If you visit an international five-star hotel in China, especially outside Beijing and Shanghai, the chances are that you may well find it boasts either a karaoke club or a sauna.
Guests who inquire further might even find that these clubs often offer a bit more than ordinary entertainment.
The Hilton in Chongqing has now been shut down indefinitely by the police over an alleged brothel, the Diamond Dynasty Karaoke Club, that it was running out of its basement. Last month, the Passion Club in the Great Wall Sheraton was similarly busted.
I’ve often wondered, as I travelled around China, why international brands like Hilton or Sheraton would put their reputation at risk by having one of these clubs. After all, if you were a businessman from the US whose secretary had booked you into the Hilton you would hardly expect to share your lift with a gaggle of working girls.
Perhaps, I concluded, everyone was content to make the usual exception that things operate differently in China.
But actually, I found out yesterday, it seems the clubs exist because the hotels themselves are not in charge of what happens in the building. In the case of the Hilton in Chongqing, the building is owned and operated by the Kingrun Real Estate company (or Qinglong Real Estate in Chinese). This local investor put up the cash and runs everything. It subcontracts the management and branding of the property to Hilton.
A number of other hotels operate in a similar fashion, essentially being just franchises. There’s nothing wrong with this business model, of course, but I’ll bet that not a few Western hotel names are beginning to get hot under the collar about the current prostitution crackdown, and whether their brands could be damaged in the fall-out.