China's WTO Entry Provides U.S. Hotel Breeding Ground
Believing that the next three to five years will see an explosion of American business interests in China as a result of the country's admission into the World Trade Organization, U.S.-based hotel companies are in the midst of a significant expansion there. This latest growth spurt will see a number of high-visibility properties, mostly at the deluxe and upper upscale price points, open in Shanghai and Beijing among other mainland destinations.
In Shanghai, for example, the Westin Shanghai opened last week, following the opening of a Four Seasons Hotel in another area of the city earlier this year. Not to be outdone, Beijing, China's second largest city, is the site of a Grand Hyatt that opened in June and a 212-room Renaissance Hotel scheduled to open later in the fourth quarter.
Outside the two main cities, Ramada International in August opened a 323-room Ramada Plaza in Fuzhou, the capital of Fujian province on the Southeast coast. Meanwhile, in Shenzhen, also in southern China near Hong Kong, the independent 540-room Forum Hotel last month became the latest Chinese hotel to join Best Western International, the U.S.-based hotel membership association.
Buyers whose hotel programs include properties in China, particularly those who are including the country for the first time, will want to be sure the properties selected are in the best locations in relation to their travelers' business appointments. The transportation infrastructure in China's sprawling ancient cities can be lacking, making it difficult to get around. Similarly, western travelers have certain expectations with regard to guest room accommodations and service levels, so buyers will want to be confident the preferred properties measure up to these requirements. On both counts, buyers can supplement the information gleaned from requests for proposals with input from locally based travel department colleagues who can tour the properties in question, if necessary.
The 301-room Westin is located in Shanghai's historic Bund district, where it is part of a mixed use development that includes offices and apartments.
"In fact, with an eye to the extended stay market, we simultaneously opened a separate tower in the complex, known as the Westin Residences, containing 143 one-, two- and three-bedroom serviced apartments," said Stephen Ford, general manager of both operations. Westin is part of Starwood Hotels & Resorts Worldwide. Another Starwood brand, St. Regis, paved the way for the company in Shanghai when the 318-room St. Regis Shanghai opened 15 months ago in the emerging Pudong financial district.
By contrast, the 364-room Four Seasons Shanghai opened in Puxi, a more traditional business district frequented by international travelers. Relative to the Chinese market, guest rooms were designed to be particularly spacious as befits western sensibilities. In addition, the hotel has 79 suites, one of the largest suite inventories in the city. "The building is configured with only 12 to 16 rooms per floor, which further creates a sense of spaciousness and privacy," said Jean-Pierre Dosse, general manager and regional vice president.
In Beijing, both the 591-room Grand Hyatt and the 212-room Renaissance are part of mixed use developments. In Hyatt's case, the commercial undertaking is called Oriental Plaza. "We're located on Chang An Avenue, which translates as Beijing's Main Street, the core business hub," according to Peter Chau, general manager. While the hotel comes with such state-of-the-art technology as high-speed Internet access, it also acknowledges China's more practical antecedents. Parking for 12,000 bicycles, for example, is available in the development.
The Renaissance, which is part of Marriott International, will be located in the Chaoyang mixed use development in the northeastern part of the city. Managed by Marriott, the hotel is owned by Air China. Like operators of the other new Chinese hotels, Ed Fuller, Marriott director of international lodging, stressed such hotel amenities as the business center. Given the time difference from their offices, western travelers, armed with their own laptops, often rely on the computer printers, fax machines and translation services they need to be able to maintain communication with the home office.
Both the Four Seasons in Shanghai and the Grand Hyatt in Beijing also feature executive club floors, which, for a premium in rate, provide business travelers with upgraded services. "Special concierge and business services—in addition to those provided to all guests—are available 24 hours a day. This allows guests to be their most productive while they're in the hotel," Four Seasons' Dosse said. Both also include small meeting rooms. Like club lounges in other high-end hotels, these lounges offer food and beverage services throughout the day and more private surroundings.
As the major hotel companies continue to make inroads into the Chinese market, independent hotels have found it difficult to remain competitive. "The big groups are at the point where they're working on multiple properties, especially in Shanghai and Beijing, where the demand for international standard hotels is high," said Roy Olsson, managing director of international development for Best Western. Marriott, for example, presently has four Renaissance Hotels in operation in China, including one in Shanghai. One more—in Wuhan—is on the drawing board. Ramada International, another Marriott brand, now has 10 properties in the country.
"China's entry into the WTO, in particular, has had a lot to do with the arrival of midscale hotel companies, which is new," Olsson said. The awarding of the Olympics here in 2008 also has been a catalyst in the market.
Independent hotels quickly have come to realize what Olsson called the "importance of the brand." In many cases, hotel owners in China have "realized that they simply cannot compete without an international brand, especially in the big cities," he said. "There still are many independent hotels that are suitable for branding and they're feeling a lot of pressure." In addition to the Forum Hotel in Shenzhen, Olsson said hotels in Hangzhou and Harbin had agreed to join the Best Western system in the next few months. "There are very few hotel 'chains' in China as we understand that term," Olsson said. "This reflects the regional differences that typically exist in China, which is understandable given the size of the country."