Best Shanghai business hotels for every budget

Shanghai has many things in spades: expensive cocktail bars, xiaolongbao stands and hotels -- boutique, luxury, business, you name it.

Whether a Fortune 500-listed company is footing the bill or a penny-wise businessman is pay out of own pocket, here are the best Shanghai business hotels to suit a range of budgets.

Shanghai Marriott Hotel City Centre (上海雅居乐万豪酒店)
This 720-room hotel just north of Shanghai's commercial heart, People's Square, is built for corporate goings-on.

The fifth floor features 2,000 square meters of meetings and events space, as well as a business center with its own conference room.

For presentations, the grand ballroom has an enormous LED screen measuring nine by five meters.

The 48 Executive Suites, each of which features two bathrooms, a bedroom and a living room, are ideal for more intimate small meetings.

Every room's 42-inch LCD television can connect to a laptop, and each desk holds a connectivity kit with all manner of cables.

Guests staying at the Executive Suites can book the conference room free of charge for up to two hours at the Executive Lounge on the 37th floor. The lounge serves a full breakfast, snacks all day and an ample spread of canapés after 5:30 p.m.

555 Xizang Zhong Lu, near Fengyang Lu西藏中路555号, 近凤阳路; +86 21 2312 9888; nightly rate from around RMB 1,380 (US$222) plus 15 percent; official website

InterContinental Shanghai Pudong (上海锦江汤臣洲际大酒店)

InterContinental has three locations in Shanghai, but this branch is the most convenient for business travelers, providing easy access to Shanghai's Lujiazui CBD, four metro lines at the Shiji Da Dao station and a short trip to the international airport.

Each of the 398 guest rooms has an LCD television, DVD player, iPod dock and wireless Internet access.

The rooms’ workspaces have been thoughtfully designed, with bright lighting and a slew of outlets at varying levels so busy bees can plug in all their gadgets.

Adapters and converters are available at the concierge desk free of charge.

Meetings are a breeze here, with 3, 576 square meters of meetings and events space divided over 16 rooms. Host up to 750 people for a massive conference or go more intimate in a 30-person boardroom.

The hotel has plenty of AV equipment for all the rooms, including digital, LCD and overhead projectors, modem lines and DVD players.

777 Zhangyang Lu, near Laoshan Lu 张扬路777号, 近崂山路; +86 21 5835 6666; nightly rate from around RMB 1,180 plus 15 percent; official website

Swissôtel Grand Shanghai (上海宏安瑞士大酒店)

Who says business travelers can't squeeze in wining, dining and shopping?

With its location just off jam-packed Nanjing Xi Lu, guests at this Swissôtel are a stone's throw from a bevy of malls, restaurants and Jing'an Park, where elderly locals practice tai chi each morning.

The hotel is right next to Shanghai Pudong Airport's city terminal, which hosts direct airport shuttle buses.

Each of 467 rooms comes with wireless Internet access, daily newspaper delivery, a big flat-screen TV, a Nespresso machine and a tea station, which carries local and imported blends.

Meeting and events facilities include the 575-square-meter Grand Ballroom, the 390-square-meter Junior Ballroom, which can be divided into three smaller rooms and six multi-purpose function rooms that work for corporate events or smaller meetings.

The hotel's website displays floor plans and capacity charts.

1 Yuyuan Lu, near Jiaozhou Lu 愚园路1号, 近胶州路; +86 21 5355 9898; nightly rate from around RMB 1,100 plus 15 percent; official website

Holiday Inn Pudong Shanghai (上海浦东假日酒店)

With its location right in Lujiazui, Shanghai's financial district, this is one of the city's best mid-range hotels for business travelers.

Rooms are well-appointed, with wireless Internet, fax machine and printer access and a sizeable desk with plenty of power outlets, computer cables and a reading lamp.

The hotel's six meeting rooms can arrange corporate gatherings of 10-400 people, all of which come with necessary equipment like stage lights, projectors and moveable lecterns.

It's practically a crime in China to let business associates go hungry. Holiday Inn serves bites from its all-day Chinese restaurant Bauhinia Court, which cooks Cantonese, Sichuanese and Shanghainese cuisine, and an Irish-pub style eatery, Flanagan's.

Guests staying in the executive rooms can take in complimentary breakfast and evening cocktails in the bright, airy executive lounge.

899 Dongfang Lu, near Pujiang Lu 东方路899号,近浦江路; +86 21 5830 6666; nightly rate from around RMB 799 plus 15 percent; official website

Hengshan Picardie Hotel (衡山宾馆)

Business travelers looking to trade Lujiazui's gridlocked avenues for the French Concession's tree-lined streets would do well to shack up here, which is a quick stroll from Metro Line 1 Hengshan Lu Station.

All 259 rooms have free broadband Internet, phones for local and international calls, safe deposit boxes and satellite TV.

Ten meeting spaces can host 20-250 people, and the hotel's website provides floor plans and capacity charts for each room.

There's wireless Internet access throughout the hotel’s public areas, and all the meetings spaces are stocked with AV equipment -- sounds systems, DVD players, LCD screens in a handful of sizes and wireless microphones. Luddites can take advantage of flip charts, white boards and podiums.

534 Hengshan Lu, near Huashan Lu 衡山路534号, 近华山路; +86 21 6437 7050; nightly rate from around RMB 800 inclusive; official website

Manhattan Bund Business Hotel (曼哈顿外滩商务酒店)

Located directly behind the Fairmont Peace Hotel, this 100-room hotel costs only a fraction of the Peace to stay a night. Guests get the same Bund-side location, complete with glittering skyline.

All facilities were built to meet the Chinese three-star hotel standard.

The standard rooms are small, not all of them have windows, and the décor is a little 1970s, with red-paper lanterns in the lobby and lots of faux gold and marble.

By the same token, suites are palatial and well-priced: for those who wants to feel like a king without spending like one, check in here.

Every room has a computer with Internet access; 24 hours will run you RMB 40.

The hotel's tour desk can help with faxing and photocopying, and there's a business center and two banquet rooms that can be used to host meetings.

81-85 Dianchi Lu, near Yuanmingyuan Lu 滇池路81-85号, 近圆明园路; +86 21 6888 8123; nightly rate from around RMB 328 inclusive; official website

Source: CNN Travel By Sophie Friedman

Home Inns & Hotels Management's CEO Discusses Q3 2012 Results

Source: Seeking Alpha

David Sun - Chief Executive Officer

Hello, everyone, and thank you for joining us today to discuss our third quarter 2012 results. We are pleased to have achieved another quarter of solid results. We experienced normal seasonality during the third quarter. The broad operating environment remained subdued and there has been no clear sign to recovery. Our core business delivered stable performance despite absence of systematic pricing increase.

Integration of Motel 168 generated another set of continued operating metrics improvement. Yitel brand of hotels are establishing healthy development framework and operating [lesson]. Our cost control and productivity initiatives at both hotel level as well as corporate level are effectively addressing rising costs and helping to protect margins. And we expect to exceed our new hotel opening targets for the full year driven by strong and mature programs of franchised-and-managed hotels. The company is well-positioned to leverage its solid business fundamentals to navigate through challenging time and to capitalize on the long-term growth prospects within the travel and lodging industry in China.

Turning to specific results, total revenues for third quarter increased 61.8% year over year to RMB1.6 billion. Our organic revenue reached RMB1.2 billion, a 21.4% growth year over year, exceeding our previous guidance. The uneven market condition throughout China, depending on the level of concentration of manufacturing industries and the maturities in economic development, presents challenges as well as opportunities for us to operate [homogeneous] hotel products. We see the price opportunities driven by seasonality and events in relatively strong markets and effectively managing the yield between price and occupancy rate in soft market -- in soft markets.

