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December 31, 2014

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Luxury hotels forced to close as frugality bites

A COMBINATION of difficult trading conditions, bad management and the government’s crackdown on extravagance has led to a drop in the number of starred hotels in Shanghai.

The city currently has 255 such establishments, or 18 fewer than it had seven months ago, the Shanghai Hotel Star-rating Appraisal Committee, under the tourism authority, said yesterday.

Of the hotels to lose their status, 14 were three-star and four were four-star, it said.

“Some starred hotels are finding it difficult to adjust to the prevailing market conditions and stringent government policies,” said Qiu Yongqiang, director of the committee.

Many have seen their occupancy rates and conference bookings slump as a result of the government’s “eight rules” on official behavior, which include bans on expensive meals and a crackdown on official trips, he said.

Among the recent casualties was the four-star Shanghai Galaxy Hotel in the Hongqiao area of the city, which was formerly operated by the state-owned Jinjiang Group.

The building has since been sold to a property developer and will be converted into offices.

In the past five years, 55 hotels built to a “luxury” standard have opened in Shanghai, but only eight of them have applied for a five-star rating, the committee said.

This was also likely due to the “eight rules,” which were adopted by the Party in 2012 to improve administration efficiency, enhance public relations and highlight the need for frugality.


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