Beijing And Shanghai Hotel Performance On The Up | Deloitte Reports
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Latest results from the China edition of the HotelBenchmark Survey by Deloitte show that revenue per available room (revPAR) across China increased by 18% to US$70 during the first quarter of 2005. This is not surprising, as visitor arrivals to the country have been booming. According to the China National Tourist office, international visitors increased by 48% in 2004 to reach 17m. Strong economic growth, an increase in the number of low-cost airlines and the relaxation of travel regulations have also resulted in a surge in domestic travel across the country.
Two of China's key gateway cities that have benefited from this influx of visitors are Beijing and Shanghai. This growth is expected to continue as both cities prepare to host major events over the coming years, namely the 2008 Olympics and the World Expo 2010. This article looks at how hotels in Beijing and Shanghai have been performing recently and how each city is getting itself into shape to cope with anticipated future demand.
Beijing bubbles
Beijing Capital International Airport saw 8.7m passengers pass through its terminals during the first quarter of 2005, up 18% compared to the same period in 2004. These figures are expected to increase further as travel restrictions continue to be relaxed. Previously, international visitors were only allowed to renew their visas twice, each for a period of three months. Now travellers can extend their visas for six to 12 months, as many times as they wish.
The Beijing Municipal Bureau of Tourism has also recently launched a European marketing initiative to attract visitors in the run up to and during the Olympics. In March 2005, an incentive scheme was introduced in the UK to offer travel packages, including flights and accommodation, to travel agents bringing more than 1,000 visitors to Beijing.
Seal of approval
This is also the perfect opportunity for hotel companies to increase their presence in the city. In December 2004, Accor won the management contract to operate the Sofitel Wanda Beijing hotel in the new Wanda Plaza development in the city's central business district. The new 453-room Sofitel hotel is due to open in 2006.
Marriott is also planning to open two new Ritz-Carlton hotels in Beijing during 2006. The 256-room Ritz-Carlton Beijing Financial Street will be located in the city's financial district, while the 320-room Ritz-Carlton Beijing will be located on Changhan Avenue, close to Tiananmen Square.
First quarter hotel performance in Beijing and Shanghai - 2005 v 2004
Source: HotelBenchmark Survey by Deloitte
World Expo 2010
Visitor numbers are expected to increase in the run up to the city hosting World Expo 2010. This global forum is the third largest event in the world after the Olympics and the World Cup and is expected to attract over 70m visitors. To cope with this increased demand, the government is already making plans to upgrade metro lines, buses and road links. Also as World Expo 2010 will be located on opposite banks of the Huang Pu River, a ferry service will also be provided to transport visitors between the two venues.
Get ready for take-off
New kids on the block
In January 2005, Raffles International Limited signed a deal with Jing An City Construction Fitting Development Company to manage a new 478-room hotel. This is scheduled to open in 2007. The Swissôtel Grand Shanghai marks the company's first hotel in the city.
Starwood Hotels & Resorts have also joined forces with the Shanghai You You Group to manage the Sheraton Shanghai Hotels & Residences in the Pudong district of the city. This new development will be part of a multi-purpose complex built alongside the new Shanghai World Exposition site, the venue for World Expo 2010. The hotel will be housed in one tower whilst the serviced apartments, offices and retail space in a further two towers. Scheduled to open in 2008, the hotel will have 509-rooms and 150 serviced apartments.
Promising outlook
Note: All analysis in US$
The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,500 hotels and 1.2 million rooms every month. Monthly surveys are produced on the following areas:
- Four regional rate and occupancy surveys covering Asia-Pacific, Europe, Central & South America and the Middle East & Africa.
- 12 country/sub-regional rate and occupancy surveys for Australia, Belgium & The Netherlands, China, Germany, India, Italy, New Zealand, Nordic Countries, Paris, Qatar, South Africa, Spain, UK and London.
- Profitability surveys on Germany and London.
- Two city rate and occupancy surveys for Paris and London.
- On an annual basis we produce profitability surveys tracking performance across all regions of the world.
- Daily HotelBenchmark tracks rate and occupancy everyday for a number markets across the UK, Europe and the Middle East. Coverage is building rapidly since launch in early 2005.
For further information on the China edition of the HotelBenchmark Survey please contact Jessica Jahns on +44 (0) 20 7007 0967.
Jessica Jahns
+44 (0) 20 7007 0967
STR Global