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CHINA HOTELS
Room for improvement
at hotels
As the demand for hotels in
China grows and operators focus more on management contracts rather than
owner-operated developments, reliance on local developers has increased.
As the demand for hotels in
China grows and operators focus more on management contracts rather than
owner-operated developments, reliance on local developers has increased.
The problem is that many mainland developers lack
the best-practice processes necessary to deliver an international project to
the levels of quality required by the industry and expected by the customer.
Delays are common, early overspend results in cost
savings in the finishes, and an overall compromise on the level of quality
is not unusual.
This need not be the case.
There is an opportunity for operators to turn this
situation into a competitive advantage.
Increased business travel, tourism, and the
upcoming Beijing Olympics are fueling the demand for hotel rooms in China.
At the recent Hotel Investment Conference Asia
Pacific, 77 percent of participants confirmed that China would be the major
source of new developments in the region.
Land prices in China are rising and it is becoming
increasingly difficult to find good sites.
There is a trend towards mid-range business hotels
in secondary cities. Acquisition and rebranding of existing hotels is one
option, but major brands prefer new buildings in China via local developers.
There is also a trend towards management contracts
and a reliance on developers to build hotels to brand standards.
Due to the lack of hotel developments in the
mainland over the past 10 years, most developers lack the necessary hotel
experience to successfully deliver the product.
The major brands have developed their "brand
standards" to which developers are obliged to comply. Compliance with
such standards is checked via site visits by the operators' technical
services teams.
However, the developers' lack of project planning,
the tendency to appoint consultants and suppliers based on price rather than
capability and the overall lack of hotel and international best practice
often results in missed opening dates and poorer quality.
The frequent response is to accelerate the program
during the critical fitting out stages through additional, often unskilled,
labor and 24-hour work.
Typically, this results in delayed opening dates
because a large number of unacceptable defects have to be fixed prior to
opening, otherwise there is a risk of tarnishing the brand.
By working alongside hotel operators and
developers at an early stage, consultants can set up the overall project
management, cost management and procurement frameworks that will enable the
project team to work to a clear roadmap that will maximize the chances of
project success.
Commencing with establishing the project brief,
the master program and a well-balanced cost plan, consultants can assist the
developer in the pre- qualification, selection and ultimate appointment of
the team.
In-depth knowledge of the supply chain enables
consultants to develop the optimum package-letting strategy to secure both
time and cost savings from the market.
And the setting up of an efficient structure for
meetings, together with executive "dashboard" reporting, allows
all parties to focus on key deliverables without being unnecessarily
distracted.
The overall management of program, budget, risk
and value will result in time and cost savings compared with the typical
outcomes currently experienced in China.
Such services can be delivered as an extension of
the operators' technical services team.
A major benefit of a well-planned, transparent and
risk-managed approach is that the developer, the operator and the whole
project team are fully aware of the status of the project at all times, and
actions to maintain program and budget are known.
This approach reduces the likelihood of surprises
and the adverse affect of knee-jerk reactions to the late discovery of bad
news. - by Andrew McPherson THE
STANDARD 17 March 2006
Hotel
investment potential in China bound in red tape: report
(AFP) -International investors looking to pump
money into China's rapidly growing hotel sector are finding few
opportunities, according to a property industry report Tuesday.
A
huge gap in the aspirations of buyers and sellers, and Chinese red tape were
acting as a deterrent, property consultancy Jones Lang LaSalle said.
As
China has opened up over the past decade, its inbound tourism market has
consistently outstripped the world average.
Between 1990 and 2000, international visitor arrivals
increased by an average 11.8 percent a year, compared with the more modest
global figure of 4.3 percent.
The
country with the world's largest population, also leads the world in
economic growth which is expected to grow as the benefits of accession to
the World Trade Organization crystallise.
"Hotel
investors, developers and operators alike, are currently scrambling for
market presence in China, especially in the key centres of Beijing and
Shanghai," said Scott Hetherington, the consultancy's hotel executive
vice president.
