The nationwide investment programme in China's airport sector will bring obvious benefit to travellers. It might also stimulate investment in the hotel sector. Airport hotels are common in international aviation hubs, such as Tokyo, London, Frankfurt and Chicago. These hotels cater mostly for cabin crew, transit travellers and those who have missed flight connections. They are also convenient places for business meetings involving delegates flying in from various locations.
Until now, the airport hotel sector has been undeveloped in China. The simple reason is that no Mainland city has yet developed into an aviation hub, a prospect hampered by the restriction on landing privileges granted to international carriers. The volume of international flights with connections elsewhere in the region is small and, while there is quite a high number of internal flights, this does not in itself generate much business for local hotels, says Mr. Steve Kleinschmidt, managing director of PKF Consulting.
Mr. Reggie Shiu of the Accor group in Bangkok believes it is a "bit early" for air-port hotels on the Mainland. Accor operates 2,800 hotels worldwide under well-known brands including Novotel and Sofitel, but the group's aggressive expansion campaign in China involves no airport hotels.
In China no one airport has become a transit point, although Beijing and Shanghai are slowly pressing their claims. All other airports are simply destination airports, although it is possible to envisage secondary cities such as Wuhan, Chongqing and Shenyang emerging as regional hubs. It requires a concerted effort to promote a city as an aviation hub, says Kleinschmidt.
For the moment, there are very few specific airport hotels in China. "The closest is the Movenpick Airport Hotel in Beijing," says Kleinschmidt. "However, that hotel does a mix of business, including FIT business, since it is located in a suburb with several industries." The' same can be said of Hongqiao in Shanghai, served by Shanghai International Airport Hotel. The hotel claims recent occupancy levels as high as 80 percent but it is braced for a downturn when
The 408-room Movenpick has been operating for a decade. Business has been impacted by the high level of hotel over-capacity in Beijing ?the occupancy level in 1998 was 65 percent, falling to 55 percent in the early months of this year. About 35 percent of its guests are airline crew and 45 percent are foreign tourists or business travellers. The remaining 20 percent are locals or long-stay foreign guests.
Ms. Barbie Takahashi, sales and marketing director of the hotel, says some long-stay guests have been lost to the villas and condominiums being built in the area. To counter this development, long-stay business has been propped up by the large number of technicians working on the airport expansion.
Construction of the new airport in the Pudong region of Shanghai, due to open on October 1, may be sufficient to support a single hotel, says Shiu. Shanghai is starting to emerge as a hub between north and south China and the new airport is in a remote location. Shiu says that since connecting transport is well advanced – including a rail link, a six-lane highway, bridges and tunnels – travel time to the city centre should be swift. However, several development companies are evaluating opening a hotel.
By contrast, most inland airports are close to downtown which makes travelling easy, despite worsening road congestion. Shiu says Mainland Chinese air travellers tend to be relatively affluent and stay in a city for more than one day. An Accor study showed that domestic travellers stay on average between 1.8 and 2.0 days at a destination. This makes them likely to prefer to stay downtown, close to entertainment facilities. The proximity of restaurants, bowling lanes and karaoke bars is key to hotel selection, he adds, and these facilities tend to be in city centres.
"Until the aviation industry improves, I don't see the demand," says Shiu. Certainly, there is little evidence of international groups moving into this market. Even Movenpick says it has no more plans in this area. However, Shiu believes the pace of change in China is so rapid that conditions might exist to sustain several airport hotels in as little as eight to 10 years from now.