Formosa International Hotels Corp (晶華酒店), owner of the Grand Formosa Regent Taipei, will become the first local brand to explore the competitive hotel market in Shanghai at a time when the city's real estate market is cooling down and the number of businesspeople traveling to China is on the rise, said a top Grand Formosa executive yesterday.
The Chinese government's effort to cool its overheating economy has created a marked effect on Shanghai's real property market, driving down housing prices by 15 percent to 19 percent, said Lin Ming-yueh (
"Shanghai's business travel sector is growing by 15 percent annually, making it a commercial hub in Asia Pacific with abundant business opportunities," Lin said. "Now is the perfect time to expand our core business there."
Grand Formosa is following in the steps of other international hotel chains that have entered Beijing, Shanghai and other cities to tap into the growing tourism market. Five-star hotel brands, such as Ritz-Carlton, Hyatt, Sheraton and the Regent, are building luxury hotels amid slowing growth in Europe and North America.
Grand Formosa shareholders gave the green light to the overseas investment project Wednesday. Detailed plans and investment targets will be finalized at a board meeting early next month before the hotel submits an application with the Investment Commission under the Ministry of Economic Affairs, Lin said.
In accordance with the Chinese government's regulations, Grand Formosa will bring in foreign capital to establish a holding company in Hong Kong, an approach Lin said will allow it to better manage risk.
According to government rules, Taiwan companies can invest at most 40 percent of their net value in China. Grand Formosa, therefore, can invest up to NT$1.1 billion (US$35 million) on the mainland, based on its third-quarter financial report which shows the company has a NT$2.9 billion net worth.
In the initial stage, the company will pour in at least NT$330 million to buy Shanghai hotels to operate under its own brand name before expanding into other big cities.
"The premium hotels we run there will target Taiwanese businesspeople, who have become a big segment in the travel market," he said.