Can Chinese Tourism Beat the Credit Crisis?

In June 2007, Hilton formed a joint venture with Deutsche Bank (DB) and H&Q Asia Pacific to set up 25 Hilton Garden Inn service hotels in China. Marriott's (MAR) Ritz-Carlton expects to open three luxury hotels (BusinessWeek.com, 4/21/08) in China this year to go with the three it already operates in Beijing and Shanghai.

Hotel groups from the Middle East and elsewhere in Asia are targeting China, too. Dubai-based luxury chain Jumeirah on Sept. 25 announced it is teaming up with a Chinese partner, GT Land Holdings, for a hotel in the southern Chinese city of Guangzhou. The 200-room Jumeirah Guangzhou, scheduled to open in 2011, will be the company's second in China after the opening of a 309-room hotel in Shanghai's trendy Xintiandi district scheduled for early next year. Indian Hotels, the subsidiary of India's giant Tata Group and operator of the Taj chain of luxury hotels, in July announced an agreement with Chinese partner Zhong Qi Group to operate a 500-room resort on the southern island of Hainan and a 106-room hotel in Beijing. "China is one of the major tourism hubs worldwide," Krishna Kumar, vice-chairman of Indian Hotels, said in a statement, pointing to the country's 8% year-on-year tourism growth and 135 million tourists in 2007. "It is critical for Taj to have a presence in this country."

Forging Ahead
Entrepreneurs are still counting on Chinese tourists, too. Shanghai-born David Jin, 46, is president and CEO of Grand Canyon Skywalk Development, an attraction in Arizona launched last year with the Hualapai Indian tribe. A glass bridge that extends over a part of the canyon and gives visitors the chance to look down at the vast natural wonder 4,000 feet below, the Skywalk attracts about 50,000 visitors a month, Jin says, and he predicts that number will grow once a new museum and gift shop open by the end of the year. "There's plenty of space for growth," says Jin, who adds that the monthly capacity for the Skywalk is 150,000 visitors.

Jin is now looking to China to capitalize on what he thinks will be a boom in the Chinese tourist industry. He recently was back home talking with government officials about opening a new-style tourist attraction that could break the mold of the typical crowded Chinese site. "People could have a better experience if you managed the place differently," he explains. "You could open more viewpoints at one destination, more attractive places, so people don't all have to be in one place." Jin won't comment on what location in China's he's targeting, but he promises "the world will say 'Oh wow,' the same as the Skywalk."

In the meantime, Jin is also trying to boost the number of tourists from China who travel to the Grand Canyon. China had 41 million outbound tourists last year, and that number will likely grow to 65 million by the end of the decade, he believes. "You can't go wrong with that," says Jin. "If we can get 10% or 5% of the people who go to the U.S., we're talking about a lot of people," he says.