As the travel and hotel industries worldwide face the squeeze from
the global economic recession, China has turned out to be a hotspot for
hotel owners and management companies to seek continued growth and
expansion.
In Shanghai alone, adding to the ever-changing city's skyline, will be a number of luxury hotels in the coming two years.
Six years after it made its first footprint in Shanghai, the world's
leading luxury hotel Four Seasons Hotels and Resorts said it would
start a second chain in the city's Pudong district by the end of 2009.
The hotel company is ready to embark on a rapid path of expansion
there, encouraged by the country's phenomenal pace of development that
seems undaunted even by the current worldwide financial crisis.
Four Seasons has also announced new openings in Hangzhou and Beijing
by the end of 2009, and Guangzhou and Sanya in Hainan province in 2010.
It currently operates three hotels in China including Shanghai, Hong
Kong and Macao.
For Isadore Sharp, chairman, founder and CEO of the Canada-based luxury hotel chain, this is just the beginning.
He says China is of strategic importance to the company's global
expansion given the sheer size of the population and the country's
potential to vie with North America as an economic super power.
"We grow with the market," says the 76-year-old hotelier, who
obviously revels in the outlook of his hotel business in China. "China
is a vibrant country. For the hotel and travel industry, they are going
to benefit from what's happening in countries like China, India, and
Russia. The dynamics and demographics in this part of the world is
going to overwhelm what the future will be in our industry."
He adds that in the future Four Seasons may probably have as many
hotels in China as it has in North America, where it now manages a
conglomerate of nearly 40 medium-sized hotels of "exceptional quality".
"If you look at the size of the country in a number of cities, we are just beginning," he says.
Obviously Sharp is not alone in thinking so. The world's largest
private hotel company Global Hyatt Hotel also announced in September
the opening of the first Park Hyatt in Shanghai, together with two
other new hotels in Beijing and Guangzhou in the same year. Mark S
Hoplamazian, president and CEO of the private hotel company, says given
the significant growth in the Chinese business community and its need
to travel around the country, there will be great demand for Hyatt's
lodging.
Both hoteliers have reason to be optimistic. The last time Sharp was
in China was when the first Four Seasons Hotel opened in Shanghai in
2002. Since then, the country has undergone "dramatic changes," which,
according to Sharp, has given the company a foothold to grow and expand
in the country.
"A good example of what China is capable of doing is the way it
handled the Olympics," says Sharp. "China has set a standard that the
only time when it is reached again is when it runs another Olympics. It
is symbolic of many other things happening here. It has raised our
sights. We also want to be the Olympic champion of the hotel industry,"
he chuckles.
Both hoteliers' belief in the prospect of the hotel industry
worldwide, especially in China, is not dented by the current economic
downturn. For them, the whole idea of economy going down is within its
normal cycles, which will not affect the companies' long-term strategy
and undermine what the future holds for the hotel business in general.
"The hotel industry worldwide is going through normal downturn in
the economic cycles, but you are prepared, because it's natural
business," Sharp notes. "The industry today is the largest industry
worldwide, growing in percentage terms probably greater than any other
industry. You have to understand that we build a hotel to last 80 to
100 years, so it doesn't matter whether we build it during a downturn.
It's a long-term commitment."
What hotels like Four Seasons could do, he says, is to organize
their business plans to be able to go through the (leaner) times and
make sure the crisis does not affect the companies, so that they would
become strong enough to withstand whatever happens in the economy and
be prepared to deal with the next good cycle.
Hoplamazian, too, agrees that the economic growth in China,
especially in Shanghai, is going to be strong over the long term. The
company wants to stay focused on making sure that the hotels are built
for the long term. He says.
Zhao Huanyan, consultant at the Shanghai-based SAO Hotel Solution
Consulting Ltd, says that it is not surprising for major international
hotel giants to look to China for growth opportunities. According to
his observation, ten of the 12 major multinational hotel owners and
management companies have either announced new openings or signed new
contracts in China during the two months after the Olympics.
Jumeirah, the Dubai-based luxury hotel group and operator of the
world famous Burj Al Arab, will reportedly open its first hotel in
Shanghai early next year, and hopes to eventually open 10 in the
mainland, though it did not provide a timeframe for that expansion.
Even budget hotels in China are receiving a boost from the current
economic uncertainties. The Wall Street Journal reported earlier last
month that Actis, a private-equity investor in emerging markets,
recently pumped $65 million into the 7 Days Inn Group, a
Guangzhou-based budget-hotel operator. The investor had reportedly
expressed confidence in China's budget hotel industry whether in good
times or bad.
"If we look at the potential of the tourism and hotel industries in
the Asia-Pacific region, especially in China during the current global
economic downturn, China will continue to offer growth opportunities
and confidence for hotel runners," Zhao says.
