TheNanfang » Hilton Hotel http://www.thenanfang.com/blog News & views about Guangzhou, Shenzhen & Dongguan Fri, 10 Oct 2014 10:40:45 +0000 en-US hourly 1 http://wordpress.org/?v=3.4.1 Guangzhou’s hotel industry is sailing along, but there may be rough seas ahead http://www.thenanfang.com/blog/guangzhous-hotel-industry-is-sailing-along-but-there-may-be-rough-seas-ahead/ http://www.thenanfang.com/blog/guangzhous-hotel-industry-is-sailing-along-but-there-may-be-rough-seas-ahead/#comments Thu, 18 Oct 2012 15:01:50 +0000 Danny Lee http://www.thenanfang.com/blog/?p=10192 Continue reading ]]> Beijing and Shanghai look with envy at Guangzhou’s luxury hotel market. While China’s top two cities have sluggish occupancy and erratic room rates, the Flower City has been blossoming.

Across the province, manufacturing is an important growth maker meaning when times are good the benefits are felt including in the services sector, like hospitality, and likewise in harder times the trading environment is challenging.

Concerns of slowdown paint a gloomier picture, based on some data, leaving Guangzhou treading carefully.

As the Canton Fair gets ready for business, China’s flagship trade fair – central to Guangzhou’s economic story – is hoping for brisk business despite the outlook. The city’s hotel industry thrives on it, benefiting from the extra hotel occupancy and room rates swelling. By the time the trade fair wraps up, some 200,000 people will have been and gone.

From a Hilton and Ritz-Carlton to a Westin and Shangri-la, big names vie for corporate accounts and business bookings. The good news for them is the premium-room market is on the cusp of its next big upgrade. But throw in a Four Seasons, Mandarin Oriental, Jumeirah and another Marriott hotel into the mix – all of which just opened or will open soon – and only the fittest will survive, according to one hotel boss.

According to the latest data seen by The Nanfang, Guangzhou’s optimistic picture is in stark contrast to hoteliers in rival cities fighting for more room nights and customers in a market that’s oversaturated. Despite the slowdown, tens of thousands of more rooms are being added every year across the country.

Past, present and future
By the end of 2012, Guangzhou will add another 3,627 high end rooms taking supply near the 20,000 mark. However, Shanghai will be flooded by another 5,500 rooms bringing 50,000 room choices to customers. In Beijing only 2,500 rooms will come online taking the total to 34,000 rooms, according to hospitality consultancy firm Jones Lang LaSalle Hotels.

The 2010 Asian Games is a good example of how a big event can boost hotel statistics. It helped operators in Guangzhou recover as the 2009 financial crisis struck. Occupancy rates jumped 10 per cent over the Games year.

While Guangzhou is holding strong, it was a late bloomer in attracting 5-star hotels, with an influx of operators arriving in 2007. Guangzhou is not the “country’s financial centre that Shanghai is or the capital like Beijing,” explains Darlena Zhai from Horwath Asia Pacific.

Horwath Asia Pacific also says over the next five years the “top-tier” market nationwide will add another 30 per cent more rooms. Even so, year-on-year demand for luxury hotels is outpacing supply, growing 7.9 per cent compared to the supply side’s 7.5 per cent growth. The strong numbers have reached near all-time occupancy rates as Guangzhou nears the 70 per cent level.

But hoteliers across the nation have reservations about growth and are becoming increasingly concerned about the market a few years out.

General managers The Nanfang spoke with have a hard time predicting what the future may hold. “I don’t have a crystal ball,” says John Burger, formerly the general manger of the Hilton Guangzhou Tianhe.

Economic snapshot
The economic outlook in China and around the world has plenty to keep general managers both excited and awake at night.

Internationally, the global recession continues to linger following the international financial crisis of 2008, and a series of new flash-points  such as territorial disputes with Japan, are impacting places like Guangzhou. Horwath notes that Japan, Korea and Southeast Asia “are the main drivers of international corporate demand.”

Peter Esho, chief market analyst at City Index Asia Pacific, reckons a major turnaround can’t take place without significant interventions.

“[We need] confidence back in Europe, the Chinese policy response…which parts of the economy will be targeted, monetary easing by the People’s Bank of China, more reserve requirement ratio cuts and possibly [base] rate cuts and among the state owned and controlled banks. We need to see the lending flood gates resume once again.”

Bullish
The Westin Guangzhou’s Carolyn Smith is confident and assured that her hotel is in good shape, which is why she is bullish about her hotel’s prospects. For her, the economic signs are pointing in the right direction. As general manager she is presiding over 72 per cent capacity; higher, she says, than the city and national average.

