Almost all international hospitality chains have successfully set up shop in Shanghai, but even major players are encountering a challenge in cementing their presence as new brands arrive. They’re also looking for ways to grab a larger slice of the city’s market in both short-term and extended-stay segments. In a recent interview with Shanghai Daily, several market leaders in the city’s hotel and serviced residency businesses shared their thoughts on industry prospects as well as their own plans to stay vibrant in a highly competitive market.

Q: Anything you have done recently to further improve guest satisfaction at your property or do you have any plans for that in the short- to medium-term?

Fraser: Fraser Residence Shanghai has embarked on an ambitious environmental plan that is targeted to improve the quality of living for all of our guests. The program consists of three strategic initiatives, improving the internal air quality and two initiatives improving residential water quality.

Air quality is an increasing concern to everyone living and working in China. Fraser Residence Shanghai recognizes the seriousness of this issue and has completed a project where every apartment features air purifiers designed to filter pollen and dust from the air in the living space. The result is a fresher and cleaner living environment for all of our guests.

Fraser Residence Shanghai has installed water purifiers in the kitchen cold water tap of each apartment. These certified water filters are designed to remove harmful chemicals and microorganisms. Everyone will be able to feel more comfortable knowing that their water has been effectively filtered before use.

The third apartment improvement initiative was the installation of a new water softening plant designed to provide softer water for the entire building. Now guests can rest assured that with the softer water, the quality of clothes washing will be improved and they can also shower without the worry of dry, itchy skin.

Fraser Residence Shanghai has listened to our guests and is making every effort to provide them with our world famous Gold standard of service.

The Portman Ritz Carlton, Shanghai: As a Ritz-Carlton hotel, we always seek opportunities to innovate and improve the guests’ experience; so to continue our efforts to enhance hotel physical conditions is part of our mission. Just to give you an update, the on-going guest room soft goods renovation, health club male and female locker rooms and Urban Spa renovation was completed in 2013. The lobby renovation is scheduled to commence in February 2014, with many more to come.

SH Centre: We have just wrapped up a three-year renovation of our serviced apartments, which included newly upgraded units, corridors and lobbies. We also keep on improving our retail mix by revamping existing shops (City Shop, Beef & Liberty ... ) and by introducing new, high-quality retailers (Garden Bookstore, Camus Lounge, JuiceBar ... )

Sheraton Shanghai Pudong Hotel & Residences, and Four Points by Sheraton Shanghai, Pudong: Due to increasing demand for wireless Internet connections, the complex has completed its public wifi project. Since May of this year, our guests can surf on their devices at any corner of the hotel, including the comfortable and relaxing rooms.

Sheraton has upgraded all desktop computers at the Link @ Sheraton area in the lobby with 22-inch Lenovo touch screens, enabling our guests a better-than-ever complimentary wired and wireless Internet environment for them to stay connected.

Knowing that arrival experience impacts over 50 percent of guest satisfaction, the complex has recently launched the “welcome check-in” at the front desk. The program allows associates to personalize the check-in for each guest based on their reason for stay, connect guests with our signature brand programs, and also create a long-lasting impression at the first touch point.

Q: How do you perceive the city’s overall serviced residency market? What’s your plan to deal with intensified competition as more players jockey for a lucrative share?

Fraser: With continuously increasing supply, the market will take some time to absorb new apartments. We noticed in the first half of the year, both rental and occupancy had seen a decline compared to the same period of last year. Starting from July, the lease market resumed and in August, most serviced residences have gotten occupancy back to normal.

Shanghai, as the most important gateway in China and with new free trade zone concept, will continuously attract new investment and projects. The serviced apartments market will continue to have healthy growth in the next decade.

Fraser Residence Shanghai welcomes new competition. As a market leader, Fraser Residence will always be focusing on customer’s needs instead of competitors. It was and will always be our way to success.

The Portman Ritz Carlton, Shanghai: The competitiveness of the overall serviced residency market will continue to intensify due to the oversupply in rooms on the market. Therefore, money for value is going to be the determining factor of capturing market share. Hoteliers also need to focus on the enhancement of tangible and intangible products in order to remain competitive. 

SH Centre: Competition comes not only from the traditional serviced apartment providers, but also from hotels that cater to long-term stays, as well as from prestigious non-serviced apartments. We focus on our core competencies of offering the best international service and living environment to our mostly expatriate residents. With the recently completed renovations, we once again offer one of the most premium apartments available.

Sheraton: With the fast growth of Shanghai’s economy, the demand for serviced apartment will increase because the city’s construction projects require domestic and overseas experts, who also need high quality and comfortable serviced apartments for long stays. As a true, meaningful hotel serviced apartment we will always leverage five-star hotel facilities and service standards to maintain current market share as well as winning new business. Since the serviced apartment connects with hotel building, it provides easy access for guests to the swimming pool and gym center, restaurants and 24-hour hotel services like concierge service, in-room dining and all other hotel services.

Q: How do you expect the market to grow over the coming few years in terms of room numbers? As one of the major players in the city, do you foresee any challenges for the industry in the near term?

Fraser: There are 11 properties categorized under serviced residences opening in 2013 and 2014, adding 1,483 units to the market. The supply will continually be growing in the following few years, not even counting privately owned condos.

The challenges are coming from both demand and supply. Recently we noticed many corporate clients electing to move their office out from the city center to satellite towns in outskirts areas of Shanghai. This has impacted the business in those areas but reduced the demand in the city center.

To deal with the business slowdown, multi-national corporations are keen to assign their staff with more flexible terms, e.g., shorter terms and this provides hotels opportunities to target the extended-stay market. 

The Portman Ritz Carlton, Shanghai: There has a declining trend for international arrivals to Shanghai after the World Expo in 2010. Nevertheless, domestic arrivals is a rising trend and has shown relatively strong growth. Hotels in Shanghai are pressured to maintain their percentage of market share due to the oversupply of hotel rooms with more and more new hotels opening. However, our confidence will be regained once the development of major tourist attraction sites is completed in 2015 thanks to active tourism boards in Shanghai and China in general — for example, Shanghai Disneyland in Pudong; New Hongqiao National Conference and Exhibition Center, and redevelopment of Expo area. With that infrastructure in place, how hoteliers strategically approach and capitalize on those opportunities to improve hotel performance might be the question we need to consider.

SH Centre: The growth in serviced apartment demand has moderated the past few years as international companies become more cautious in deploying expatriate staff in the current economic environment. Housing allowances have stagnated and, in some cases, are even being cut back. While the number of new serviced apartments has moderated, challenges come also from the growing number of alternative residential providers. But so long as we continue to provide the best service and living environment, we remain optimistic in both our near-term and long-term potential. 

Sheraton: There will be various brands to cover different markets in terms of guest budgets and needs. Once there are numerous competitors, the challenges could be in how we can adjust ourselves to satisfy guest expectations and how we can provide added value to keep the guest staying with us.