HONG KONG—Cachet Hotel Group has signed an exclusive development agreement in Shandong Province with Qingdao Izunco Inn Investment Company (Izunco) to launch Savant Hotel by Cachet, a midscale lifestyle brand, in Mainland China.
“We are witnessing a fundamental shift in Chinese real estate as developers are looking to build boutique and midscale hotels that can address the growing demand for a higher quality of domestic tourism,” said Alexander Mirza, president and CEO of Cachet Hotel Group.
He added, “In addition, a growing number of discerning but cost-conscious business and government travelers will provide a steady stream of consumers for midscale lifestyle hotels focused on tier 2 and tier 3 cities across China. The emerging midscale lifestyle segment is poised to capture spending from the burgeoning middle class who are looking for modern design and at an affordable price.”
The targeted midscale segment is the largest hotel segment in China with $36.3 billion total room revenues in 2015 and has seen the fastest growth with compounded annual growth of 12.5% over the past four years, according to Cachet Hotel Group. This trend is estimated to continue in the future, with the most significant growth areas likely in tier 2 and tier 3 cities.
Drawing on Cachet Hotel Group’s expertise in environmental sustainability in China, Savant Hotel by Cachet will be carbon neutral. The rooms will be prefabricated, with modules assembled off-site and delivered complete with carpeting, lighting and showers, reducing construction and labor resources by over 50%, according to the company.
Izunco has grown since its inception with 30 hotels under franchise and 11 under management currently, according to Cachet Hotel Group. It also opened the very first business hotel in the port city of Qingdao, also the location of its company’s headquarters. In addition, Izunco has already established its footprint in cities and provinces like Beijing, Zhejiang and other parts of Shandong Province.
“Our goal is to open no less than 20 Savant Hotels in the next three years in the Shandong province,” said Zhang Yuyong, chairman of the board of Qingdao Izunco Inn Investment Management Company Limited. “By combining our deep knowledge of the region and Cachet’s experienced international management team, we are confident in building Savant into a leading brand in the Chinese midscale segment.”