Occupancy rate of the core business was still relatively high at 92.7% compared with 94.1% in the same quarter last year. And the RevPAR of RMB164 this quarter compared with RMB169 a year ago was in line with market conditions. Excluding Motel 168, 833 mature hotels that have been in operation for at least 18 months achieved RevPAR of RMB177, flat from last year. By end of the third quarter, we had six hotels operating under the midscale Yitel brand, four of which have been operation for nine months or less. The overall occupancy rate for the Yitel was 89.2% in the third quarter. We are very encouraged by the development of the Yitel framework and excited about its future to further our multi-brand strategy.

Total revenue for Motel 168 was RMB398.9 million in the third quarter, coming at the high end of the revenue guidance. Occupancy rate and average daily rate continued to increase, taking advantage of seasonality as well as incremental benefit from integration efforts. The core branded operation armed to address the challenging of large-scale hotels is showing positive results, with double-digit increase in RevPAR by the entire base during the preliminary testing period. Based on this initiative success, we have identified another 15 to 20 locations to gradually adopt this conversion in the next six months.

The restructuring of Motel 168 to food and beverage operation had been consolidated with co-branded initiatives. To further update everyone to Motel 168 integration, I'm pleased to report that as of November 1, Motel 168 and the core Home Inn brands will consolidate to form the economy hotels, led by our Chief Operations Officer. After the first stage of stabilization and foundation building, this reorganization is another step forward in our integration plan to fully leverage the company's institutional strengths and maximize resource utilization at regional and city operation levels to drive execution effectiveness.

Moving on the hotel development, we opened a total of 108 new hotels, including 39 new leased-and-operated hotels, including two Yitel hotels and two Motel 168 hotels, and 69 new franchised-and-managed hotels, of which four were franchised-and-managed hotels for Motel 168 brand. Compared to the previous few quarters, we have improved our hotel operation pace given the healthy flow in the pipeline. At the end of third quarter, we had a robust pipeline of 252 hotels constructed or under construction, including 87 leased-and-operated hotels and 165 franchised-and-managed hotels. We believe our well-established and high-margin franchise platform will be a key aspect of our portfolio's growth and profitability expansion. Driven by strong demand in our franchised-and-managed hotels, we expect to open no less than 360 hotels in total for the year and exceed the high end of our new hotels opening guidance for the year.

As of September 30, 2012, our frequent guest program reached a new level of 10.6 million unique active non-corporate numbers, increased from 9.2 million as of June 30, 2012. Home Inns is voted the Chinese brand of the year 2012 by Chinese Central Television or CCTV, one of the largest television broadcasters in China. We continue to capitalize on our increasing brand value and our loyalty program continues to provide a stable revenue base across all our hotel brands.

In the first part of the year we implemented a new wave of cost control and productivity initiatives. The third quarter results showing the hotel personnel cost increase at our core business will keep below the level of revenue growth. Further, G&A as a percentage of gross revenue for the total group continued to decrease year over year as our headquarter operation generated further productivity gains during the quarter. The ability to manage and keep the cost increase in check is one of our competitive advantages and we expect to continue to benefit from the scale and leverage across the business as we grow our multi-brand portfolios.

Looking into the next six to nine months, we remain cautiously optimistic that the market environment may remain stable but material improvements may be slowly sure to come. We remain positive, however, on the long-term view of the growth of the Chinese economy and we'll continue to strengthen our brand equity and the scale of our networks. Combining a stable level of annual [unit expansion], a shift towards capital-free but margin-rich franchise growth [and space], well-integrated Motel 168 brand ready for new growth, fully-developed Yitel brand for scalable expansion, lean and productivity-driven operating structure and leverage, the company is strategically well-positioned better than ever to wade through external challenges and embark on another cycle of growth in revenues, profitability and cash generation in the near future.
With that, I will turn to Huiping.

Huiping Yan - Chief Financial Officer

Thank you, David, and hello to everyone on the call. I'm pleased to first discuss our third quarter results and will then provide our guidance for the full year.

Once again the company has consolidated Motel 168 operation and financial results since October 2011, we have presented consolidated group numbers in the main body of our earnings release. Business and financial figures exclusive of Motel 168 are being presented separately in an appendix to the earnings release. Financial data for the group and exclusive of Motel 168 are also presented in spreadsheet attached to our earnings release, which is available for download from our Investor Relations website. On this call I will review group financial results as well as selected non-Motel 168 information to provide more context. As I take you through the numbers, please note that I only speak in RMB terms unless specifically mentioned.

For the third quarter, total revenues for Home Inns Group were RMB1.6 billion, increasing 61.8% year over year. Excluding Motel 168, total revenues were RMB1.2 billion, an increase of 21.4% year over year.
Total revenue from leased-and-operated hotels was RMB1.43 billion, a 62.3% increase year over year and a 10% increase sequentially. Excluding Motel 168, total revenues for leased-and-operated hotels were RMB1.05 billion, increasing 19.1% year over year and 11.7% sequentially. Total revenues for franchised-and-managed hotels were RMB166.6 million, increasing 57.2% year over year and 11.3% sequentially.
Excluding Motel 168, total revenues for franchised-and-managed hotels were RMB148.8 million, increasing 40.5% year over year and 12.7% sequentially.

Total operating costs and expenses excluding share-based compensation expense, acquisition and integration costs, were RMB1.3 billion, representing 81.6% of total revenues, compared with RMB77.6 for the same quarter a year ago and 82.4% for the previous quarter. Total leased-and-operated hotel costs excluding share-based compensation expenses and integration costs were RMB1.19 billion, 82% of the leased-and-operated hotel revenues, compared to 76.3% of leased-and-operated hotel revenues in the same period of 2011, and 84.3% in last quarter. This year-over-year increase in expense ratio was mainly driven by overall soft market conditions not suitable for systematic price increases, higher cost ratio from Motel 168 hotels which are still being integrated, and certain non-recurring charges to other operating costs. The sequential decrease in this ratio was mainly driven by seasonality.

Excluding Motel 168, total leased-and-operated hotel costs, excluding share-based compensation expenses, integration costs, were RMB836.7 million, representing 79.6% of the leased-and-operated hotel revenues, compared to 76.3% for the same quarter in 2011 and 81.8% for the second quarter of 2012. The year-over-year increase in this expense ratio was again mainly driven by softer market conditions resulting in lack of price opportunities and certain one-time charges. The sequential increase in this ratio was mainly attributable to seasonality.

Excluding share-based compensation expenses, personnel cost of franchised-and-managed hotels was RMB42.6 million, representing 25.6% of franchised-and-managed hotels revenues. This compared to 22.4% for the same quarter of 2011 and 20.2% for the second quarter of 2012. The year-over-year increase in its ratio was mainly due to impact of Motel 168 as the revenue from franchised-and-managed hotels at Motel 168 was relatively lower while it's been integrated. The sequential increase in this ratio was mainly due to a higher accrual of performance-based bonuses in the third quarter.

Excluding Motel 168, total personnel costs of franchised-and-managed hotels excluding share-based compensation expenses were RMB35.1 million, representing 23.6% of franchised-and-managed hotel revenues compared to 22.4% for the third quarter of 2011 and 18.8% for the second quarter of 2012. The slight year-over-year increase in this expense ratio are driven by slightly lower revenue base due to market conditions, while the increase in dollar amount of such costs are in line with unit increase of franchised-and-managed hotels. The sequential increase in this ratio was mainly due to a higher bonus accrual of performance-based bonus in this quarter.

Excluding share-based compensation expenses, sales and marketing expense were RMB17.9 million, representing 1.1% of total revenues, compared to 1.6% in the same period a year ago and 1.0% in the second quarter 2012. We maintain vigilant cost control on maximizing return on investment, and the level of sales and marketing spending is well-managed to continue to support a growing revenue base.

General and administrative expenses excluding share-based compensation expense and integration costs were RMB57.4 million or 3.6% of total revenues, compared with 5.5% of the total revenues in the same period of 2011 and 3.7% in the second quarter of 2012. The company continues to benefit from economy of scale and leverage.

