(Bloomberg) -- Radisson Hospitality Inc. is plunging ahead with a plan to triple capacity in China over five years, despite its expectation that a looming trade war with the U.S. will damp travel demand in the country.
The chain controlled by China’s HNA Group Co., the aviation-to-hotels conglomerate, has 15 hotels in the country for a total 4,147 rooms, with 16 new properties under development, John Kidd, chief executive officer of Minnesota-based Radisson Hospitality, said in an interview Monday in Singapore.
China is a “critically important market for us, particularly as our owners are HNA and they are able to provide us support, guidance and connections to the market,” Kidd said. He was president and chief operating officer of HNA Hospitality Group before moving to Radisson.
Trade tensions between the U.S. and China could put pressure on room occupancy and rates for eight to nine months, especially affecting corporate travel, Kidd said. “There will be no need for travel if you can’t sell goods in a particular market.”
Beyond that period, the picture brightens, Kidd said, as domestic tourism demand will rise faster than hotel rooms are being added. Radisson has 15 hotels in China with 16 more under development. The focus is on expanding its Radisson and Park Inn affordable accommodations brands in second- and third-tier cities, such as Ningbo and Wuhan, he said. HNA gained control of Radisson through its acquisition of Carlson Hotels Inc.
The growth trend in China’s travel market is moving away from luxury toward mid-scale, affordable brands, said Katerina Giannouka, Radisson president of Asia Pacific.
©2018 Bloomberg L.P.
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