Hainan Province, often called “China’s Hawaii,” is poised to be the recipient of a new wave of tourism investments with the announcement of a tourism free-trade zone on the island province. Several large Chinese firms had already initiated long before the announcement. However, the completion of high-profile projects, along with facilitated investment regulations and encouragement from Beijing, will only serve to accelerate this process. The most recent large-scale effort to come to fruition is the recent opening of Fosun’s Atlantis, Sanya. The conglomerate invested some $1.74 billion into the new luxury resort, which features an aquarium, ocean-themed activities, and underwater suites.
The newly opened Atlantis, Sanya is a $1.74 billion marine, luxury resort, and hopes to be the new icon of Hainan tourism
Fosun is not primarily a travel company, rather it has a wide range of holdings in industries like banking, insurance, healthcare, hospitality etc. Some of Fosun’s most prominent overseas investments include a major stake in Thomas Cook Group and the acquisition of Club Med.
The company has also been one of the most prominent Chinese companies investing billions into overseas companies. This behavior has come under scrutiny from Chinese authorities, who have been attempting to compel Chinese conglomerates from making large-scale, debt-fueled purchases abroad. The rate of outbound investment from companies like HNA, Fosun, Anbang, and Dalian Wanda has virtually stopped, likely at the impetus of Chinese regulators.
While the Chinese government isn’t keen on Fosun and others making more big purchases abroad. It’s clear that these big companies are being instructed to invest more at home, and that this latest investment is a response to the effort of the central government to raise the profile of Hainan’s tourism industry.
The Chinese government is making substantial efforts to compel companies to invest at home rather than abroad
Hainan has been a tropical getaway for Chinese tourists for some time. However, the island has yet to achieve much of a reputation for “luxury.” Moreover, China’s notoriously difficult visa process has made Hainan, and indeed all of China, a much less attractive destination for international tourism. Tourists looking for high-quality beach experiences have a host of easier, and cheaper options in Indonesia, Thailand, Vietnam, the Philippines, etc.
Nonetheless, Hainan has struggled with the intensity of interest in investment in the island. The real estate market of Hainan, like many other places in China, has become incredibly inflated, and the province has initiated restrictions on the purchases of real estate. Non-locals cannot make real estate purchases in Hainan unless they have contributed to the local social security fund for at least two years, or five years in some cities like Haikou and Sanya. The hope is that these measures will ease the impact of speculative real estate purchases on home prices and keep housing affordable for locals.
The announcement of the tourism free-trade zone, however, seems to imply that companies will have no problem acquiring the property necessary to facilitate development projects and may actually harm efforts to keep Hainan housing affordable. This seems especially likely within the context of the vision of the tourism free-trade zone for Hainan as a luxury destination.
Atlantis, Sanya is the first prominent effort to make Hainan a “luxury” destination worthy of international tourism
The Atlantis, Sanya seems to be part of a wider effort to raise the perception of quality surrounding Hainan as a destination internationally, along with compelling more Chinese tourists to spend money on expensive leisure tourism at home. China has many high profile destinations, but few, if any, have a reputation for “luxury.”
The new resort is a “clone” of the Atlantis, The Palm in Dubai, which is a joint venture between Kerzner International Holdings and Istithmar. The Atlantis, Sanya will be managed by Kerzner International and is expected to generate a revenue stream similar to that of the Atlantis, The Palm, which generates about $600 million annually.
It seems highly probable that authorities had consulted with Fosun, and potentially other large Chinese conglomerates, long before the announcement of the tourism free-trade zone on Hainan to ensure that there would be enough private investment into Hainan’s tourism industry to facilitate successful development. Of course, this is all speculative, but the timing of the opening of the Atlantis, Sanya with the announcement of the new Hainan tourism free-trade zone is certainly convenient.
It’s likely that, in the next few months, there will be a whole host of announcements regarding large-scale Hainan tourism investments, both to take advantage of potential growth in tourism and curry favor with the government.