By Clare Baldwin
HONG KONG (Reuters) - U.S.-based hotel chain Marriott International Inc and Alibaba (N:BABA) Group's online travel booking platform announced a tie-up on Monday, joining a flurry of rivals expanding their presence in China to cater to the country's growing upper-middle class.
China's economy is forecast to slow to roughly 6.5 percent growth in coming years, but companies such as Alibaba Group Holding Ltd and Tencent Holdings Ltd promise direct access to the country's middle class and what Marriott Asia Pacific head Craig Smith is calling a "land grab" for Chinese travellers.
"People talk about China slowing down but there is a growing middle class and that creates opportunities for companies like us," Smith said. "It is the most important market for us outside of the United States and it will continue to be."
China's growing middle class is boosting domestic and outbound travel and sparking a spate of travel-related deals.
Marriott's deal announced on Monday is a commission-based tie-up with Alitrip that allows customers to book rooms with their mobile phones. It follows a September deal with an Alibaba affiliate allowing Marriott customers to settle their bills with Alipay, a Paypal-like payments service.
Smith declined to say how much the hotel chain will save on Alitrip bookings compared with online travel agents such as Expedia Inc (O:EXPE), but said Alitrip is "a very lucrative channel".
The number of outbound Chinese tourists is expected to double to 200 million by the end of this decade, according to a study by Hong Kong-based brokerage CLSA. The study forecast domestic tourism would decline slightly in the coming years, but it is still booming.
China's National Bureau of Statistics showed a rise of 72 percent in domestic tourism in the five years to 2013, the most recent data available. Earnings from domestic tourism rose even more dramatically during that period, up 158 percent to 2.6 trillion yuan ($409 billion).
Marriott is not alone in trying to take advantage of online platforms to capitalize on Chinese travellers.
In August, Chinese vacation rental company Tujia raised $300 million to expand its business overseas and Chinese developer Fantasia Holdings Group launched its own vacation rental business similar to Airbnb Inc and HomeAway Inc.
Airbnb, which said the number of outbound Chinese travellers using its service grew 700 percent in the past year, said it was partnering with China Broadband Capital and Sequoia China to build its China business.
($1 = 6.3592 Chinese yuan renminbi)