Shui On Land is a property developer that’s been happy to contribute to China’s super-sized growth. Its flagship project, Xintiandi, has helped put Shanghai on the map of cool urban spots, but it also served as an incubator for something altogether more delicate: a rash of new boutique hotels.
Perhaps it’s not so strange that a giant developer should be the progenitor of small-scale lodging. In 2001, the plan for Xintiandi, a mixed retail and commercial “lifestyle” hub, called for the addition of a serviced apartment block. That block was called 88 Xintiandi. Within a year of 88’s opening, however, it became clear that the concept wasn’t going to work.
“The purpose [of 88] was to actually have a serviced apartment,” said Jan Buttgen, who oversaw the hotel’s transformation. “However, Shanghai became so popular that people come and go, [but] they request very big rooms.”
Guests didn’t want to stay at 88 for months, but they didn’t mind putting up in the apartment-sized rooms for days or weeks. So in 2003 the property was converted from a serviced apartment into a boutique hotel, setting the stage for the current surge in the number of tiny, luxurious hotels in China.
“At the time there were no hotels like ,” said Johannes Qiao, a former manager there. “It was a pioneer for the concept of boutique hotels in Shanghai.”
Qiao should know. The Shanghai native is now manager of the trendy new Jia Hotel on Nanjing Road. Jia Shanghai is every bit as slick as its Philippe Starck-designed sister property in Hong Kong. The lobby is an exercise in hip minimalism. An Apple Macbook Pro laptop glows quietly on a stark black desk, serving as a check-in computer, and a life-sized Bearbrick toy sits in a corner.
Small hotels with a flair for design and service, like Jia, are now mushrooming in China’s top cities. In Shanghai, for example, Jia’s opening was preceded by the similarly plush Mansion hotel, Pudi and M-Suites.
This is happening against a backdrop of fevered growth in China’s hotel sector.
“The whole hotel industry, from the budget hotels to high-end ultra-premium hotels, is seeing astounding growth,” said Parita Chitakasem, a travel and tourism account manager at research firm Euromonitor International.
Much of this can be tied to next year’s Beijing Olympics. Property consultancy Jones Lang LaSalle estimates that the number of rooms at internationally branded hotels in Beijing will double to 27,000 by 2009. In Shanghai, rooms at such properties will grow 22% to 33,000 by 2010, in time for the World Expo.
The budget hotel chain Home Inns grew from 134 hotels in January to more than 200 in October, aided by a buyout of the Top Star chain worth about US$46 million.
But budget chains will have little to fear from their boutique brethren. It is the traditional luxury hotels that should be worried. Since boutique hotels tend to be priced at US$200 a night and up, says Lily Ng, a senior vice president at JLL’s hotels unit. A night at a Home Inn in Shanghai starts from US$22. Traditional hoteliers are aware of the threat.
“If you’re complacent, you end up being just a bed and breakfast,” said Charlie Dang, general manager of Westin Beijing, Financial Street.
As a result, the Starwood group, which runs Westin hotels, is introducing its boutique-like brands to China, with Aloft and W hotels set for launch in Beijing. These establishments may not be very small but they do share a preoccupation with edgy design and trend-spotting that can lure guests away from a standalone boutique outfit.
“You can see the big hotel chains trying to emulate [boutique hotels],” said Boris Yu, who heads the luxury travel service Quintessentially in China.
Industry watchers say the profile of a typical boutique hotel guest is difficult to pin down, but it has much to do with a city’s cultural capital. As more museums, interesting architecture, clubs and restaurants appear, boutique hotels spring up so that visitors won’t have to lower their cool quotient when they hit the sack.
As hotel chains expand in anticipation of the mega-events on China’s tourism calendar, they are feeding a hotel glut that could leave some players overexposed once the events are over and arrival numbers drop. Boutique hotels now account for less than half a percentage of China’s total hotel market value by sales, by Chitakasem’s reckoning, but they are well placed to survive a luxury hotel implosion.
“Boutique hotels will be the best positioned to withstand any potential setback and maintain their brand power,” he said.