The above resulted in an income from operations, excluding share-based compensation expenses, acquisition and integration costs, of RMB204.7 million or 12.8% of total revenues, compared to RMB160 million or 16.2% of total revenues in the same period 2011 and RMB170.4 million or 11.8% of total revenues in the second quarter 2012. The year-over-year decrease in the ratio of income from operations was mainly caused by a higher cost ratio at Motel 168, absence of systematic selling price increase, and one-time charges. The sequential increase was mainly due to seasonality.

Adjusted EBITDA was RMB375.5 million or 23.5% of total revenues compared to RMB272.9 million or 27.6% of total revenues in the same period in 2011 and RMB331.6 million or 22.9% of total revenues in the second quarter of 2012. Excluding Motel 168, adjusted EBITDA was RMB322.3 million or 26.9% of total revenues compared to RMB272.9 million or 27.6% of total revenues in the same period of 2011 and RMB274.3 million or 25.6% of total revenues for the second quarter of 2012.

Adjusted net income attributable to Home Inns Group's shareholders was RMB135.8 million for the third quarter compared to adjusted net income of RMB132.0 million in the same period of 2011 and adjusted net income of RMB108.5 million for the second quarter of 2012. Adjusted diluted earnings per ADS for the third quarter of 2012 was RMB2.93 or USD0.47.

During the third quarter, the company generated a net operating cash flow of RMB239.9 million compared to RMB276.9 million in the same quarter of 2011. Capitalized expenditures for the third quarter 2012 were RMB357.4 million, while related cash paid for CapEx during the quarter was RMB225.3 million. We believe the cash generation capability of the company will strengthen as Motel 168 performance further improves and normal annual price increases resume when market condition improves.

As of September 30, 2012, Home Inns Group had cash and cash equivalents of RMB752.5 million. The outstanding balance of convertible bonds issued in 2007 was RMB113.5 million including principal and accrued interests. Financial liability of the convertible notes issued in December 2010 and interest rate swap contracts both measured at fair value totaled RMB1.03 billion. During the third quarter, the company paid an additional USD21 million towards it US dollar denominated four-year term loan, bringing the outstanding [face] balance of the term loan down to USD124 million.

For outlook, we expect a stable operating environment in a broad sense and uncertainties within certain markets relatively more impacted by economic structural reform. We are reaffirming our previously provided revenue expectations for the full year of 2012 which are gross revenues for the total group are expected to be in the range of RMB5,715 million to RMB5,810 million. Gross revenues for Motel 168 brand for the full year are expected to be in the range of RMB1,475 million to RMB1,500 million. Gross revenues for the full year of 2012 excluding Motel 168 are expected to be in the range of RMB4,240 million to RMB4,310 million.

The company expects to deliver on our leased-and-operated hotel opening target of 105 to 125 hotels for the full year. And as David mentioned earlier, the strong growth momentum of franchised-and-managed hotels will top the total number of our new hotel openings in 2012 over the high end of our previous guidance of 360.

Above forecasts reflect the company's current and preliminary view which are subject to change.

Challenges, but room for hotels' expansion

China's hotel developers and investors are gradually shifting their focus from building new hotels to protecting their assets as uncertainties and challenges are building up, but the country's hotel industry still offers great opportunities, according to a new report.

The report, jointly issued by the China Tourism Hotel Association and Jones Lang LaSalle Hotels on Tuesday, said that China's hotel market is progressively moving from the development-expansion stage to an ownership-maintenance phase.

The continuous increase in labor and operating costs, and competitive pressure from new supply and aging facilities are bringing challenges and pressures to hotel investors, owners and operators.

Based on an extensive hotel survey and an assessment of 35 hotel markets in China, the report said that economic growth has brought new opportunities and challenges to the sector, with many hotels gradually entering the market and fueling competition.

To respond to the challenge, hotel operators and investors should adopt aggressive and creative tactics, experts said.

China's hotel market has an average occupancy rate of 60 percent, compared to about 80 percent in developed markets. The low occupancy rate is a result of oversupply, according to Zhao Huanyan, chief consultant at Shanghai -based SAO Hotel Solution.

The average daily rate of a five-star hotel room in Shanghai was 526.17 yuan ($83) at the end of 2011, a drop of 14.05 percent from 2010. In the same period, the occupancy rate of five-star hotels averaged 55.81 percent, down 11 percent year-on-year , said Qiu Yongqiang, secretary-general of the hotel division of the Shanghai Tourism Trade Association.

"The large supply of new hotels is not only intensifying competition among hotels, but also affecting their rates. Hotels without special features can hardly retain customers," said Qiu.

The increasing costs along with high employee turnover are worrying hoteliers.

"Many Chinese cities today are confronted with a hotel demand and supply imbalance despite the significant economic growth," said Andy Flaig, managing director for advisory Asia of Jones Lang LaSalle Hotels.

However, some hotel owners are optimistic, said Charles He, senior vice-president of Jones Lang LaSalle Hotels and head of China advisory.

"Despite the fact that higher operating costs caused by rising inflation and the increased labor costs pose increasing challenges to future operations compared with the survey in 2011, 44.6 percent of surveyed hotels are optimistic or very optimistic when it comes to the market outlook," said He.

According to Qiu, many boutique hotels, in particular, are getting more business these days than ordinary hotels due to their special features.

"Boutique hotels are not as well-equipped as five-star hotels, but their rates are much higher than average five-star hotel rooms. The secret is their exceptional service," Qiu said.

While business travelers are still the main customer source among the surveyed hotels, many indicated growth in meeting, incentive, conference and exhibition venues as a key demand driver.

Meanwhile, many hotels are continuing to explore F&B opportunities to increase overall revenue, the report said.

At the same time, some multinational hotel groups have high hopes when it comes to the Chinese market.

Marriott International Inc, for instance, said recently that it plans to open one hotel per month in China on average for the next five years.

Source: china economic net

Marriott Plans Asia Expansion

BEIJING—Marriott International Inc. plans to double its hotel outlets in Asia, expanding most in China despite already considerable capacity increases and falling occupancy rates there.

The company said it plans to have 260 hotels open in Asia by 2016, expanding its China-based hotels to about 125 from 60 and covering nearly 75% of Chinese provinces.

Hotels in the pipeline will range from Marriott's luxury Ritz-Carlton and JW Marriott brands to its Marriott resorts and lower-end Courtyard brand.

Marriott's expansion is an attempt to attract the growing number of Chinese tourists who are traveling at home and abroad. In the first week of October, a peak travel period each year due to China's national holidays, national tourist sites recorded 34.2 million tourists this year, an increase of 21%, from the year earlier, according to China's National Tourism Administration.

Despite the growth in travelers, China is facing a hotel glut as the world's largest hotel companies have been expanding rapidly across the country.

Hilton Worldwide Inc. has 110 hotels in its pipeline, adding to its existing 31. InterContinental Hotels Group PLC expects to add 150 hotels in upcoming years, adding to the 172 it already operates in China.

Of the 1,600 hotels planned for the Asia-Pacific region in the next five years, nearly 60% will be in China, according to hotel market research firm STR Global, which said occupancy rates have declined in China, falling to 61.3% in September from 62.9% in the same period a year earlier, outpacing a broader regional drop.

Executives at Marriott are betting that the travel demand will continue to grow, eventually filling supply.

"There aren't that many hotels given the pace of growth and the expectations of future growth," said Simon
Cooper, Marriott International's president and managing director in Asia. "We're bullish on Asia and particularly in China," Mr. Cooper said, noting that in smaller, less populated cities in the U.S., Marriott's hotels already surpass the existing number in China.

The company won't follow a recent trend of China-specific hotel launches, but will instead aim to bring room rates down in 2013 in China's lower-tier cities to meet demand for the flagship Marriott hotel brand, Mr. Cooper said.

In China's smaller cities, the average rate for a one-night stay in a Marriott is about $130, Mr. Cooper said, declining to disclose specific details of future pricing plans.

