China Aims to Attract More Luxury Travelers to Hainan

If you haven’t been paying attention to what’s happening in China’s Hainan Province lately, you may be overlooking one of the world’s top destinations for new luxury tourism development.

Hainan, known as the Hawaii of the East, is an island province in the South China Sea. Sanya, located on the southern tip of the island, is the preferred domestic destination for established Chinese high-net-worth travelers. Given Chinese president Xi Jinping‘s vow to make the area a pilot zone for reform, the aim is to bring more luxury travelers in from overseas.

According to Xinhua, the official press agency of the People’s Republic of China, only 1.1 million of the 67 million who visited Hainan last year were foreign (2017 marking the first time international visitation topped the one million mark). But relaxed government policies, an explosion of hotel development and murmurs of the legalization of some forms of gambling may increase the odds of international visitation.

Within the last six weeks, three major developments have taken place. At the Boao Forum for Asia, held in Hainan in April, Xi pledged that China would “significantly broaden market access,” “create a more attractive investment environment,” and “adopt policies to promote high-standard liberalization and facilitation of trade and investment.”

On May 1, the Chinese State Immigration Authority started implementing a new visa policy allowing 30-day visa-free visits for travelers from 59 countries (including the United States).  The third development is the $1.7 billion Atlantis Sanya. Inspired by Atlantis, The Palm in Dubai, the mega-resort is owned by Fosun, China’s largest privately-held conglomerate.

Like other big international players, the company has received government scrutiny for pursuing deals offshore. Developing in Sanya is likely to curry favor with a government determined to boost the domestic economy.

Atlantis joins a host of other big-name players in the luxury space in Hainan. The MGM Grand Sanya opened in 2012. According to the website of Diaoyulai MGM Hospitality, a joint venture of Diaoyutai State Guesthouse and MGM Resorts, a Bellagio will follow in 2021. Raffles Hainan opened in 2013. Shangri-La came in 2014. Sofitel arrived on the scene in 2016. Rosewood Sanya opened in 2017, and a property from Singapore-based Capella Hotel Group is set to open later this year.

A government policy that’s been in place since the end of 2009 has driven the spate of development. At that time, China’s State Council announced plans to use Hainan as a test case for international tourism development and as a pilot region for tourism reform.

According to Jing Daily, “China’s so-called blueprint for Hainan is to transform the province into a “free-trade port with Chinese characteristics.” However, unlike other free-trade zones (FTZs), the Hainan “experiment” is explicitly focused on tourism.” As such, the blueprint is part of the effort to raise the perception of Hainan internationally, along with compelling more Chinese to spend money on expensive tourism at home.

Nicholas M. Clayton, CEO of Capella Hotel Group, cited “favorable policies by the central government to boost economic development in Hainan,” as the key to all of the recent development.

“The plan to make Hainan [China’s] largest free trade zone by 2025 underscores the importance of this destination. In addition, many other factors make Sanya an ideal location,” Clayton said, including the fact that it’s a “destination of choice for keynote events, such as Boao Forum, Asia’s equivalent of Davos” and that there’s been “an addition of international flight routes to Hainan.”