"They
are driven by the desire to benefit from an increasingly affluent domestic
population as well as the influx of foreign corporate travelers."
Beijing's
hosting of the 2008 Olympic Games also offered immense opportunities, both
during the event and in the lead up as foreign corporations establish a
presence in time to win lucrative contracts, he said.
But
despite the strong investor interest in China, there have been few hotel
transactions.
There
is a lack of market transparency and a "significant pricing gap"
between buyers and sellers in China's key hotel markets, the report said.
Tenure
laws, restricting the maximum ground lease for a hotel to 40 years, concern
about the ability to repatriate earnings out of the country, and the
dominance of minority interests also held back investment, it said.
Hetherington
said the China market needed to follow established practices.
"It
is the balance of supply and demand that determines the profitability of any
hotel investment," he said.
"Potential
investors, developers and operators in China's hotel industry need to look
beyond the obvious attractions to these same hotel market fundamentals that
apply across the globe."
Beijing
and Shanghai were the only Asian markets to record growth last year when
hotels elsewhere in the region had to contend with the global economic
slowdown at the aftermath of the September 11, 2001 terrorist attacks in the
US.
The World Tourism Organization recently announced China is set to become the
world's top destination by 2020, attracting 130 million visitors.
- ehotelier
1 November 2002
WEST MEETS
EAST - Joint Venture in
China
China's Jin Jiang International
Management Corporation and Europe's Accor hotels have signed a joint venture
agreement in preparation for an April launch of its new domestic sales and
distribution network targeting the China
market under the Mercure brand. Accor
now has 25+ hotels in Greater China.
The rush into China includes Starwood's
opening of the Sheraton Shenyang Lido Hotel
HONG
KONG Four
Seasons Hotel secured contracts to manage two six-star hotels above the Hong
Kong Station. International Finance Centre which comprise
gross floor area of 4.68 million sq ft jointly developed by Sun
Hung Kai Properties and Henderson Land that include 1,000
rooms when they will be completed in 2004 and will be the SAR's largest
luxury hotel to be named Four Seasons Hotel Hong Kong and Four Seasons
Suites.
Britain's
Bass Hotel acquired New World's 100% stake in 514 room Regent Hotel in
Tsimshatsui for $346 million USD in 2001. The hotel has been re
-branded to an Inter- continental. The Bass group also owns Holiday
Inns.
HONG
KONG: THREE & FOUR STAR HOTEL DEMAND TO OUTSTRIP SUPPLY
Three
to four-star hotel demand will outstrip supply over the next three years in
the wake of increasing numbers of mainland visitors, according to DTZ
Debenham Tie Leung.
DTZ
investment director Mark Hahn said recent hotel transactions included
Harbour Plaza Metropolis in Hunghom, the former Starra Hotel at 133 Leighton
Road and Grandfield Pacific at 18 Percival Street, both in Causeway Bay.
"Investors
are looking for quality hotel properties and this reflects that the market
has confidence in the hotel sector," he said.
Prospects for hotel properties were promising,
especially for three and four -star hotels, which would be in strong demand.
Cheung
Kong (Holdings) paid HK$ 1.19 billion to acquire the 690-room Harbour Plaza
Metropolis, representing an average HK$ 1.73 million per room.
The
former Starra Hotel, with 240 rooms, was believed to have been bought by a
Taiwanese investor for HK$ 260 million, or HK$ 1.08 million per room.
The
buyer of Grandfield Pacific Hotel with 123 rooms is understood to be a
Japanese investor who paid HK$ 190 million, or HK$ 1.54 million a room.
DTZ
said the hotel industry was benefiting from increased visitor arrivals due
to the relaxation of the mainland visitor quota.
It
said visitor arrivals increased 14 per cent to five million during the first
four months this year. Mainland visitors grew 48 per cent to represent 38
per cent of the total.
Three
to four-star hotels achieved an average 90 per cent occupancy rate in April.
