Beijing hoteliers will be left with tens of thousands of rooms to fill after the Olympics building boom is over.
The Sofitel Wanda Beijing, a so-called platinum standard property that is scheduled to open this summer, will be contributing to that huge supply. Beijing will have nearly 150,000 hotel rooms next year.
But Gerhard Zimmer, the Sofitel’s general manager and an industry veteran after 15 years here, tells us why he is not worried.
Q: Will the luxury hotel market cope after the Olympics?
A: Beijing has a total number of 90,000 hotel rooms right now. From 2006 to 2008, an additional 45,000 rooms will be added. So of course this is a phenomenal growth. Whether the market after the Olympics can sustain this supply, is the question in everybody’s mind. I believe the luxury market — the five and five-star-plus hotels — there is a glut in that segment, so it will face some pricing difficulty. Unless there is a cohesive strategy to keep the rates at certain levels, what will happen is the real platinum hotels will probably see prices stay consistent, but the five-star prices tips towards four-star, and the four-star tips to the three-star. So this makes it difficult to remain profitable.
Q: What effect will the Olympics have on the market?
A: I’m an optimist by nature and I think the overall marketing effect of the Olympic Games will be tremendous. There will be much more interest than there is today to visit China, to visit Beijing. during the Olympic games, the city will enjoy very good business at very good rates, but a lot of this will be generated through sponsorships by major corporations. The normal traveler will probably stay away during this time because the prices are too high. But after the Olympics, in September, October, November, is the traditional high season for Beijing, so we may not suffer that much.
Q: What do you tell your staff about service?
A: There is always this stigma when you run a hotel that you don’t have to pay as much attention to the local domestic traveler as to the foreign traveler. This is actually not the case at all. We have to be much more attentive to the domestic traveler if we want to have a good service reputation. It’s the local traveler who will give your hotel your reputation.
Q: What challenges have you faced working in the China market?
A: The challenge has been less daunting. We have been in such a buoyant economic situation that it has been growth year on year. The only downturn was in the mid 1990s and, of course with SARS in 2003. But other than that there was growth every year. Our forecasts and revenues have never declined except for those two periods.
Q: Do you have difficulty hiring the right people for your hotels?
A: In most developed countries, you run a hotel with an employee to room ratio of 0.5 or 0.7; for super luxury hotels maybe 1.1 or 1.2. Super luxury hotels in China have a 2.2 ratio. So yes, we pay the individual employee less, but we have a lot more employees to pay. The productivity of staff is not yet that high. [The labor market] doesn’t have the depth of experience. We normally hire straight from hotel schools, so they have no experience whatsoever. We have to train them and that takes time. As the staff becomes more efficient, you can reduce the numbers by natural attrition. But when opening a hotel, you have to build in this training period.