Outside of China, 61 hotels will be added to the India pipeline and the 83 others will be built in countries such as Japan, Indonesia, Vietnam, Malaysia and Australia.

The expansion adds to a plan Marriott announced in June to invest $2 billion over the next three years to open new hotels globally, expanding to 100 countries from 70. The company said then it would invest an additional $600 million to renovate existing locations and update technology.

Hotels buck weak global economy

The average daily room rate - an index to gauge the prosperity of hotels - in Beijing, Hong Kong and Macao continued to grow despite the weak global economy, international real estate service provider Knight Frank said in its latest report.

Hong Kong experienced the largest year-on-year growth among the five cities in the first half of 2012, with ADR gaining 12 percent, followed by Beijing with a growth of 11.4 percent, according to the report.

"We believe China's tourism market will continue to grow rapidly in the next few years despite the gloomy global economic outlook," said Thomas Lam, head of Research at Knight Frank Greater China.

Around 425 million people visited tourist sites around the country during the Golden Week holiday starting on Sept 30, up 40.9 percent over the same period last year. Revenue from tourism hit 210.5 billion yuan ($33 billion), an increase of 44.4 percent year-on-year, figures from the National Tourism Administration showed.

Robust economic development and growing numbers of tourists in China make it an attractive hotel market in need of more hotel rooms. International hotel operators have shown strong confidence in China's market and are pursuing aggressive expansion plans.

For example, Accor's upmarket brand Pullman is planning to open 25 hotels in the country by 2015, on top of its 14 existing hotels. Club Mediterranee plans to open five new resorts on the mainland by 2015, which will make China its second largest market in the world.

Starwood Hotels & Resorts has opened 40 hotels in China over the last five years, with an additional 90 in the works. InterContinental, which now operates 162 hotels in China, has an additional 143 under development.

"Sentiment in the Greater China hotel market is set to remain strong, with demand for hotel rooms being driven up by the increasing numbers of both local and international visitors," said Lam.

"In our judgment, the hotel market in all the five major cities - Beijing, Shanghai, Guangzhou, Hong Kong and Macao - will benefit from increasing demand from tourists and business travelers, including those coming from the MICE (meetings, incentives, conferences and exhibitions) and corporate segments," Lam added.

In the first half of 2012, hotel operators continued to expand in the Greater China region. Among the five major cities covered by this report, Guangzhou was the most active market in the first half of 2012, with more than 300 rooms added in the city.

The bi-annual Canton Fair is the largest trade fair in China and attracts more than 400,000 visitors every year. Given its position as a major Asian business and exhibition center, Guangzhou should continue to generate a steady stream of business visitors.

Shanghai's hotel market, in particular, is expected to benefit from the completion of major tourism projects, such as Shanghai Disneyland in 2015.

Meanwhile, Shanghai is to be developed into a regional transportation hub for the Yangtze River Delta region with infrastructure projects in the pipeline such as Hongqiao Transportation Interchange linking the
Huning Intercity High-Speed Railway with air and municipal public transport lines.

A number of large convention and exhibition centers in Pudong, including Shanghai New International Expo Centre and Pudong Expo and Shanghai International Convention Center, will be holding many major international exhibitions in the coming years.

The hotel markets in Hong Kong and Beijing, according to the Knight Frank report, are expected to grow steadily.

Although already well developed, they offer unique competitive advantages that cannot be easily substituted. Also, both cities have a number of tourism projects in the pipeline that should further boost hotel demand.

Beijing would benefit from the expansion of the MICE industry in the country and the central government's plans to develop the tourism industry into one of the pillars of the Chinese economy.

New hotel supply is expected to be limited in Beijing in 2012 and the ADR and occupancy rate should increase steadily and rebound to pre-2008 levels, according to the report.

Demand for hotel rooms in Hong Kong is expected to grow further, with a number of tourism-related projects in the pipeline, such as the expansion of Ocean Park and Hong Kong Disneyland as well as a new cruise terminal in Kai Tak.

9 China hotels with ridiculously good views

Some hotels are there to let you get some shut-eye; others aim to keep your eyes busy day and night. Here are nine of the latter in China where a snapshot from the windows could be the best souvenir for your trip.

The list is in no particular order.

1. St. Regis Lhasa Resort, Tibet Autonomous Region

This is one of the world’s highest luxury hotels, situated 3,700 meters above sea level.

The hotel itself is as stunning as its surroundings, so much so that you’ll be sorely tempted to skip that Everest climb after all.

There are 122 rooms, a dozen suites and 28 private villas plus a wine bar and a spa, all affording literally breathtaking views.

The Deluxe King Rooms, Lhasa Suites, Tubo Suite, and Everest Suite all provide a straight-on view of the

Potala Palace, the one-time residence of Tibet's spiritual leader in exile, Dalai Lama.

22 Jiangsu Lu, Lhasa 拉萨市江苏路22号; +86 891 680 8888; rooms from RMB 1,900 (US$302) per night; www.starwoodhotels.com

2. Li-An Lodge, Guangxi

Set atop the Longji, or Dragon’s Back, this four-story boutique hotel provides the best angle to view the rice terraces that are the wonder of southern China.

Eight of the 16 rooms overlook the rolling emerald tiers spread over eight mountains, while the others face various parts of the surrounding landscape.

Corner room Celadon has the best views: you can take in the green spirals from two sides.

Each room is uniquely decorated, with celadon porcelain, terracotta earthenware, and wood block prints.

"I was thrilled when I reached the spot [in 1997] where Li-An Lodge stands now," says Keren Su, 60, owner of the lodge.

"A fantastic dream-like view spread out right from my feet down to the entire valley," the Chinese-American continues. "I dreamed about building a house of wood structure just like the local village houses. It took me nine years to fulfill my dream."

What's most amazing about the wooden lodge is that it was built without a single nail -- in the manner of traditional Chinese dwellings.

Ping'an Cun, Heping Xiang, Longsheng County 龙胜县和平乡平安村; +86 773 758 3318; rooms from RMB 1,850 per night; www.lianlodge.com

3. Songtsam Meili, Yunnan

This quaint lodge in northwest Yunnan Province has just 17 rooms,13 in a building facing Tibetans’ sacred site Meili Snow Mountains, and four in a second building that overlooks the valley as well as the tiny, five-house village in which the hotel is located.

At about 3,600 meters above sea level, Songtsam is remote. It’s incredibly quiet here and there’s not a hint of light pollution to tarnish the star-speckled night sky.

The hotel is designed to look like a traditional Tibetan home gone chic, with Wi-Fi and shiny Macs in the library.

A good option to spend the days is hiking and flower picking in the village. At night, curl up around the wood-burning stoves, or join the staff for a bonfire sing-along.

The room rate includes all meals, soft drinks and local beer. The hotel is closed every winter from mid-December to mid-March due to harsh weather.

Geji Village, Deqin County, Zhongdian, Shangri-La 香格里拉中滇德钦县各几农村; +86 887 828 8889; rooms from RMB 1,280 per night; www.songtsam.com

4. Hotel Indigo, Shanghai

This is the only high-rise hotel on the south Bund, with 184 rooms all decked out in 1930s Shanghai style.

The views are sweeping throughout its rooms and public spaces.

From rooftop steakhouse and bar CHAR, take in the cityscape with a dirty martini in hand and Wagyu filet in stomach.

Guestrooms overlook either the Shanghai old town, with its brick row houses, or the gleaming Pudong skyline, Huangpu River, and Bund’s colonial architecture.

For 28-year-old American Johanna Hoopes, the appeal of the hotel is that "the south Bund is just starting to develop."

"There are no other tall buildings to obscure your view," says Hoopes, "it's wide open."

