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Wed, Nov 10, 2004 - Page 12 News List

Luxury hotel chains targeting China for expansion

NEW MARKET With their traditional markets in North America and Europe slowing down, premium hotels are pouring money into Asia, and China in particular


New Jingjiang Hotel, right, and Garden Hotel, left, stand at sunset in Shanghai in this photo from September. With markets in Europe and North America more or less saturated, international hotel chains expect Asia, especially China, to bring growth they can't find elsewhere.


The elevator shafts at The Regent are still empty. The concrete floors of the half-built hotel are bare. Windows haven't been installed.

But general manager Martyn Standen looks at the building and sees a strong contender in Shanghai's competitive market for luxury hotels.

Premium hotels are popping up all over Shanghai, Beijing and other Chinese cities as Regent, Ritz-Carlton, Hyatt, Sheraton and others pour billions of dollars into expansion. Others are opening motels to serve a market that didn't exist five years ago: Chinese travelers with their own cars.

With growth slowing in Europe and North America, hotel chains are targeting Asia -- China in particular -- for their new growth. They point to occupancy rates as high as 90 percent in Shanghai as proof that there's plenty of room to expand.

"Many cities have become overbuilt. Shanghai will be the only city in Asia where there is a high level of established business and a level that will continue to grow," said Standen. "The outlook over the next several years is remarkable. It's the best city to be in Asia by far."

Between 1998 and 2002, the number of tourists visiting China jumped by 54 percent to 97.9 million. Growth stalled last year amid the outbreak of severe acute respiratory syndrome but has rebounded.

The number of Chinese travelers hit 878 million in 2002 and looks set to top that figure this year.

"There's going to be a need to take care of these people in the different market segments where they want to be served," said Mark DeCocinis, general manager of the Portman Ritz Carlton Shanghai.

Three 50-plus-story premium hotels have recently opened in Shanghai -- the JWMarriott, Four Seasons and Westin. Standen's hotel, The Regent, is due to open next June. Another 25 are under construction or on the drawing table.

All qualify for a five-star rating, the highest given out by China's government, meaning they meet international standards for room sizes and offer swimming pools, business centers and other amenities.

In Beijing, Ritz-Carlton is planning a 320-room luxury hotel for the new business district and another for the financial district on the Chinese capital's west side.

Six Marriott hotels are planned. Hyatt International is taking a one-third stake in a boutique Park Hyatt in the Beijing business district. Starwood Hotels & Resorts Worldwide Inc plans to open a Westin hotel in the capital, four Sheratons in mid-sized cities, and a designer W hotel across from Shanghai's famous Bund district within the next five years.

Carlson Hotels Asia Pacific, which owns the Regent and Radisson brands among others, is opening a 300-room Regent in Beijing this year.

In major Chinese cities, a stay at a foreign-managed luxury hotel nowadays is comparable to that in a Western city. Free broadband Internet and executive lounges are standard.

Chinese-run hotels are struggling to catch up.

"We need to deal very quickly with building our brand name," said Yang Weimin, vice chairman of Shanghai Jinjiang International Hotel Development Ltd. The company is China's biggest domestic hotel chain, with 139 outlets that include Shanghai's famed Peace Hotel.

Jinjiang is part of a state-owned conglomerate with transport, property development, education and manufacturing companies.

It owns colonial era landmarks like the Jinjiang Tower, Park Hotel and Jing'an Guesthouse -- elegant but well-worn and due for refurbishment.

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