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Hotels to benefit from MICE business

AN industry report concludes that Shanghai's luxury hotels will benefit from increased MICE-related events as the city's global profile grows, writes Sam Riley.

Despite weathering a difficult trading period in 2008, hotels can expect to see a strong level of MICE-related activity after World Expo 2010 Shanghai, claims a new report on China's hotel industry.

The Hotel Intelligence Report by Jones Lang LaSalle Hotels China gives an annual snapshot of the hotel industry both in China and Shanghai.

The report gives a positive outlook despite the hotel industry being hit by falling visitor numbers as a result of the global financial crisis and fierce local competition with more than 15,000 new hotel rooms expected to come online in the next few years.

While acknowledging that Shanghai's luxury hotels would struggle to maintain current rates in the face of this glut of supply, the report said Shanghai would remain a key hotel market.

The upbeat findings of the report, which gathered information from analyzing more than 18,000 five- and four-star hotel rooms in Shanghai, is backed by several key international five-star hotels who say they expect increased MICE-related activity in the city as a result of World Expo 2010 boosting the global profile of Shanghai.

The report found that Shanghai had 455 major exhibitions in 2008 in addition to a large number of smaller conferences, meetings and events. This makes Shanghai the top exhibition destination in China last year followed by Beijing with 264 and Guangzhou, Guangdong Province, at 227.

In terms of smaller international meetings Shanghai also managed to ride out the bad times, edging up the global International Congress and Convention Association rankings to 28th in the world.

The association, which has 850 members in 85 countries and regions, ranked Paris as the world's number one destination for meetings of international organizations last year followed by Vienna, Barcelona and Singapore. In Asia, Seoul (9th), Beijing (14th) and Bangkok (18th) outperform Shanghai.

Jones Lang LaSalle Hotels China's Senior Vice President Lily Ng says, while Shanghai has experienced an increase in MICE-related activities in recent years, there was still a lot of room for growth in this sector after Expo.

"I think it is no secret that as much as Shanghai's facilities and service quality are pretty good, I think if you stack it up against international standards there is still some room to grow," she said.

"In China, facilities are the easiest aspect to catch up with other potential global destinations, but service quality and knowledge about how to run conventions and exhibitions and the quality side of how to make an event successful is still developing."

Ng said Shanghai's improved transport links, including the major development around Hongqiao Airport, would be a draw card for event organizers as would the increase in exhibition space, particularly the 200,000 square meter expansion of indoor exhibition area at the Shanghai New International Exhibition Center.

"From a venue and service quality point of view Shanghai seems to have a little bit more of an edge compared with other cities in China," she said.

A diverse range of leisure and recreational activities is also seen as key in attracting event organizers to a city. Ng said the new Happy Valley amusement park, which is expected to have up to 7 million visitors a year and the Shanghai Disneyland development will also make the city an attractive MICE destination.

MICE-related activity typically accounts for between 15 and 25 percent of the overall business of five-star hotels the Shanghai Daily contacted.

Amanda Elder, general manager of The St Regis Shanghai, said with the growth in MICE visitors to Shanghai there has been a corresponding increase in competition for this segment.

The St Regis has successfully grown this area of its business by forging solid partnerships with national organizations, exhibition halls and Expo contacts, she said.

The individual service, particularly their butler service, also provided St Regis with an edge in servicing MICE clients and guests, according to Elder.

But The St Regis was also focused on the growing domestic MICE industry as well.

"While we look forward to increased international events to drive visitor numbers, we must also look to the growing national association and corporate meetings segment to increase opportunities," she said.

Swissotel Grand Shanghai General Manager Julian van den Bogaerde said he was optimistic about the outlook for Shanghai's hotel industry post-Expo and in particular the MICE segment of the market.

Saying that Shanghai was "on the world stage" already and would be even better known after Expo, van den Bogaerde pointed to the city's improved facilities, infrastructure and leisure activities as potential drivers of growth in visitor numbers.

"I believe the future is bright for Shanghai and the benchmark in terms of facilities and indeed service delivery will continue to be raised," he said.

"MICE business has been a key and growing generator of hotel demand in Shanghai," he said. "Since opening in April 2009, the Swissotel Grand has pursued a policy of recruitment and development of staff, despite the tough economic times. Hotels that had not cut their level of service due to cost pressures would be well placed to benefit from the growing MICE sector, he said.

The second half of this year has seen an increase in MICE-related business, according to Le Royal Meridien Shanghai's Director of Sales and Marketing, Regina Lourenco.

Along with a boost in MICE business, Lourenco said event organizers were also looking for increased levels of service.

"Guests are becoming savvier. Hence, raising the service standards bar to further meet the guests' needs is very important in attracting the MICE market," Lourenco said.

"Meanwhile, packages with more added value and convenient locations are also the key selling points."

Five-star hotels continue to be an attractive proposition to event organizers who want to ensure that high levels of service make their events a success, according to The Longemont Shanghai's MICE Director, Conny Bartly.

Bartly says that the five-star hotels have developed a wide range of experience in delivering large-scale events and could provide personalized service to both guests and organizers.

"If there is a big supply out there people will compare quality and value for money," she said. "I think hotels with established reputations will do well and others won't survive.

"After Expo it will go either way for many hotels in the city but we have continued to do well despite the economic downturn because with hotels, in the end, what it comes down to is service," added Bartly.


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