The
Hong Kong Tourism Board projected that demand in late 2005, when Disneyland
would be completed, would grow an average 36 per cent to about 59,000 rooms,
assuming an annual visitor growth rate of 7 per cent to 8 per cent from the
expected 14.8 million this year.
There
were 80 hotels in Hong Kong at the end of last year, providing 34,314 rooms.
DTZ
said an additional 28 hotels would be completed during the next three years
and the rooms available would increase 54 per cent to 53,080.
However,
it said most of the new supply would be four to five-star hotels in tourist
areas, including Tsim Sha Tsui, Hunghom and Lantau Island.
The
Hong Kong Disneyland Hotel will provide 5,000 five-star hotel rooms by 2005
and contribute to a 136 per cent increase for the category, it said.
- June 2002
China
4 months Tourist Arrivals Up 8.26%
Tourist
arrivals in the four months to April rose 8.26 pct year-on-year to 30.99 mln,
the official Xinhua news agency reported.
Foreign
tourist arrivals in the period increased 17 pct year-on-year, Hong Kong
tourists rose 2.43 pct, Macao tourists increased 27.07 pct and Taiwan
tourists increased 4.69 pct, Xinhua said, citing statistics from China
National Tourism Administration.
The
number of tourists from several countries reported two-digit growth,
including South Korea, the Philippines, Mongolia,
Malaysia, -eHotelier
31 May 2002
The
China National Tourism Administration on March 29 issued the first
regulation government the hotel industry. The regulation calls for
credibility in hotel management, protection of the legitimate interests of
guests and hotels, and standardization of hotel operations in line with
international practice. The regulation will first be implemented in
2,500 star membership hotels, and then be spread to some 8,000 hotels across
the country.
SHANGHAI’S
LEGENDARY ASTOR HOUSE HOTEL
Situated
in an inconspicuous corner near the Bund, the Pujiang Hotel, formerly the
Astor House Hotel, seems to have lost its bygone glory.
The
low-rise building has been eroded to be dated in colour, which was submerged
among the eminent architecture of the Bund.
Few
members of the city's younger generation are even aware that the hotel
exists, let alone that it is considered the father of the city's luxury
hotels.
The
hotel was opened in 1846. In 1861 the two-story hotel was sold to Henry
Smith who renamed it the Astor House Hotel. The building we see today was
completed in 1910. In 1959, the hotel name was changed to Pujiang Hotel.
It
was once the most renowned and luxurious foreign-owned hotel in the Far
East.
The
Victorian-style design was the work of an Englishman, which can be detected
from the grand columns standing in the halls and arched gates.
The
hotel has witnessed many breakthrough events in Chinese history. The first
lamp bulb in the country was lit here, the first telephone in the country
was switched on here, and the first sound film from the West was projected
here.
Plus,
China's first ball was held in the hotel, helping to bring to a close the
tradition that women should not attend social activities.
It
is said that Chiang Kai-shek had his last dinner here before withdrawing to
the island of Taiwan.
A
bellboy picked up a wallet belonging to a Russian at the main entrance to
the hotel, and used one third of it to buy a car, serving as the first taxi
in the country. He was the founder of Johnson, now Qiang Sheng Taxis.
Today,
when you walk on the creaking wooden floor and see the simple furniture, you
cannot imagine the brilliant days of the hotel. It is only a two-star hotel
now.
Some
of the 116 guestrooms, in which international celebrities such as Charlie
Chaplin and Albert Einstein once stayed, are taken as historic spots with
photos hanging on the wall to show guests.
The
suites have been redecorated in their original style (except for modern
electric appliances), and some of the furniture has been modeled with
guidance from old photos.
The
hotel still keeps its hulking and slow manual-operating elevators, which
work from 7:00am to 11:00pm.
Close
to an international wharf, the hotel changed some guestrooms for young
travelers, known as the youth hostel. Here there are several beds in one
room.
It's
the first of its kind in Shanghai, and has been applauded by young student
tourists.
- By Lu
Chang,
Shanghai Star
; South China Morning Post
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