585 Zhongshan Dong Er Lu, Shanghai 上海市中山东二路585号; +86 21 3302 9999; rooms from RMB 1,580; www.shanghai.hotelindigo.com

5. Grand Hotel, Beijing

The furnishings at this 217-room hotel err on the side of classical Chinese, rather than the now de rigueur East-meets-West, but it’s what's outside the rooms that's really what you’ve come to see -- the gargantuan Forbidden City.

The Deluxe and Old Pekin Suites look out onto the Forbidden City and bustling Chang'an Street. From the Forbidden City View Room, you get a full-on view of the golden pointy roofs of the former imperial palace.

Ambassador Suite provides views of both the Forbidden City and Tiananmen Square. With the rose pear wood furniture, the 118-square-meter flat is fit for an emperor.

35 Chang'an Dong Jie, Beijing 北京东长安街35号; +86 10 6513 7788; rooms from RMB 980 per night; www.grandhotelbeijing.com

6. Shangri-La Hotel Guilin, Guangxi 

Guilin is the jumping-off point for Yangshuo, a backpacker town whose karst mountains and crystal-clear river are immortalized on the RMB 20 banknote.

The seven-floor, 449-room Shangri-La sits right on the bank of the Li River and, from the Deluxe River Rooms, you can see its delicate curve, backed by the sharp peaks of the karst rock formations.

At sunset, the rooms and surroundings are flooded with golden light, a photographer's dream.

Though locals will dip in the Li, you can take advantage of the 400-cubic-meter, enormous (and immaculate) outdoor pool, which is set in a verdant garden and watched over by a uniformed lifeguard.

111 Huan Cheng Bei Er Lu, Guilin 桂林市环城北二路111号; +86 773 269 8888; rooms from RMB 850 per night; www.shangri-la.com/guilin/shangrila

7. Hongzhushan Hotel, Sichuan

There are 510 rooms spread across nine buildings in this 440,000-square-meter resort, so you'll get in plenty of walking before you even hike Mount Emei (峨眉山), one of the nation's Buddhist mountains whose base is adjacent to the hotel.

Buildings Five and Eight are the best of the lot -- rooms inside either face foresty Emei or 100,000-square-meter Hongzhu Lake.

Billy Zi (字文照), 31, a product manager at online travel platform Trekiz, recommends the third- and fourth-floor mountain-view rooms in Building eight.

"On sunny days," he says, "you can take photos of [Emei's] shining Golden Summit," atop which sits the world's highest golden Buddha (48 meters).

And when the weather's less clear, you'll still have a prime view of the 3,099-meter mountain.

Beside Baoguo Temple, Mount Emei 峨眉山报国寺旁; +86 833 552 5888; rooms from RMB 335 per night; www.hzshotel.com

8. Naked Stables, Zhejiang

"The tranquility evoked by the peaks and dips of the mountains create a sense of calm," says Zimbabwean Jean Jumbe, 28, who stayed at the 240,000-square-meter private reserve last December.

From the resort’s African-rondavel-inspired Earth Huts, you can look directly into the tree tops and bamboo stalks for which Mount Mogan is known.

From the treetop villas, you've got a panoramic view of the whole resort, including the tiered infinity pools, their soothing blue water popping against the verdant backdrop.

Naked Stables Private Reserve, Sanjiuwu, Laoling Village, Moganshan Town, Deqing County, Huzhou City 浙江省湖州市德清县莫干山镇老岭村三鸠坞; +86 21 6431 8902; rooms from RMB 2,600 per night for an Earth Hut and RMB 5,800 per night for a treetop villa; www.nakedretreats.cn

Ritz-Carlton Guangzhou, Guangdong

Canton Tower is currently the tallest structure in China (though the 632-meter Shanghai Tower will overtake it in 2014) and the world's second tallest TV tower, after Tokyo's Skytree.

From the 351 guestrooms at the Ritz-Carlton Guangzhou, you'll overlook either the sprawling city or the Pearl River and Canton Tower.

All the River View rooms have a straight-on outlook of the gleaming “slim waist,” a nickname for the 600-meter tower.

The center of Guangzhou is constantly under construction, especially the neighborhood in which the Ritz-Carlton is located, so some rooms do overlook building sites. You won't be waking up to jackhammers, though; the windows block out every decibel.

3 Xing'an Lu, Pearl River New City, Tianhe District, Guangzhou 广州市天河区珠江新城兴安路3号; +86 20 3813 6688; rooms from RMB 1,950 per night; www.ritzcarlton.com

Source: CNN Go By Sophie Friedman

Hoteliers Brave Room Glut in China

HONG KONG—Demand is cooling in China for international hotel companies. But that hasn't kept them from putting new hotels and resorts on the drawing boards.

Hoteliers say China remains their most important country for growth, with Accor SA, Hilton Worldwide Inc., Marriott International Inc. and InterContinental Hotels Group each planning to open more than 100 properties in the country in the coming years.

"There's a lot of supply growth, but demand will eventually catch up," says IHG Chief Executive Richard Solomons.

Mr. Solomons acknowledges that the pace of construction has created short-term oversupply in certain parts of the country in recent years. Beijing and Shanghai, for example, added hundreds of hotels in anticipation of the 2008 Olympics and Expo 2010, respectively. But he says he expects domestic demand will pick up the slack quickly.

IHG's revenue per available room, an industry standard for business health, rose 9.7% in the first half from a year earlier. Mr. Solomons says growth was lower in recent months, without disclosing the figure. IHG, the world's largest hotel company by number of rooms, operates under the InterContinental, Holiday Inn and Crowne Plaza brands.

France's Accor, which runs about 130 hotels in China under the Ibis, Sofitel, Grand Mercure and Pullman names, says China's cooling economy has decreased the company's revenue growth per available room in the country to between 6% and 8% in the past three months from 12% to 15% in the first half.

"It's too soon to say it's a definite trend," says Michael Issenberg, chairman of Accor Asia Pacific.

Accor has signed contracts to open 100 more hotels in China. The company is focusing on developing its Ibis budget brand. Accor has 59 Ibis hotels in China, 40 of which the company owns outright, an unusual move in China where most international hotel chains operate under management contracts and don't own the properties.

Hilton has 31 hotels in operation in China with another 110 hotels in its pipeline. Martin Rinck, the company's Asian-Pacific president, says Hilton sees "huge potential" in smaller cities for midmarket hotels.

IHG, which opened its first hotel irn China in 1984, says it expects to add 150 hotels in the coming years to the 172 it already operates. The company generated $1.9 billion in revenue in China last year, up from $1 billion 2009.

China now makes up 10% of IHG's global revenue, though Mr. Solomons says he expects the country to match the U.S. as the industry's biggest hotel market in terms of rooms by 2025.

In a bid to lure more Chinese travelers, IHG started a Chinese-only brand, Hualuxe. Aimed at the "upper midmarket" and catering to Chinese clientele—boasting 24-hour noodle bars and favoring tea rooms over cocktail bars—the first Hualuxe is scheduled to open in 2014.

So far, most hotel development by international brands has been in major cities, mostly as part of mixed-use projects sanctioned by the government. But hotel companies now are building in smaller cities in China's interior and developing resorts for a newly affluent middle class that only recently has begun to afford leisure travel.

Marriott is developing resorts in Yunnan province and the Yellow Mountain region of Anhui province.

"We're particularly bullish on domestic leisure spots," says Paul Foskey, executive vice president of lodging development for the Asian-Pacific region at Marriott.

Industry observers have said the glut of rooms is a short-term issue. "I'm cautiously optimistic," says Torsten Stocker, a partner at consulting firm Monitor Group. "It's less a matter of continuous oversupply in the market than how some brands will do a better job in building their brands than others. The bigger issue is:
How do you actually find people to run and manage these hotels? There's a shortage of well-trained people."

IHG says it expects it will need to hire 100,000 employees in China over the next five years.

