The president of China is visiting Washington this week, and this country's annual $200 billion trade deficit with China will be very much on the table. Our Savvy Traveler, Rudy Maxa, says one bright spot for American companies is a spike in the construction of luxury hotels by companies such as Ritz-Carlton, Marriott, Hilton and Starwood, owners of brands including Sheraton and Westin. In fact, luxury hotels are springing up like daffodils all over the world.

As Paris Hilton might say, "China is HOT!" Sure, you've got your obligatory Ritz-Carltons and Toronto-based Four Seasons in China's two most modern cities, Hong Kong and Shanghai. But the Ritz folks are putting a second hotel in Hong Kong, and Four Seasons is opening a second one in Shanghai. And with the Olympics scheduled for next summer in Beijing, there will be two Ritz-Carltons there--including one on what China hopes will be its third international center of commerce, Financial Street.

Equally interesting are the hotels going up in Chinese cities most Americans can't find on a map--a Ritz-Carlton Shenzehn, a Ritz-Carlton Guangzhou, and a Ritz-Carlton resort on the island of Sanya. There's a Sheraton about to open in Guiyang and another in Xiamen. But the end of 2007, Marriott will have about 40 hotels in China, including new ones in Ningbo, Nanning, and Nanchang. This is just the beginning, because there are about 20 cities in China with populations of more than three million people. In the U.S.? Two.

All these pricey hotel rooms aren't unique to China, of course. Dubai can't build expensive (and dramatic) hotels fast enough, and there are at least five new companies building hotels whose rooms will cost north of $500 a night.

The man who built Starwood, Barry Sternlicht, is launching an international luxury chain named after the Crillon in Paris. The former president of Ritz-Carlton, Horst Shultze, is launching Solis and Capella hotels--he says the luxury hotel market has let its standards down. Then there are the new Armani and Missoni hotel chains, brands using the names of designers who, investors hope, will give their projects some high-end mojo. And let's not forget hotels named after a jewelry chain, the $1,000-a-night Bulgari in Milan and, later this year, Bali.

High-end hotels are enjoying banner years, after the 9-11 travel slump. Hoteliers like to say the cycles go this way: Six or seven great years, two or three bad ones. If that's true, we're just a couple of years into the new bull cycle--maybe there will be enough affluent travelers to fill these expensive rooms.

But just as hoteliers are looking toward China as a way of expanding their markets, they may soon be looking for the Chinese to help fill their hotels elsewhere. That's because the Chinese are starting to get out and about. Today, when it comes to international travel, Germans are the world's biggest travelers by number, followed by the Japanese and then Americans. The Chinese are in fourth place, but in four years, China will be in first. Which may prompt hotel execs to ask new hires, "How's your Mandarin?"

April 06, 2006