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Home » City specials » Hangzhou

Business falls off at high-end eateries, hotels

By Xu Wenwen | August 20, 2013, Tuesday | Print Edition

High-end restaurants and hotels in Hangzhou have had a slump in earnings this year as business has fallen off, with some establishments closing and others offering steep discounts to attract customers.

More than half of the top-earning restaurants — 235 of 406 Hangzhou restaurants with an annual sales of more than 2 million yuan (US$327,000) each — have done no better than break even recently, with many losing money, Hangzhou Statistics Bureau officials said.

Rising costs, a declining number of foreign tourists, the international financial crisis and bird flu outbreak earlier this year, as well as government campaign to cut official spending have all contributed to the slump, experts said.

“Now even if government holds meeting in our hotel, they skip the meals,” said a manager in Hangzhou Capital Star Hotel who declined to give a name.

To lure customers, hotel restaurants have cut the average price of a meal from 120 yuan to about 70 yuan. While many places are lowering prices, more changes likely are needed, such as improvements in service, experts said. Also, some companies are offering group specials.

The well-established Zhiweiguan Restaurant recently has launched a 498 yuan special for a 10-person banquet that includes abalone and snapper. The original price was over 1,200 yuan.

High-end seafood restaurant Jin Xiang Lai has specials ranging from 188 yuan for three to four people to 2,580 yuan for a banquet serving eight to 10 people, all for half the original price.

In the urban area, Hangzhou West Lake Reclusive Life Hotel, Tea Boutique Hotel, Zhejiang Xizi Hotel and many other hotels have posted group specials on the Internet, as have some big hotel brands in Hangzhou’s suburban scenic areas such as Hilton and Sheraton.

The curb of official receptions is believed to have pinched high-end hotels and restaurants the most.

Since the end of last year, President Xi Jinping called for a curb in excessive spending for the “three public consumptions” — vehicle purchasing and maintenance, overseas trips and official receptions. Provinces and municipalities have rolled out detailed guidelines on Xi’s “eight rules” on official behavior, which include bans on expensive meals and showy official trips.

“Hangzhou’s hotel and restaurants industry saw negative growth since the ‘public consumptions’ were cut, and despite businesses’ remedial measures, no sign of recovery has yet appeared,” according to an analysis on the website of Hangzhou Statistics Bureau.

Luxury clubs close

Hotels’ restaurant revenue shrunk 30 percent from January to June, the bureau said.

Earnings of hotels and restaurants with an annual sales of more than 2 million yuan have dropped 8.2 percent and 9.5 percent, respectively, in the first half of the year, compared to the same period of last year, according to the statistical bureau.

Hangzhou’s status as a tourism destination and its reliance on meetings by out-of-town companies and government departments make it particularly vulnerable. This year, several high-end clubs that provide luxury meals in scenic settings have disappeared.

Bao Qing Club, which opened in 2007 in Baoqing Villa on Beishan Road, closed in April. The club, in a desirable location facing West Lake, had spent more than 10 million yuan in renovations. It mainly catered to business and government banquets. The nearby Da Chick Mun on Beishan Road, another high-end club, also closed.

The Futong Dragon Boat, berthed at a dock at West Lake, also is suffering. The traditional-style, two-story boat is a restaurant that provides entertainment for diners.

The boat caters to businesses and institutions and the minimum cost of chartering the boat and having a meal is over 10,000 yuan. It’s still open, but instead of booking at least two cruises a week, it now goes out less than once a month, according to a security guard working in the area.

The well-known Louwailou Restaurant is “reducing expenditures by scaling back the workforce” and “focusing on bettering its traditional dishes,” said Zhang Yiliang, the restaurant manager.

Louwailou’s earnings dropped about 10 percent in recent months, mainly because the shrinking demand from tourist groups and government-related consumption.

The squeeze, however, hasn’t hurt less expensive restaurants much. Grandma’s Kitchen, known for its inexpensive but good food, has seen business grow, and the company plans to “open 26 chain outlets all over the country this year,” said owner Wu Guoping.

Another local eatery, Bai Lu Restaurant, which also serves affordable local cuisine, said it has seen little change in its business.

Both restaurants have customers lining up at dinner time.

“Trying to make quick profits by relying on government is unrealistic,” said Yang Jianhua, the director of Institute for Public Policy Research of the Zhejiang Academy of Social Sciences. “Extravagant consumption encouraged people trying to top each other, and twisted the hotel and catering industry.

“Now it’s time for those enterprises that used to rely on government to think about how to develop healthily.”

 

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