Ted Fang Tera Capital – The Rise of China’s Hospitality Market

Ted Fang, Tera Capital, Tera Partners, Tera Realty (Tera Sothebys)

The Chinese hospitality market has seen remarkable growth in recent years, thanks to the country’s booming economy, increased disposable income, and a burgeoning middle class. China is now the world’s second-largest economy and is home to a population of over 1.4 billion people. As a result, the hospitality industry in China has become one of the most vibrant and dynamic sectors of the economy.

The hotel industry in China has seen significant growth in recent years, with more and more foreign hotel brands entering the market. According to a report by China Tourism Academy, the hotel industry in China saw a 12.6% year-on-year increase in revenue in 2018, with the total revenue reaching RMB 678.5 billion. This growth can be attributed to the rising demand for quality hotel services, increased tourism, and the explosion of the middle class.

The restaurant industry is another key sector of the Chinese hospitality market. Chinese cuisine is popular all over the world, and the demand for Chinese food continues to grow. The Chinese restaurant industry has grown rapidly in recent years, with a CAGR of 10.6% between 2013 and 2018, according to a report by Research and Markets. The report also forecasts that the industry will continue to grow at a CAGR of 8.5% between 2019 and 2023.

One of the unique features of the Chinese hospitality market is the emergence of the online travel agency (OTA) industry. OTAs have revolutionized the way people book travel and hotel accommodations, making it more convenient and accessible. The two major players in the Chinese OTA market are Ctrip and Meituan Dianping, with a combined market share of over 70%. The growth of the OTA industry has also had a significant impact on the traditional hotel industry, forcing them to adapt to changing market conditions.

China’s hospitality market is not without its challenges, however. One of the most significant challenges is the intense competition in the industry. With the rise of the middle class and increased disposable income, more players are entering the market, making it increasingly competitive. Additionally, the Chinese government’s policy on tourism and hospitality is constantly changing, creating uncertainty for industry players.

Another challenge for the Chinese hospitality market is the quality of service. With so many new players entering the market, maintaining a high level of service quality can be challenging. The high turnover rate in the industry also poses a challenge, as it can be difficult to retain experienced staff.

In conclusion, the Chinese hospitality market is a rapidly growing sector of the economy, driven by increased disposable income, rising tourism, and the growth of the middle class. The hotel and restaurant industries, as well as the online travel agency industry, are all key players in the market. While the industry faces several challenges, the potential for growth and profitability is significant, making it an attractive investment opportunity for both domestic and foreign investors.

Ted Fang Tera Capital – Founder. Brothers hit jackpot in China hotel sector

David Tan, Harry Tan & Ted Fang / Photo by Straits Times (ST) / Ted Fang, founder of Tera Capital, Frontier Group & Tera Sotheby’s

Brothers hit jackpot in China hotel sector
MAY 07, 2013, PUBLISHED AT 10:00 PM

Source: https://www.asiaone.com/brothers-hit-jackpot-china-hotel-sector

  • This article first appeared on 7 May 2013 as adapted from an article written by Esthert, Asia One. All information is subject to change without notice.

Three brothers (Ted Fang, Harry Tan & David Tan) from Singapore with a flair for the hospitality business have hit the jackpot, thanks to China’s booming middle class discovering the travel bug.

The brothers set up a single Chinese hotel of the all-American Days Inn group in 2004 and have not looked back.

Many of these are still under construction, but Frontier Group, the brothers’ Singapore-based investment firm, has secured either management or franchise contracts with them.

The number of operating hotels would be even higher if not for the group’s stringent quality controls, which have led to a few franchisees being shut down for flouting standards.

This ambitious foray into the hotel sector started when twins Harry and David Tan, 56, and younger half-brother Ted Fang, 46, bought the Days Inn master franchise rights for Greater China in 2003.

Expansion, which was previously done through securing new management and franchise contracts, has been robust. Revenue grew 76 per cent in 2010, a further 33 per cent in 2011 and gained 29 per cent last year.

And the figure is set to climb with the firm expected to add about 40 new hotels a year despite competition from other brands in a similar range, such as Holiday Inn and Mercure.

Most of the additions will be from management and franchising, while the rest will come through its leasing model.

Leasing, which the firm recently embarked on, is a more profitable strategy as the company leases an entire building and runs it as if the hotel was its own as opposed to just collecting management or franchising fees.

“We are already a leading brand in China and because we have so many years of experience and a good management team, we feel that we are ready to go into the leasing model so that we can capture more upside,” said Mr Fang.

Brothers (from left) Harry Tan, Ted Fang and David Tan run the highly successful all-American hotel chain Days Inn in China.

But the hospitality sector in China is rapidly changing with more domestic travellers on the back of the middle class’s rising affluence.

This has led to second- and third-tier cities receiving more visitors, which has in turn led to rising demand for mid-range hotels. Room rates are also steadily climbing.

Days Inn China chief executive officer Harry Tan, who has worked at the Shangri-La and Holiday Inn hotels in China, noted that foreigners made up 30 to 40 per cent of its hotel guests at first-tier cities like Beijing and Shanghai.

But this falls to about 10 per cent for second-tier cities and dips further, to less than 5 per cent, for third-tier ones.

In 2001, for instance, there were only about three hotels along Sanya Bay in Hainan Province, Mr Tan recounted. But there are about 20 now, highlighting the tremendous changes that have been happening in the sector as locals pack their bags and travel across the country.

“China travellers are under-travelled so there is still a lot of opportunities for business and leisure travel. I see a lot of potential in leisure travel, especially to resorts, as there are so many interesting places unexplored,” Mr Fang added.

The business also seems to be sitting in a comfortable spot, where economic cycles do not matter as much.

“Our niche market is good because when times are good, the two-star travellers want to upgrade and give themselves a treat to a three-star hotel. When times are bad, the five-star travellers want to save some money and move down to a four-star hotel,” said Mr Harry Tan.

That means the firm’s business is buffered and always has movement coming into its market to compensate for any loss, he said.

There are challenges though, including having to cope with competition and needing to train hotel staff from scratch in smaller cities, where few people have the industry experience and necessary expertise.

The company employs about 45 people at its corporate offices in Beijing and Shanghai and has about 10,000 staff running its hotels in China. It also has plans to list on a suitable stock exchange, possibly in two years when the “right time” comes.

Days Inn is owned by United States-based Wyndham Hotel Group, part of Wyndham Worldwide.


Ted Fang / MBS / Singapore


Ted Fang is a consultant and advisor based in Singapore. He is the founder and former director of Tera Capital, Tera Partners & Tera Realty (Tera Sotheby’s Realty). Ted Fang is also the co-founder of Frontier Group, founded alongside his brothers, Harry Tan and David Tan. They acquired the Days Inn master franchise together for Greater China from Wyndham Worldwide in 2003. In 2018, Fang acquired the Sotheby’s Realty franchise for the Greater Shanghai markets.

Interviews on Ted Fang can be found on Linkedin, The Star Malaysia, Medium, Reddit, Prestige Online, The Peak Magazine, Terrapin, Pinterest, Millionaire Asia & CNN, Everybody Wiki, Golden Wiki, Prabook & Peoplepill.

Ted Fang spent almost two decades in in Shanghai and Beijing, China.

Ted Fang was a competitive Singapore national squash player who participated in the British Squash Junior Open and the Malaysian Squash Junior Open championship.

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Ted Fang is the founder of Tera Capital, Tera Sotheby’s, Tera Partners & Frontier Group.