With the 2008 Olympics looming, Beijing is one of the hottest development markets in Asia. But the rest of China is not far behind. Key demand drivers in China: rising prosperity of population, more ‘approved destination status’ locales, low-cost airlines, improving infrastructure, including major highway systems.
Upcoming Olympics in Beijing in 2008 and World Expo in Shanghai in 2009 mean an accelerated development pace.
Labor, ‘with no easy answers,’ is the biggest challenge going forward; training and retention will be top of mind for the foreseeable future as hotels compete among each other and other growing sectors.
Scott Woroch, senior vice president of development, Asia, for Four Seasons Hotels & Resorts, which has 12 announced Asian projects in its pipeline, explains that addressing those issues is easier in China. He said, ‘From airports to bridges — things that assist with movement of people — those issues in China are a bit easier because the government is involved.’
Tom Storey, executive vice president, development, Fairmont Raffles Hotels International. ‘In China the bigger issue is having the right partners — period. If you have the right partners who have done a lot of transactions with Chinese government, that helps get entitlements.’
Tom Storey says the company is focused on finding the right partners for the key gateway markets. Raffles just debuted in Beijing. Swissôtel will open in Shanghai in late 2007 and China’s Guangdong Province in 2008.
Also addressing the growing demand for mid-market product, Accor is targeting most of its expansion to the budget and mid-market. Michael Issenberg, managing director, Accor Asia Pacific, said, ‘70% of our business in China comes from the domestic market, and while the expansion of our luxury Sofitel brand will see the international component of our business increase (a new flagship Sofitel Wanda Beijing will open this year), domestic business to our economy and mid-tier Ibis, Mercure and Novotel brands will grow at an even faster rate.’
The majority of these hotels will be concentrated in regional centers and secondary cities that offer new business parks and transport hubs.