“The market is growing, China is growing, the business world in China is growing, the middle class is growing,” she says. “China has more than 170 cities with more than one million people. China has tremendous capacity and I think it will be a long time before there is oversupply.” As for Guangzhou, “it can continue to take new hotels and new hotel openings, [but] not all at the same time.”

One risk is Guangdong’s largely manufacturing-heavy economy could take a negative turn as China slows. For now, it is an important driver for the province and the manufacturing index in September showed a contraction.

“In terms of the manufacturing index, it is holding up well. It is a very good example of how the slowdown doesn’t necessarily affect all areas at the same time,” Carolyn adds. “Market forces might dictate but they might not dictate at the right times.”

But Horwath Asia Pacific’s Darlena Zhai warns, “since a lot of corporate demand is from the manufacturing industry and auto industry, it would be strongly affected by economic changes in China.”

Optimistic
John Burger’s is bullish but he pulls no punches. He thinks there is saturation in the market, and the casualty will be those smaller, local hotels that have not spent money on their infrastructure.

While the Hilton Guangzhou Tianhe started from “a zero base,” Burger isn’t too concerned. “A new hotel has got a growing phase like a child. You have got to mumble and talk before you can shout; before you run you have to walk.”

But he concedes as an indicator of performance “when you look at the occupancy rates, some places are doing better than others” although he is not “unhappy” with how his establishment is doing. He is projecting growth this year and next year.

The Hilton’s high-end global reputation strikes the right note with the cash-rich Chinese traveller – which makes up 70 per cent of business at the Hilton Tianhe. “The Chinese consumer is more brand aware than they were in the past. As long as the Chinese traveller is fueling the international brands then that’s ok.”

Bearish
“You name it, we have it in Guangzhou,” says Arics Lam, general manager of the China Hotel, a Marriott Hotel, but cautions “none of us can see what is going to happen to us in a few years time.”

Nevertheless, the China Hotel, A Marriott Hotel is outperforming its peers by operating at 72 per cent occupancy. However, Arics says the city needs more tourists. That is more of a concern rather than the macro-economic picture.

For the time being, Arics is one of many general managers in discussions with the Guangzhou Tourism Bureau on how hotels can work together to help promote the city. “We’re suggesting repositioning Guangzhou. Going into the international market is important. How we can propose to government bodies how we can form something to promote the city.”

With warning signs down the road, at least in Guangzhou, hoteliers hope to work more closely with the tourism bureau to drum up business. Bosses are also hoping for more trade fairs and exhibitions to soak up supply. Horwath Asia Pacific notes the bi-annual Canton Fair can result in 40 per cent of total annual revenue for major brands.

The future
Local statistics favour Guangzhou but national statistics do not look good.

With money pouring into public transport infrastructure, Horwath Asia Pacific warns of an increase in day-tripping from more popular cities like Hong Kong.  ”Transport infrastructure in Guangzhou and its improved accessibility from other surrounding cities is likely to increase the city’s appeal.”

At least in the key areas where Guangzhou is successful – manufacturing, trade and hosting exhibitions – business is ticking over for the time being.

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Shekou to undergo major transformation http://www.thenanfang.com/blog/shekou-to-undergo-major-transformation/ http://www.thenanfang.com/blog/shekou-to-undergo-major-transformation/#comments Mon, 28 Feb 2011 03:29:53 +0000 Nanfang Reporter http://www.thenanfang.com/blog/?p=289 Continue reading ]]> Seaworld Square in Shekou is a bar and restaurant oasis for many in Shenzhen. But as anyone who’s been there recently can attest, construction can be seen everywhere. Not only in the square itself, where a number of bars have been closed, or around the newly-opened metro station, but also near the now-aging Nanhai Hotel. To put it simply, the area is going through a major face lift which will see some high end eateries and hotels opening up in the next couple of years.

The Shenzhen Standard provides some details:

The Marine World Hotel located next to Nanhai Hotel is said to cost 800 million yuan to construction and will cover 56,000 square meters. The hotel will have 320 rooms and managed by Hilton Hotels, this will be their first seaside hotel in Shenzhen when its completed in 2013. Building of the Marine World Hotel will be the first phase of the overall Marine World upgrading project.

China Merchants Group, is a major developer of the Shekou area, will spend and additional 60 billion yuan in the nest five to eight years to fully upgrade facilities in the Shekou area. The Marine World urban compound, Taizi Bay terminals for passenger cruisers and Shekou Network Valley are among the key ares also said to undergo upgrading. Aside from the hotel project, commercial ares located around the Minghua ship will also undergo construction and renovation that will turn the area into an international food street for exotic food and other specialties.

The square has aged a bit from its heyday a few years ago. The giant flood in 2007 certainly didn’t help. Nonetheless, the area retains its quaint charm and community feel. The question is, will the influx of new high-end establishments change the area’s vibe? And if so, will it be better or worse?

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