Little it seems will stop the gallop of international hotel chains expanding their presence in China. If they are not building new properties over the next 18 months they are negotiating joint ventures for future construction plans.
One of the few drawbacks to business is the pressure being exerted by Beijing on the provinces to cut back on investments in 'non-core' sectors. Hotels, and other low priority areas such as golf courses and real estate, may begin to feel constrained by the government's desire to channel capital into areas like transport and power. Decisions like the one taken by Xian to ban foreign investment in new hotel projects before 1995, may stifle some of the demand.
Yet the word still on every hoteliers lips is an unqualified "booming" with demand for rooms in major business centres such as Shanghai clearly outstripping supply.
The momentum begun by opening doors to foreign investors in the late 1970s has mounted steadily and in the ast year investor interest has reached Fever pitch. In China's gold rush culture which in October helped push the Hang Seng index to breathtaking highs, international investors are scrambling for a piece of what most expect will be the world's largest economy by the early 21st century.
An expanding infrastructure is helping deliver this army of businessmen and women to China's established and newly-emerging industrial centres, fuelling an unchecked demand for hotel accommodation particularly in the coastal cities and in the south.
While the traditional visitor centres in China continue to grow in terms of tourist hotels, it is the country's less fashionable but fast-growing provincial capitals such as Zhengzhou and Wuhan which are enjoying the latest wave in hotel construction.
Holiday Inn Worldwide, for example, has just signed management contracts for properties in Zhengzhou and Wuhan. This increases its presence in China to 15 hotels in 13 provinces and makes it the largest countrywide representation of any international hotel chain. "Wuhan is the industrial heartland of the PRC and Zhengzhou already boasts an international airport to accommodate the increasing flow of traffic to and from the region", explains David Poulon, managing director of the chain's Asia Pacific operations.
The 200-room Holiday Inn Crowne Plaza in Zhengzhou which will include an executive floor and associated business facilities is currently under renovation and will open in the third quarter of 1994. The Wuhan property, a new building, will open later in the year. Appropriately, Werne Katte, at present general manager of a Holiday Inn property in the prospering industrial town of Qingdao, will take over the running of the Zhengzhou Crowne Plaza.
The Asia-based chain, New World Hotels International, is also targeting the commercial hotel sector in China in anticipation of increased demand for no-fuss, good quality business hotels in growing industrial cities. "We think the major cities in China have been saturated and so we are opening in secondary cities," explains Cynthia Csang from the chain's Hong Kong office.
New World which already boasts six hotels in China's major cities will open in the north-eastern industrial city of Shenyang in mid-1994 and is aggressively negotiating for outlets in Qingdao, Harbin and Wuhan.
Joanne Wilcox of Shangri La International, describing her company as being "very bullish" about developments in China, says the chain also sees the country's secondary cities as exciting opportunities for growth. Despite its 'A grade hotel associations, Shangri La is looking to its more commercial brand, Traders Hotel, as the likely beneficiary of company extension plans, and the first in the latest crop of this outlet opens in Shenyang in 1995.
Although at present coy about details, she promises that business travellers can expect to see a growing Shangri La presence in China's secondary cities over the coming few years, adding that a new Shangri La International is under construction in the southern city of Beihai, due to open in late 1995, early 1996. In 1993 the group acquired the 510-room renamed Shangri-La Golden Flower Hotel in Xian and opened its first property in Taiwan.
The Peninsula Group, which includes the Peninsula Hotel and Kowloon Hotel in Hong Kong and the Palace Hotel in Beijing, has experienced an up-turn in China 'and has plans to capitalise on its expertise and experience to be a key player in the hotel industry there", says Grebstad.
ITT Sheraton, the first international chain to brave the China market, opened the Great Wall Sheraton in Beijing 1984. Almost a decade later and with five properties in major Chinese cities, Sheraton professes to have "ambitious" plans for its future development in China. Confirming the trend seen in other hotel chains, it is targeting booming business centres such as Guangzhou, Hainan island and Shenzhen.
The group is thought to be considering introducing a second brand for China which it would then take to other parts of Asia. Like Shangri-La, the new chain would adopt a price strategy pitched slightly lower than the premium Sheraton Group. But it rules out targeting budget-oriented travellers.
"China is a very, very important market for us" enthuses Sheraton Marketing services Manager Susan Boveford, who insists that with its forthcoming expansion plans Sheraton is confident of becoming one of the main operators of international chains in China.
Up until the beginning of December, the start of a traditional three-month winter lull, occupancy rates were running at 100 per cent at Sheraton's five star properties in Beijing, Shanghai and Tianjin. Sheraton believes that barring disaster, high occupancy levels will continue in the spring.
Such is the shortage of rooms in Shanghai, a city boasting one of the most dynamic hotel markets in Asia, room rates have increased twice in the past year taking prices to a level found in most Asian capitals. Westin Tai Ping Yang in Shanghai predicts a further rise in the city's travel and tourism in the coming year. If shortages continue, businessmen can only expect the rates throughout China to go higher.
In response to the growing demand from business travellers, hotels are increasingly tailoring their facilities to this market. Shanghai's 1,000-room Hua Ting Sheraton has just introduced new executive floors with associated services, while the hotel's 'Japanese Floor' with the Japanese communications facilities will cater to the regiments of Japanese visitors doing business in China.
Meanwhile Sheraton describes its Tianjin property as a 'purely business' hotel, boasting a state of the art business centre, a gym for today's health conscious executives and a jogging path. Tianjin's flourishing economy has helped give the hotel 100 per cent occupancy in recent months, perfectly illustrating the future growth potential for the commercial hotel sector as China's economic boom expands to encompass cities once familiar to adventurous travellers. *
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