton treatment menus are designed so that each hotel offers core elements that our guests expect, but the menus also give our owners in China flexibility to add treatments specific to their local market. Hilton Guangzhou Tianhe will feature spa treatments such as a foot massage and a variety of full-body massages inspired by traditional Chinese aromatherapy oils.
As a global brand with hotels in 78 countries, we invest a great deal of time and research into understanding the needs and expectations of travelers today, and we are prepared to meet these needs as they evolve over time. Research tells us that travelers have a great deal of trust for Hilton, particularly when traveling abroad. Because traveling abroad is a new experience for many of our guests from mainland China, our brand gives them confidence that the hotel experience will meet their needs so that they can focus on exploring a new destination.
From our more than two decades of experience operating in mainland China, we see two trends that differentiate the Chinese traveler. These trends are similar to the trends we have historically experienced with other rapidly expanding customer segments. First, we must provide our guests with familiar comforts, and make it a point to have team members fluent in Mandarin on staff at our hotels outside China. The recent global launch of the Hilton Huanying program is helping us achieve this goal.
Second, we recognize that most travelers from China are booking through government-approved travel agents and tour operators, rather than booking directly with a hotel or online. This affects how we communicate with our customers when they are considering lodging options. With more than 20 years of experience serving the China market, we have developed longstanding relationships with government travel agencies and tour operators. Hilton Worldwide opened its first international sales offices in Beijing and Shanghai in 2005, so we have teams in the market who really understand the travelers and communicate regularly with government travel agencies and tour operators. With Hilton Huanying, for example, we invited many of the tour operators to participate in the global launch events in San Francisco, Beijing, and Shanghai.
Our brand also has an aggressive marketing campaign in China, offers a Chinese version of our consumer site (www.hilton.com.cn) and recently launched a Chinese version of our global press site (www.hiltonglobalmediacenter.com.cn) as a resource for Chinese media.
Please tell us more about the Hilton Huanying service launched in 2011.
Hilton Huanying is a consistent set of amenity and service standards at Hilton properties around the world that meet the Chinese traveler’s unique needs and expectations when traveling abroad. All of the 10 hotel brands within the Hilton Worldwide portfolio can choose to participate in the program. Currently 61 hotels are enrolled in Hilton Huanying. China has emerged as a key source market for us and we are expanding at a record pace. We also recognize the opportunity to build brand loyalty. As more Chinese guests stay with us in mainland China, we want them to choose Hilton when traveling abroad.
Huanying is the Chinese word for “welcome” and the program offers amenities and services that extend an authentic welcome to Chinese travelers. Guests are greeted at the front desk by a Chinese-speaking team member, the guest rooms are outfitted with amenities such as tea kettles and slippers, and breakfast includes traditional Chinese items such as dim sum, congee, hard-boiled eggs, fried rice, fried noodles, and dough fritters.
We were inspired to create Hilton Huanying because of our core brand promise, which is to ensure every guest feels cared for, valued, and respected.
Please describe the typical Hilton customer in China. What types of travelers do you hope to attract to Hilton hotels in China?
We attract both inbound and local guests at our hotels—whether they are traveling for business or leisure. The various Hilton Worldwide brands and hotels within China give our company the ability to attract travelers across multiple segments such as business travelers, families, and leisure guests. Chinese travelers visiting regions outside of China are most likely to be young to middle aged, relatively wealthy, middle class, urban with higher than average education, and from major cities or coastal provinces. For Hilton Hotels & Resorts specifically, we have a number of active initiatives focused on sharing our story with travelers across China.
In addition, much of our business may come from locals who are not staying with us. We are a destination for people in China to find a rejuvenating spa, enjoy fine dining, and host an event.
Hilton Huanying is a key program for us because it provides familiar services and amenities to any of our Chinese guests—whether they are traveling from Beijing, London, or San Francisco. As outbound tourism from China increases, this program puts us in a position to best serve the needs of these travelers.
What trends do you currently see with domestic and international Chinese travelers?
In October 2011 we issued a Hilton Blue Paper study about Chinese travelers, which was written by Kevin Latham, senior lecturer in social anthropology at the School of Oriental and African Studies at the University of London. The report indicated that we may soon see a shift from Chinese travelers booking group tours to traveling abroad independently. The report shows China is now the largest outbound tourist source-country in Asia. This growth is expected to continue as China’s middle class expands and relaxed visa procedures make foreign travel more accessible. Within China, we see a need for brands like ours to expand into new markets such as Nanjing, Xi’an, and others to accommodate local tourism needs.
How has the travel and hotel market in China changed since Hilton entered China?
The greatest change is the rise in outbound tourism from China. This growth has a direct impact on the industry within China because more guests are experiencing hotels and brands in other parts of the world. The total number of Chinese outbound tourists reached roughly 57.4 million in 2010, an increase of more than 20 percent over 2009. The numbers were predicted to rise to 65 million in 2011.
International hotel brands may have once heavily relied on international visitors to China. Today we are building brand loyalty within the China market as more Chinese travelers experience our hotels.
What are the brand’s plans for future expansion in China?
China is one of our most important source markets today, and we are expanding at a record pace in mainland China. We see noticeable growth not only in the number of outbound travelers from China, but also the number of travelers of Chinese origin living in other parts of the world.
Hilton Hotels & Resorts has the largest development pipeline in the brand’s history with more than 45 new properties in development in China. Currently, 11 of these hotels are set to open by the end of 2012. Hilton Worldwide will expand its presence in China to more than 100 hotels during the next five years. This will add roughly 25,000 rooms in more than 35 cities—many of which are provincial capitals or second or lower-tier cities.
What are your predictions for China’s hospitality market in the future?
China has emerged as the world’s fastest-growing economy, and independent reports show the growth in Chinese tourism can be expected to continue. The online travel booking environment continues to grow in importance. More travelers are searching for information about hotels and destinations on their own and turning to social media and travel review sites to inform their booking decisions. Our portfolio of hotels is expanding to new markets across China—such as Guangzhou and Nanjing—as travelers within China and those visiting China from abroad are moving beyond Beijing and Shanghai and exploring other regions of the country. We also see increased interest in leisure travel and are opening several resort properties to meet this demand.