Late last month, reports surfaced that Dalian Wanda Group, a Chinese property conglomerate, intends to spend over $1 billion on a luxury hotel and development project in London. The group's chairman, Wang Jianlin, also told the media that Wanda plans to announce details on a luxury hotel project in New York City later this year, with Wanda-branded luxury hotels expected to debut in as many as 10 world cities over the coming decade.
Outside of China, Wanda is probably best known as the company which spent $2.6 billion buying out US-based cinema chain operators AMC Entertainment. Since this headline making acquisition, the company appears to have been busy trying to expand its portfolio of global holdings. The company reportedly signed a letter of intent in early June with China Oceanwide Holdings Group and North Caucasus Resorts to spend up to $3 billion on tourism and commercial facilities in Russia. Wang also confirmed last month that his company would purchase Bristish luxury yacht maker Sunseeker for 320 million pounds ($489 million).
Wanda is certainly not the only Chinese company pursuing lofty global expansion plans, but it remains to be seen whether the trail it is blazing into the luxury hotel market is one that its peers will follow.
News of Wanda's planned hotel in London comes as many global hotel operators scramble to attract newly affluent Chinese travelers. Wanda's history of success in its home market, as well as its familiarity with China's media and marketing landscape, will obviously give it an edge when it comes to connecting with local tourists. Yet, the learning curb is narrowing - several leading hotels outside of China now have presences on the Chinese Internet, accept UnionPay bank cards, employ Putonghua-speaking staff and even offer congee on their breakfast menus.
Several reports on Wanda's hotel plans made much of the fact that Chinese overseas travelers lead the world in outbound tourism spending last year - Chinese nationals shelled out a combined $102 billion overseas in 2012. But these spending habits have just as much to do with deficiencies in the Chinese market as rising levels of prosperity - product quality and safety concerns, high tariffs on imported goods and limited product availability have all, at various times, been attributed to the country's passion for shopping abroad.
But industry data also suggests that this willingness to spend does not extend to accommodations - a 2011 survey by the hotel booking platform hotels.com found that Chinese travelers ranked sixth in terms of per night hotel spending.
A survey conducted in 2010 by the Boston Consulting Group (BCG) also concluded that for many Chinese travelers a hotel "was just a place to spend the night" - 66 percent of Chinese respondents staying at 4- and 5-star hotels said they spent little or no time in their hotels. A BCG report from 2011 also found that wealthier and more experienced Chinese travelers showed a strong interest in personalized vacation experiences which would likely take them off the beaten tourist track and away from holidays based in opulent hotels.
One can't help but wonder whether Wanda's foray into the global hotel market is less of a viable commercial move than a prestige play, a way to keep attention on its other luxury interests, or simply a test of the Western commercial property market as China's top-tier cities become saturated with 5-star hotels.
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