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Hoteliers continue to grow presence

WHILE Shanghai's five-star hotel business has been hammered by the global financial turmoil, which slashed Grade A office rents by double digits and curtailed demand for luxury houses, international hoteliers still remain upbeat about their China business as most of them continue to extend their footprint in one of the world's fastest growing travel markets.

Yesterday, Marriott International Inc marked a milestone when it officially opened its 800th Courtyard hotel worldwide in Shanghai.

Under the United States hospitality giant's blueprint, another four Courtyard hotels, now under construction, will be added to its China network over the next three years in Hangzhou, Shanghai, Suzhou and Nanjing.

"China, as well as India and Thailand, have been the three fastest growing markets for Marriott International," said Geoff Garside, Marriott International's executive vice president for Asia Pacific. "In Shanghai, where Marriott has already established quite a large network covering six brands (including Ritz Carlton, JW Marriott, Marriott, Renaissance, Marriott Executive Apartments and Courtyard), we continue to see a lot more opportunities as well as a lot of growth ahead of us."

The current dip in the hotel business, affected by slowing economic growth coupled with a deteriorating global economy, won't change the company's long-term vision in the local market, according to Garside, who is already prepared for a rather slack momentum in the coming year.

Latest statistics have shown that key indicators for hotel performances have declined since last year with both room rate and occupancy hitting lows.

By the end of 2008, revenue per available room, or RevPAR, at the city's five-star hotels tumbled 16.6 percent to 911 yuan (US$133) while the average daily rate, or ADR, fell 3.9 percent to 1,541 yuan. The occupancy rate plunged to 59.1 percent in 2008, a loss of 9.1 percentage points from 2007, according to recent research by the hotel division of real estate services provider Jones Lang LaSalle on more than 9,480 five-star hotel rooms across the city.

Statistics have shown that both RevPAR and occupancy figures were the lowest since 2004 while ADR was the least since 2005.

Smaller travel budgets by both business and leisure travelers resulted in more vacant luxury hotel rooms last year, industry people said.

Marriott is definitely not the only hotel group undeterred by the current sluggish market.

Five contracts

Hilton Hotels Corporation, another upscale hotel management company based in the US, displayed its confidence in the China market last month by signing five contracts in a single day with major Chinese real estate developer Dalian Wanda Group.

Comprising upscale and luxury hotels under the Hilton family, the agreements include plans for the Conrad Sanya Haitang Bay and Doubletree by Hilton Sanya, Haitang Bay on Hainan Island, the Conrad Dalian and Hilton Dalian, and the Hilton Nanjing, all to be opened by 2012.

"Five hotels in one day is a very special occasion,"noted Martin Rinck, president of Hilton Hotels Corporation's Asia Pacific operation. "Through this important relationship with Wanda Group, we are committed to offer best-in-class hotel products in key cities across the country. With domestic travel continuing to grow and increasing interest in China from international visitors, we hope to make the Hilton Family a household name here."

The five contracts marked a significant expansion for Hilton in China, adding another 1,484 rooms to the hotel operator's system. With nine hotels in operation and 23 hotels under development, the company aims to increase its presence in the country to 32 hotels by 2012, Hilton said.

The long-term vision and confidence in the China market is also shared by Starwood Hotels & Resorts Worldwide. After opening eight new hotels in the country last year, the international upscale hotel operator continued its aggressive expansion in China.

So far this year, Starwood has already announced four new hotels which include the first St Regis hotel in Chengdu, the first Sheraton hotel in Jiangyin and Dalian as well a Sheraton resort in Huizhou in Guangdong Province.

The hotel operator, which currently operates 47 hotels across the country, is expected to add more than 60 new hotels to its China network within the next three or five years.

Continuous expansion plans by major international hoteliers will help guarantee a steady growth of new supply to the local market. According to Jones Lang LaSalle, the city will likely add 6,722, 3,540 and 3,753 internationally branded hotel rooms in the coming three years and therefore increase total supply in the local market to more than 40,000 rooms by the end of 2011 from more than 25,000 rooms now.

The World Tourism Organization has earlier projected that the Chinese mainland is expected to become the world's second most popular tourism destination after France by 2010, mainly fueled by various factors including a strong economic backdrop, further opening of the domestic tourism market to foreign tour operators, a fast emerging MICE market (meetings, incentives, conventions and exhibitions) and the 2010 Shanghai World Expo.


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