Source: Wall Street Journal By Jason Chow

Hotelier Kerzner Pins a Comeback on the 'Hawaii of China'

Hotel operator Kerzner International Holdings Ltd. was buried under a mountain of debt when its luxury projects ran into trouble during the financial crisis. Now, it is attempting a comeback with a colossal resort on the "Hawaii of China," backed by a leading Chinese investor.

Kerzner, known for giant developments such as Sun City in South Africa and Atlantis in the Bahamas, is expected to announce Thursday that it has reached an agreement with Chinese conglomerate Fosun International Ltd. to build a $1.5 billion Atlantis resort on Hainan Island in the South China Sea, according to both companies.

The 153-acre property in the city of Sanya will include 1,300 hotel rooms, 18 bars and restaurants, a water park, dolphin shows and other marine life. Groundbreaking is to start this year, and the resort is to be completed in 2016.

Fosun is led by Guo Guangchang, who calls himself a disciple of famed investor Warren Buffett, chairman and co-founder. His company has about $28 billion in assets, making it the largest privately owned Chinese conglomerate. "Fosun has all the funds ready to build this project successfully," Mr. Guo said in an interview.

Along with a partner, Fosun made an offer earlier this year to buy French resort company Club Méditerranée SA for $729 million that is awaiting shareholder approval. Club Med has two resorts in China and is planning to open three more by the end of 2015.

Leisure travel is expanding in China faster than in Europe, experts say. In previous years, affluent Chinese liked to boast of how many new places abroad they had seen, Mr. Guo said. "Now, many Chinese people like to have a good time in one place."

The China project represents a second chance for Kerzner's 78-year old founder and chairman, Sol Kerzner, and it marks a sharp break from the company's past. Before the downturn, the hotel operator had borrowed heavily for stakes in projects it later had to sell or turn over to lenders, including giant Atlantis resorts in the Bahamas and Dubai. Last year, such property sales helped Kerzner complete a debt restructuring.

Kerzner says the China project is part of its new approach of keeping its name off the property deeds. The hotel operator will manage the resort, while its deep-pocketed Chinese partner is putting up all the capital and owning the real estate.

"We are focusing on managing hotels," said Alan Leibman, Kerzner's chief executive.

The strategy of operating or franchising instead of owning hotels has become increasingly popular. Managing hotels rather than owning them means tying up less capital and taking on less debt, analysts say.

Mr. Kerzner, a South African native, launched his hospitality career in 1962. In the following years, he developed Sun City, which includes hotels, a man-made lake, golf courses and a 6,000-seat arena where Frank Sinatra sang.

In 1996, he opened the Mohegan Sun casino in Uncasville, Conn., partnering with an Indian tribe, and a few years later started a brand of boutique luxury resorts called One&Only in the Bahamas, Mexico and other destinations.

His firm bought the 2,300-room Paradise Island Resort in the Bahamas out of bankruptcy protection in 1994. He turned it into his first Atlantis, with 1,150 additional hotel rooms, and opened restaurants featuring celebrity chefs such as Jean-Georges Vongerichten.

Mr. Kerzner and his son Butch Kerzner, then-chief executive, took the company private in 2006 through a roughly $3 billion transaction, with Goldman Sachs Group Inc. and Colony Capital LLC, among others, coming in as partners. That same year, Butch Kerzner died in a helicopter crash.

Kerzner opened a second Atlantis in partnership with the Dubai government in 2008, just as the financial crisis was about to boil over. The company sold its 50% stake in Dubai Atlantis to a Dubai government fund for $250 million last year, part of the process of reducing Kerzner's debt to $120 million from $500 million.

Separately, with $2.5 billion of debt on the Atlantis Bahamas resort, the company that year turned the property over to Brookfield Asset Management Inc., one of the lenders. Kerzner continues to manage both resorts.

Source: Wall Street Journal by Craig Karmin

Hilton expanding vigorously in China

Since the launch of its first hotel in China, in Shanghai, in 1988, Hilton hotel group has been expanding rather slowly in the nation. Over the past 25 years, it has opened only 31 hotels in 17 cities in China, including Hong Kong and Macao.

However, since last year, Hilton's business strategy in China has been undergoing major adjustments. Paul Brown, president of Brands and Commercial Services for Hilton Worldwide, told China Economic Weekly that "We believe that China will become Hilton's second largest market worldwide, trailing the US. By 2015, Hilton plans to open 100 new hotels in China, including Waldorf Astoria Hotels & Resorts and Conrad Hotels & Resorts, two topnotch hotel brands under the Hilton group."

Olivier Chavy, chief of the Lifestyle & Luxury Brands of Hilton Worldwide, pointed out that "We plan to open Waldorf hotels not only in first-tier cities, such as Shanghai, but also second-tier cities in China. With the enhancement of their vision, wealth Chinese have begun to embrace high-end hotels."

In 2010, the Woldorf hotel in Shanghai Bund opened, joining the ranks of 23 Woldorf hotels worldwide and serving as the foothold for the brand to pry open the Chinese market.

Stuart Foster, vice president of luxury brands and marketing, Hilton Worldwide, revealed that "We have decided to open a Woldorf hotel in Chengdu, the first hotel of the brand in central and western China."

Along with the rapid progress of the hotel industry in recent years, five-star hotels already cannot meet the demand of Chinese people in pursuit of rich and famous lifestyles. Some municipal governments hope to induce the development of businesses for rich persons, such as yachts, business planes, and golf, via enhancement of the brands and quality of hotels. In practice, municipal governments often take part in the construction of high-end hotels, while soliciting support from international hotel brands in design and management.

Olivier Chavy noted that "We feel the enthusiasm of municipal governments for luxury hotels. Under the warm invitation of the municipal government, we will open two Woldorf hotels in Hainan in five years."
　　
Another luxury brand Conrad has only 20 hotels worldwide, four of which are located in China, including Dalian, Macao, Hong Kong, and Sanya. Hilton plans to open another 15 Conrad hotels worldwide in the future, including that in Beijing (2012), Suzhou (2014), Guangzhou (2014), Xiamen (2015), and Qingdao (2016).

Little room for growth among high-end hotels

The high-end hotel market has become saturated in China, with industry-wide declines in average occupancy and daily rates this year.

In the first quarter, the average daily rate for five-star hotels slid 6.15 percent year-on-year, while the average occupancy rate was down by 7.8 percentage points, according to the National Tourism Administration.

"This year is very challenging for the industry," said Sun Jian, chief development officer for China of InterContinental Hotels Group Plc.

The group's average daily rate in China fell 1.2 percent in the first half, its interim results show.

"We worked very hard to hold the decline to only 1 percent, but it was still a surprise, as we never saw a decline in the China market before," he added.

There are simply too many high-end hotels in the nation, industry sources said.

In the first half, the supply of hotel rooms went up, as did demand. But demand only increased 1.4 percent while supply increased 4.3 percent, said He Wen, business development manager in China for STR Global, an international hotel industry data and analysis provider.

High-end and luxury hotels will account for the largest part of the future new supply in China, He said.
A slowing domestic economy is weighing on the sector.

"The hotel industry is directly affected by the macroeconomic situation," said Zhu Chaolun, vice-president of the China hotel and tourism real estate department of Jones Lang LaSalle Inc, a real estate services firm based in Chicago.

Zhu said that business travel declines as economic growth decelerates, which cuts demand for hotel rooms, especially at the higher end.

Most luxury hotels in China cannot attain an occupancy rate of 70 percent, which is the break-even point for the hotel industry, he said.

Statistics from the NTA show that the average occupancy rate for five-star hotels was only 50.1 percent in the first quarter.

"Luxury hotels usually don't like to cut rates, as they want to maintain their market position," Zhu said. "So the occupancy rate declined."

A government drive against luxury consumption using public funds in 2012 had an adverse effect on luxury hotels, many of which depend heavily on food and beverage services. Some luxury hotels' catering income contracted by 20 to 30 percent in the first quarter of 2013, some business insiders said.

To counter the decline, some luxury hotels launched buffet and group-purchasing services to get more from the lower and middle segments of the market.

