More room for growth in Shanghai

Business travel flow to China continues to surge and so does competition among hotels.Shanghai is among the cities that have been attracting ample hotel developments.



Not a few hotels in Shanghai insisted that the only way to continue staying on the top is to constantly enhance products and improve services.



“We are aware of the growing number of options available to throughout the city and China,” said Peter Hildebrand, regional director of marketing, China and Taiwan, and director of marketing, Grand Hyatt Shanghai. “The hotel obviously has a number of ‘wow’ factors which make it attractive and set it apart, but we feel that the best way to build on our competitive edge is through service enhancements. We are very focused on quality.



Customer service will allow us to further differentiate ourselves from our competitors.



“As prices have increased significantly in Shanghai hotels over the past several years, we are very much aware that clients have also raised the bar on service. If prices are up 20 percent, client service expectations might go up 40 percent.



We are also very conscious of the potential of the domestic market and are constantly finding ways to improve our distribution capabilities and branding within China,” he said.



Grand Hyatt Shanghai’s primary market segment are business individuals followed by FITs.



He said that competition in Shanghai is very hot, especially since the supply of rooms in Hyatt's “competitive set” is growing over time. Fortunately, demand is pacing up. “On the other side of the equation is demand and in Shanghai this has been growing equally fast. If it were not for this demand growth, the growth in rooms supply would surely dampen room rates,” he said.



Over at the Four Seasons Hotel Shanghai, where 80 percent of the clientele are business travellers, director for public relations, Hilda Looi, said competition among hotels remains to be healthy.



“We are fortunate that the city has become a destination of choice not only for MICE meetings but also for individual leisure travelers.



“Room rates will continue to increase in the coming years but is still considered excellent value vis-à-vis major cities such as Hong Kong, London or New York,” she said.



Shanghai might be sizzling but it is not about to get done yet. Hildebrand believed demand for the city as a destination is still building up which translates to further growth in the coming years, both in field of business and leisure travel.



“Hotel demand and demand for business travel correlate very closely to foreign direct investment in China. FDI figures and forecasts continue to be strong, thus we fully expect Shanghai to see better days ahead as a business destination.



“Of course, there are some businesses that are looking for lower cost destinations. However, as these players move to smaller cities nearby, they are quickly being replaced by newcomers both domestic and foreign,” he said. Looi said the number of multinational companies coming to Shanghai should be a strong indicator of future business travel movement trends.



As a tourist destination, Hildebrand noted that interest from the short-haul markets peaked between 2002 and 2004 and has since waned because of the attractive pricing of competing destinations in South-east Asia. Long haul holds a big potential.



”There are many from long-haul markets which have never considered China as an option for their leisure travel, so I am confident that Shanghai is now seeing only the tip of the iceberg of interest and awareness from some of the long-haul leisure markets in Europe and the USA,” he said.