Shanghai shines on

When the Shanghai World Expo finally opened on the night of April 30, tens of thousands of fireworks and lasers lit the city’s riverfront. It was a lavish display welcoming the Expo’s 240 participating countries and international organizations, beckoning the world to set its sights on Shanghai.

Indeed, the Shanghai Tourism Bureau estimated that a record 70 million visitors would attend the Expo, leading many to believe that MICE-related activity would get a big boost from not only a surge in visitors, but also the city’s heightened global profile.

"The best thing about the Expo is not only the amount of people it brings in, but also the marketing aspect of it," said Nicholas Mulley, Greater China managing director of Destination Asia, a business travel management company.

"It’s another way to show that China is a world class destination. Foreign media come and report on the Expo in Shanghai, but also other cities here. It takes the edge of mystery away, and travelers will have more of a desire to see it themselves."

More than halfway through the Expo, Shanghai so far seems to have reaped the benefits of holding the 184-day event.

This is despite concerns that the city might share the same fate as Beijing two years ago. In preparation for the 2008 Summer Olympics, the capital underwent a hotel construction splurge with an estimated 29,000 new rooms opened in the two years before the event. Oversupply and disappointing visitor demand forced hoteliers to drop rates dramatically. Things only got worse after the Games left town: The worldwide recession paralyzed international business travel, and occupancies crashed.

Big build-up

In Shanghai, the number of rooms offered by five-star hotels is expected to reach 28,531 this year, of which 7,710 were added between the end of 2009 and early 2010 – equivalent to the total increase in room numbers over the preceding four to five years. And the initial take-up has been promising: In June, Shanghai’s year-on-year occupancy climbed 60.3% to 78.2%, average daily rates rose 30.5% to US$135 while revenue per available room soared 109.2% to US$105 – the largest increases seen in the Asia Pacific region, according to data by STR Global.

Jessie Khoo, director of convention sales at Pudong Shangri-La, said MICE business has increased in the first six months of 2010, compared with a year earlier. The Expo has also helped attract more meetings and conventions to the 952-room hotel.

"As we moved nearer to the Expo opening months, we started to see some pick-up in mid-size meeting groups. What happened was that people would incorporate a meeting as part of their World Expo visit activities," she said.

Shangri-La has been a hot spot particularly for country delegations visiting the Expo, Khoo added, describing how the hotel’s Grand Ballroom hosted a 400-delegate meeting for Argentine President Cristina Fernandez de Kirchner that very day. The hotel benefits from a location close to the Expo’s national pavilions, all of which are on the Pudong side of the city.

Too much hype

At the same time, Shanghai has been a top exhibition destination in China for years now. The city hosted 455 major exhibitions in 2008, compared with 264 in Beijing and 227 in Guangzhou, according to Jones Lang LaSalle’s Hotel Intelligence China report.

In addition, Destination Asia’s Mulley emphasizes that the Expo is not as much of an incentive travel draw card as the Beijing Olympics. "Every client we had in 2008 came to China for the Olympics, but in 2010, not everyone is coming just to see the Expo," he said.

Some of the incentive travel packages that Destination Asia organized around the Olympics included VIP tickets to the event and dinner on the Great Wall. The six-month Expo is, by comparison, much more difficult to incentivize as it doesn’t attract the same level of consumer interest. 

Still, Shanghai’s big build of infrastructure, Expo venues and first-class hotels will lay foundations for future MICE business. The new additions to the Bund – such as the Waldorf Astoria, the Fairmont Peace Hotel, and the Peninsula – will allow event organizers to create more Shanghai-specific cultural experiences centered on the city’s iconic area on the Huangpu River.

"These spaces are a good sell that get people excited," Mulley said. "With the Peace Hotel, we’ll be able to hold a 1920s Shanghai-themed gala dinner, for example."

Paul Tchen, general manager of the Peninsula Shanghai, agreed the preparations for the Expo and the city’s moment in the spotlight will help MICE business in the long term. The influx of hotels means there is greater choice of quality accommodation in Shanghai – from boutique hotels like the Waterhouse on the South Bund, to big names like the Ritz-Carlton Pudong – making its international image shine even brighter.

"In the past, luxury hotels in Shanghai were mainly in tall, modern skyscrapers, which is what the China market hungered for," Tchen said. "As we move forward, there is a lot more interest in heritage brand hotels, and [the Peninsula is] helping to bring back that era of grand, glamorous hotels.

"There is a lot of choice now and that is important for Shanghai to be deemed an international city."