The structure of China's hotel industry is unhealthy, Zhu said, as high-end and budget hotels outnumber middle-level hotels.

As of July, high-end facilities accounted for 56 percent of China's hotel rooms and budget hotels took up 22.6 percent, according to STR Global.

"The main clientele of hotels should be middle class," said James Lyu, executive director of the Hong Kong Hotels Association. Lyu said that four-star facilities should be the most numerous.

Hilton Hotel and Resorts planed to bring Hilton Garden Inn to China, which is the group's four-star hotel brand, and the first Hilton Garden Inn hotel will be opened in Shenzhen, Guangdong province, by the end of this year.

However, high-end hotel operators are still optimistic about China's market over the long term and are still adding new rooms.

Usually, hotel operators sign long-term management contracts with property owners, so they have to look beyond current market demand.

"We have very longstanding contracts and with that, we feel very comfortable and confident about this market," said Rainer Stampfer, regional vice-president and general manager of the Four Seasons Hotel chain in China.

Stampfer said Four Seasons does not worry about excess supply, as it builds hotels for the next 20, 40 or even 80 years.

Source: By Wang Wen (China Daily)

Hard Rock banks on golf for China hotels

Rock music enjoys a niche following in China. So does golf.

Now they're being welded together in attempt to attract Chinese tourists.

Hard Rock International is swinging into mainland China, partnering with golf resort-operator Mission Hills.

The Florida-based hospitality company will open the mainland's first two Hard Rock Hotels by 2015 to let the nation's well-heeled tourists live, eat and party like rock stars. (Outside of the mainland, Macau already houses a Hard Rock Hotel.)

The two new hotels will be located in Mission Hills' golf and leisure complexes: the 150,000-square-meter Mission Hills Centreville in Shenzhen and the 80-square-kilometer, 10-course Mission Hills Hainan resort.

The combined construction cost for the two properties is expected to be RMB 900 million (US$142.7 million).

New experience for Chinese

Ken Chu, chairman and CEO of Mission Hills Group, said the company chose to work with Hard Rock because he wanted to introduce the mainland to a brand that "people have not experienced."

By bringing the music-theme hotel brand to his Shenzhen resort, Chu said he hoped to develop a comprehensive tourism complex.

The 22-story Hard Rock Hotel Shenzhen will contain 280 rooms while the Haikou property will host 250 rooms.

Both hotels are expected to keep the brand's traditional rock-influenced interiors and facilities such as a recording studio.

According to Mission Hills, each hotel will have a “signature restaurant,” but the company did not confirm whether or not this would be a Hard Rock Café.

Hard Rock already has a golf course at the Hard Rock Hotel & Casino Punta Cana in the Dominican Republic, where guests can play the 18-hole course designed by U.S. golf legend Jack Nicklaus.

Public reactions

Golf and rock draw different fans in China: golf appeals to affluent executives, while rock draws aspiring, rebellious youngsters. So is their marriage facing a promising future in China’s tourism market?

Eheart Chen, 35, is a Shanghai-born singer and a fan of British Rock. Chen said he has heard of Hard Rock Café, but not the hotel.

“But I’d definitely be interested to stay at the hotel if it’s not too expensive,” said Chen, who names The Smiths as his favorite band.

"Rock fans in China usually do not have a very high spending power," added Chen.

Wang Jing (王京), senior hotel business director at travel booking site Qunar, said such rock-themed hotels would definitely become popular among young Chinese travelers, but their locations would be critical to their business.

Wang said he would expect to see the hotels being built around music conservatories, bar areas, concert halls and stadiums -- in short, places that already draw lots of music fans.

Jenny Lo, 33, a seasoned hotel branding consultant, said mainland Chinese travelers are receptive to distinctively different hotel experiences.

“But with the two upcoming properties being in golf resorts, that may change the dynamics,” added Lo.

“They may appeal to families, and I do not think they will be as attractive to young individual travelers.”

Hard Rock and Mission Hills are yet to announce the room rates of the two Hard Rock Hotels in China, but the nightly rate at Hard Rock Macau usually starts from MOP 2,000 (US$250).

Source: CNN Go

Four Seasons Seen Drawing China’s Richest Man

In the hunt for luxury hotel management companies in America, China’s richest man may set his sights on Four Seasons, or several smaller boutique chains.

Wang Jianlin, owner of commercial land developer Dalian Wanda Group, said this month he hired two investment banks to buy hotel management companies, mostly in the U.S., where a recovery in travel is boosting lodging demand. Closely held Four Seasons Hotels & Resorts, operator of the namesake properties in Manhattan and around the world, would give Wang a high-end, globally recognized brand, said Robert W. Baird & Co.

With few big luxury names officially for sale, he may settle for a compilation of smaller, lifestyle hoteliers such as Morgans Hotel Group Co. (MHGC), which manages Mondrian and Delano properties, FBR & Co. (FBRC) said. While Morgans’s enterprise value is the most expensive relative to profit among U.S. lodging peers, Dalian Wanda’s revenue is forecast to exceed $100 billion by 2020 and Wang has a net worth of $12.7 billion. Wang’s ambitions may also lead him to high-end boutique chains Viceroy Hotel Group in Los Angeles and Kimpton Hotel & Restaurant Group LLC of San Francisco, SunTrust Robinson Humphrey Inc. said.

“It’s part of a larger trend,” James Macdonald, Shanghai-based head of China research for Savills Plc, said in a phone interview. “Chinese companies are starting to look at diversifying out of China and bringing intelligence and market experience from operating overseas back to the China market. It’s also about taking experience of the China market overseas to try to get the best of both worlds.”

Building Hotels

A Beijing-based representative for closely held Dalian Wanda declined to comment on potential takeover targets.

Dalian Wanda plans to build five-star hotels at a rate of 15 per year and in as many as 10 major cities around the world, including projects planned for London and New York, Wang said in an interview with Bloomberg News at the World Economic Forum in Dalian this month. The 58-year-old billionaire said he has been in talks with “several” companies in the past year.

Wang is China’s wealthiest person, according to the Bloomberg Billionaires Index.

In addition to 40 hotels, Dalian Wanda runs at least 49 commercial properties across China and 40 department stores from Beijing to Nanjing, according to its website. The 25-year-old company is owned by Wang and his son Wang Sicong.

Hotel chains in the U.S. have benefited from demand in the lodging industry, with shares of Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) reaching multi-year highs in May.

Hilton Worldwide Holdings Inc., owned by Blackstone Group LP (BX), this month filed to raise $1.25 billion in an initial public offering.

Industry Growth

Revenue per available room, the industry’s measure of average daily room rates and occupancies, is still expanding. After rising 6.8 percent last year and 8.2 percent in 2011, data provider STR forecasts it will increase 5.7 percent this year and 6 percent in 2014.

“For any buyer like Wang, it is a very good time to buy into this sector since we still have several years ahead of growth in the hospitality industry,” said Nikhil Bhalla, an industry analyst at FBR in Arlington, Virginia.

Four Seasons, with 91 luxury properties in 38 countries, would fit Wang’s ambitions, according to David Loeb, an analyst at Milwaukee-based Robert W. Baird. The Toronto-based company hired Allen Smith, the head of Prudential Real Estate Investors, as chief executive officer in August to help the hotelier expand.

Four Seasons

Bill Gates’s Cascade Investment LLC, Prince Alwaleed Bin Talal’s Kingdom Holding Co. and founder Isadore Sharp took Four Seasons private in 2007 for about $3.4 billion.

“The brand that would fit Wang’s ambitions perfectly is Four Seasons,” Loeb said in a phone interview.

“Prince Alwaleed loves Four Seasons but he’s a practical guy,” he said, adding that a sale would be possible at the “right price.”

Sorya Gaulin, a spokeswoman for Four Seasons, declined to comment when asked if the company would be willing to sell.

