William Chea hails from Hong Kong. He’s worked for the Starwood Hotel group, one of the largest global hotel brands, for ten years, the last three of them on the mainland. He spoke to CHINA ECONOMIC REVIEW from his latest assignment managing the Sheraton Changsha in Hunan.
Q: Previously you’ve worked in the first-tier market. How do you like Hunan?
A: Hunan is a big province. I’ve been in Changsha for a year but I still haven’t had much chance to travel around, unfortunately. But Hunan has many beautiful places, like Zhangjiajie, one of the most famous tourist spots in China. Changsha itself is also a nice second-tier city and a very quickly developing one. Last year GDP growth was over 14%. This year it’s still forecast at over 10%.
Q: How are you weathering the economy? Has there been a big decline in bookings?
A: In general, hotel room demand is quite elastic. We have low season and high season in a normal year. Right now it’s low season, December through February. And the downturn has also dampened demand, so both businessmen and leisure guests are reducing expenses. But this elasticity is different from city to city. For example, in Shanghai I am sure they are more affected than we are in Changsha.
Q: Why is that?
A: The reason is Changsha has lots of local guests and domestic travelers. For example, more than 80% of our hotel guests are domestic travelers from China; Shanghai, Guangzhou, and from the local area as well. Domestic demand is more resilient than international demand. But in the first-tier cities, all the big multinationals are cutting travel expenses, so hotels there are more affected than we are because they are more dependent on foreign demand.
Q: Given the intensifying competition for bookings in your sector, what are you doing to hold or gain market share?
A: First of all, I don’t think we are going to drop our room rates very much. Instead we are enhancing our competitiveness by providing better service and products to our guests. Also we need to look at costs and expenses. We already have a cost and expense analysis program, so we are all looking very closely at the way we spend money. For example, at this hotel we have stopped hiring staff, at least for this month.
Q: Have there been any redundancies or restructurings?
A: No, not with us. Other hotel groups have already started reducing staff, but no Starwood hotel [Sheraton’s parent company] is doing that at this moment.
Q: What does "providing better service" mean specifically in your operation?
A: Well, we have less guests now, maybe half as many as normal, but we have the same amount of staff. So we can be more attentive to our guests’ needs. We can also look at cleanliness, food service, and generally focus on making things better.
Q: How much of your business is from meetings, incentives, conferences and events (MICE) in terms of revenue?
A: MICE produces about 20-22% of our total room revenue. It also produces between 10-12% of our food and beverage income. In terms of total revenue share, MICE accounts for around 15%.
Q: Is your MICE business growing or shrinking?
A: In December it dropped a little bit. We have had some MICE groups canceling, one or two maybe, but we expect it to pick up again in March and April.