"The aim was to create a centre where business people could find anything they want on one site," says Jean Pierre Vanluchene, general manager of the Beijing Lufthansa Center. The end result is a complex that is home to the 540-room Kempinski Hotel, a shopping centre, restaurants, an office complex, an apartment complex, a business centre and Montessori school.
The idea was originally conceived by the former chairman of Lufthansa, who formed a joint venture made up of German companies ? Philipp Holzmann AG, Belfinger & Berger, Kempinski (the hotel group of which Lufthansa is a major shareholder), and DEG holding a total of 37.5 per cent of the shares, Chinese parties (37.5 per cent) and Daewoo of Japan (25 per cent). Construction began in February 1989, and the complex opened in Mal last year.
So, it is still early days for the Kempinski. In a country such as this," says the hotel's general manager, Robert Barsby, "it takes time to get established. We are in the process now of trying to consolidate the situation following the opening."
Teething problems, he says, have tended to be on the technical side, and are to be expected. With a range of new systems, from air conditioning to lifts, it is inevitable that hitches will occur. "With all projects of this size," he adds, "you're not going to make it happen in one year."
The hotel is aiming at the top of the top end of the market, looking to attract the wealthier, "more discerning" tourist, or more importantly the individual businessman. "And more and more and pouring into China," says Barsby.
Barsby is not worried that the hotel is likely to attract only company chairmen and not the more frequently travelling middle management. The hotel has a two tiered system of rooms and suites. "It's like having first class and business class on an airline," he explains. Middle management are able to negotiate corporate rates, he says, which makes it affordable ? "if their company is generating enough business."
An area that Barsby is keen to develop in order to pull in more businessmen, is that of incentives, offering companies the use of the ballroom, and such services as trips, and dinner at the Great Wall. He feels that China has the right ingredients to attract the incentive market. 'Let's be frank, with the way travel and leisure businesses have taken off in the last ten years, there aren't so many places left anymore where people can really say to themselves, this is something different. I think China is still one of them."
At the moment, Barsby is keen to point out the advantages of being situated in the midst of such a varied complex.
"We wanted to create an island situation within the city, where people could live, work, invite their guests, eat and drink, all on one site. The apartment complex would complement the office complex, which would complement the hotel, and I think it does."
The success of the shopping centre has been particularly important in raising awareness of the Beijing Lufthansa Center's name in Beijing. Vanluchene points out that you have more chance of getting a taxi to take you to the right place if you mention the Beijing Lufthansa Center, rather than the Kempinski Hotel. "The Friendship Store is quite an institution here," he says.
With customers being able to pay in renminbi, albeit with a surcharge, the store has attracted a large proportion of local Chinese customers. And, the restaurants on site benefit as part of a knock-on effect. The store also benefits hotel guests, says Barsby, who are able to buy goods there that they would otherwise have to travel some way to find.
On the other side of the complex from the shopping centre, the office and apartment blocks have been successful since day one. An important factor has inevitably been the shortage of flats and office space in Beijing.
"We have a waiting list for office space," says Barsby, "and it's almost distressing. We have some companies that I would love to accommodate here, but we just don't have the space."
With such a shortage of accommodation existing in Beijing, the centre has no problem commanding the prices it wants. "It is not inexpensive, it is true," admits Vanluchene, "but for the levels of comfort that this centre offers, I think it is not overpriced."
While Barsby admits that office accommodation in Beijing is perhaps on the pricey side compared to other parts of the world, when it comes to the centre's apartments, he says that he does not consider the prices too high. "We are not providing accommodation that a local Chinese individual would want. It is designed for the joint venture expatriate, living in this country on a short-term basis. We don't offer people 20 or 30 year leases ? that is not the business we are in."
"But we have to be careful," he concedes. "People have made a lot of mistakes in many countries by taking advantage of a market in a certain situation and getting paid back by all the tenants when that situation changes. It is not sensible to raise the prices to try to make a killing, because things will change."
For the business man seeking office accommodation on a more flexible basis, the Regus business centre on the site can offer an office, secretarial support, an IDD telephone installed and waiting (not always straight forward to organise in Beijing). The leases can be as short as one day and as long as one year and the centre can offer a company the chance of gaining registration.
"Here there is a Catch 22 situation," explains the Regus's manager, Susanna Schneider. "You can't get office space unless you register, and you can not register unless you have an office contract. Regus can help by giving the office contract, and the registration process can then start."
"Regus was an important part of the Ian," says Vanluchene. "It's not just a Fax and answering machine, it is competent staff who are able to give support to somebody who has just arrived and hasn't got a clue where to go."
"We try to take out all the wrinkles," adds Schneider.
The Beijing Lufthansa Center itself may still have a few wrinkles of its own to smooth out, but there is a feeling of optimism among its managers. "We're not perfect and we have got a long way to go," concedes Barsby. 'But, I think we're heading in the right direction." *