The Shanghai luxury hotel market has suddenly become a lot more competitive, with new hotels springing up in Puxi, the old part of the city. Previously, there were just a handful of really top-class hotels, headed by the Ritz-Carlton and Pudong's Grand Hyatt and Shangri-La. However, the rapid emergence of Shanghai as a regional financial and commercial centre has led to significant recent investment in this sector.
This is good news for business travellers, both in terms of choice and the cut-price deals that will inevitably follow. The city already represents good value for money – the US$170-180 typically charged by the Grand Hyatt and US$150-155 by the Ritz- Carlton are well below what a business traveller might expect to pay for similar accommodation in Hong Kong or London.
"There is rapid growth in the elite hotel market in Shanghai," says Chris Tsoi, director of marketing at the soon-to-be-opened JW Marriott Shanghai. He estimates that the number of rooms available in the 'upper-end five-star' bracket will increase by 38 per cent in 2002 and by 21 per cent in 2003.
Frank Vieira, managing director of the Radisson Plaza Xing Guo, admits that there will be a little softness in the market with all the new openings but he believes that the growing importance of the city will ensure decent levels of occupancy in the medium term. Tsoi agrees that demand is rising fast and "things will be positive" for the industry if the city's high economic growth rate is maintained. "There's a lot of room for growth at the upper end of the market," he says.
In Shanghai, unlike in Hong Kong and other centres, the top end of the market has recently outperformed four-star and three-star properties, indicating that there is potential for an expansion of luxury properties.
The Radisson is the smallest of the new entrants with just 190 rooms. But what it lacks in size, it makes up for in character. The hotel, which opened last November, is set in 70 hectares of gardens in the old French Concession area of the city. Radisson secured the 10-year management contract last September following a competitive bidding process, and getting the hotel ready for opening in just two months was quite a challenge. The complex includes a newly-built 16-storey hotel building along with 20 serviced apartments and several villas that in the past have received important national leaders, including Mao Zedong in the 1950s. These villas are now being refurbished and will later be incorporated into the Radisson brand.
The hotel is marketing itself as a quiet retreat from the bustle of the city. It should come into its own in the summer when it hopes to put on barbecues and al fresco dining on its lawns. Only the nearby Okura Garden Hotel, the first three floors of which were once old Shanghai's French Club, has a similar feel.
Half of the Radisson's guests are mainland Chinese but six months after opening much still needs to be done to convince locals that this former state guesthouse is no longer forbidden to the public. "There is a perception that this place is still something to do with the government," says Vieira, a veteran of the Shanghai hotel scene, having opened the Sheraton Hua Ting back in 1985.
The JW Marriott Shanghai is due to open in early November this year, a few months behind schedule. Located close to the People's Square in the heart of the city, it will be part of a multi-use 60-storey building, the Tomorrow Square, which will comprise the 342-room hotel, 255 Marriott executive apartments and 20,000 sq metres of retail space. Hotel rooms will be located between the 40th and 60th floors. Tsoi says the hotel will be the Marriott's flagship in China.
Meanwhile, Four Seasons opened its first mainland China property in Shanghai in February. Located on Weihai Road and within walking distance of Nanjing Road and People's Square, the 443-room hotel is the latest addition to Shanghai's roster of luxury accommodation. The 37-storey property has four restaurants and a landscaped roof-top garden.
Another mixed-use development close to the Bund is due to open in August. The US$400m Bund Centre features a 50-storey office tower, a 302-room Westin hotel and 145 executive apartments. The 26-storey Westin aims to be the first five-star hotel in the Bund area.
How long it will hold on to that status is unclear. Other deals involving international hotel groups are currently being negotiated. Talks have been going on for more than a year between Mandarin Oriental and the famous Peace Hotel, with its Art Deco features and superb location on the corner of the Bund and Nanjing Road. If a deal is finally struck, it should lead to one of the city's best-loved old buildings being restored to its former glory.