Lower-tier Chinese cities are next on the list for international hotel brand expansion, international property consultant Knight Frank told the South China Morning Post.

In a research report released Sept. 4, Knight Frank said mainland China is currently embroiled in heavy competition between both local and international hotel brands, and is currently battling slow economic growth and increasing operating costs. For this reason, brands are gravitating to smaller less congested markets.

“Looking ahead, we expect further development in China’s hotel market, particularly in second and third-tier cities where potential is vast,” David Ji, head of research & consultancy, Greater China at Knight Frank, told the South China Morning Post.

Despite these issues, Knight Frank said investors are not dissuaded from expanding into the country. At the end of August, Hyatt opened a new 355-room Hyatt Regency property in Suzhou, while Ritz-Carlton opened its first golf resort in Haikou on Hinan Island in China. Sofitel will also be opening eight more hotels in mainland China by 2017, and four more are in the planning stages.

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