If Four Seasons isn’t for sale, Wang may have to settle for a compilation of smaller high-end hoteliers, including New York-based Morgans or Viceroy, Loeb said.

“It’s a slow process,” Wang told Bloomberg in the interview earlier this month. “Those companies we liked, they might not be willing to sell. Those willing to be bought, we might sometimes feel the brand isn’t as good.”

Among boutique hotels that cater to an affluent younger clientele, Morgans, Kimpton or Viceroy could be likely candidates for Wang, said Patrick Scholes, an analyst at SunTrust in New York.

Ron Burkle

“All of them are high-end with locations in urban markets,” Scholes said in a phone interview. “This presents the opportunity to get Chinese travelers into these hotels and introduce them to these brands that can ultimately then be brought to or be expanded in Asia.”

Kimpton CEO Michael Depatie and a spokesman for Morgans declined to comment on whether the companies would be interested in selling to Dalian Wanda. A representative for Viceroy didn’t respond to requests for comment.

Morgans climbed to an almost two-year high in early June when it said it would consider a sale after receiving takeover interest from five potential buyers. Morgans has since had a tumultuous few months, with the board ousted and CEO Michael Gross resigning. Investors including Ron Burkle’s Yucaipa Cos. and Kerrisdale Capital Management LLC have called for another new slate of directors to help sell the company.

Infinity Pools

Morgans operates 12 hotels, known for their stylish decor and amenities such as infinity rooftop pools. The hotelier’s Hudson in New York, the Mondrian in Los Angeles and the Delano in Miami’s South Beach were opened by Ian Schrager, who has been credited with the invention of the boutique-hotel concept.

“Morgans has three good brands, brands whose value is arguably much bigger than their actual footprint because they are in key cities and well known throughout the U.S. and abroad,” Chris Agnew, an analyst at Stamford, Connecticut-based MKM Partners LLC, said in a phone interview.

He estimates that Morgans should be valued at $9 a share as a standalone and that an acquirer would have to pay 30 percent to 50 percent more. Such a price tag would top $900 million, including net debt.

After rising 25 percent this year, Morgans closed at $6.95 yesterday. With an enterprise value 34 times its earnings before interest, taxes, depreciation and amortization in the last 12 months, Morgans is more expensive than every other U.S. lodging stock, data compiled by Bloomberg show.

Beverly Hills

In addition to Morgans, closely held Viceroy may appeal to Wang with its 16-property portfolio that includes the L’Ermitage Beverly Hills and the Yas Viceroy Abu Dhabi, said FBR’s Bhalla. Kimpton, the operator of 62 U.S. properties, some of which feature floor-to-ceiling bookcases and lush velvet drapes in guest suites, may also fit the bill, Bhalla said.

It would be more efficient for Wang to target only bigger, top hotel operators, the same way he pursued AMC Entertainment Holdings Inc. last year to create the world’s biggest cinema owner, said Kenny Wu, a Hong Kong-based analyst at JI Asia. At the time, the $2.6 billion deal was the largest acquisition of a U.S. corporation by a Chinese company.

“If you look at Wanda and what it has done, Wang is now a big movie-theater owner,” said Loeb of Robert W. Baird. “He has the money to think big.”

Source: Bloomberg News By Nadja Brandt | Photo: Los Angeles Times

Carlyle checks into Chinese hotel sector

Carlyle Group has developed a taste for the Chinese hotel industry and its investment pace in the sector this year is expected to remain solid. The latest move by Carlyle — one of the world's largest private equity firms — was to complete a deal to take 7 Days Group Holdings Ltd private. The company, which was listed on the New York Stock Exchange, runs the 7 Days Inn budget hotel chain in China. In March, 7 Days Group said that Carlyle, Keystone Lodging Co Ltd and Sequoia Capital planned to acquire the company for $4.60 per ordinary share, or $13.80 per American Depositary Share.

In July, 7 Days Group, Carlyle and Sequoia Capital announced the establishment of the Plateno Hotels Group and said that the 7 Days Inn chain would become part of it. The Plateno Hotels Group will develop another four high-end and mid-tier hotel brands based on the 7 Days Inn's concept.

"With the acceleration of the country's urbanization drive and an improvement in Chinese people's disposable income, customers will have more specific requirements and the coverage of high-end and economic hotels will have a bigger market space," Eric Zhang, a managing director at Carlyle, told China Daily.

Zhang said that the hotel sector has a close relationship with the country's economy. And as the Chinese economy remains on a healthy track, investing in the Chinese hotel industry has great potential.

"The business risk pattern of the hotel sector is low, and brands, sites and resources are key factors of the sector and it's hard for competitors to copy them," he said.

Zhang added that the relatively high valuation of the hotel sector is another reason behind Carlyle's confidence in the industry.

"Although lots of budget hotels emerged and competition among them was fierce, the market is far from being saturated," said Zhang, adding that budget hotels are able to compete with guesthouses and two- and three-star hotels.

Industry insiders said that Carlyle is taking part in the 7 Days Inn deal not because the valuation of the company was lower than its real value, but because Carlyle is confident on the company's growth prospects and sustainable profitability.

Carlyle also took a controlling 49 percent stake in China's Mandarin Hotel Holdings Ltd in July last year, in a bid to tap into the country's emerging mid-tier hotel market.

The value of the investment was not revealed, but a typical deal by the fund through which the investment was made — Carlyle Asia Partners III LP, which totals $2.55 billion — is usually worth more than $75 million.

"The mid-tier market in China is very fragmented and of great potential, and Mandarin Hotel Holdings is a leader in this market with its product design and marketing strategies," said Zhang. "So we feel confident (the deal will) help the company to perfect its business and brand to win in the market."

The total number of rooms of Chinese mid-tier hotel chains only accounts for 12 percent of the whole mid-tier hotel industry, according to Carlyle data.

Founded in 2006, Mandarin Hotel Holdings, which is not related to the Mandarin Oriental chain, operates 25 hotels in six major Chinese cities, 14 of them in Beijing. It operates hotels under the Crystal Orange and Orange brands.

"The Chinese high-end and budget hotels have developed very well, while even the largest 10 mid-tier hotels account for no more than 5 percent of the mid-tier hotel market," said Wu Hai, founder and chief executive officer of Mandarin Hotel Holdings and a former vice-president at Ctrip, a major online travel agency in China.

Carlyle's third hotel deal in China was in 2008 when it invested $100 million in New Century Hotels & Resorts.

New Century Hotels Real Estate Investment Group, the first Chinese hotel real estate investment trust, had its initial public offering in Hong Kong in July. The IPO raised HK$676 million ($87 million).

In addition, the company said it signed a three-year loan agreement totaling HK$1.93 billion with several banks led by Standard Chartered, with HK$1.47 billion of the funds coming from offshore loans.

"Our REITs will benefit from the (solid) Chinese economy, the rapid growth of China's tourism sector, and the appreciation of the yuan," said Chen Miaolin, chairman of New Century. "With the cooperation with
Carlyle, we will seize M&A opportunities as well as our own growth to develop our REIT business."

Before Carlyle's investment, New Century only had a dozen hotels, but now it has 107 hotels in operation, with new ones in the pipeline.

Zhang said that, unlike the real estate sector, the hotel sector has to pay attention to profitability and brand cultivation. Some first-class hotels do not care for profitability and only hope that their land increases in value, Zhang added.

Carlyle helped New Century to focus on hotel development rather than on property projects, as well as on promoting its brand, inviting industry experts and improving its member systems and marketing operations.

Previously, New Century owned some land and more was rented, but now it will adopt an asset-light strategy.

Also, Zhang said that Chinese clients are the main customers of high-end hotels in second- and third-tier cities, so the company has launched several campaigns with Chinese characteristics to satisfy their requirements.

For instance, many Chinese customers don't mind spending over 1,000 yuan ($162.15) for a meal, but they only want to pay 600 to 700 yuan for a room.

New Century also pays close attention to its greeting patterns, the design of conference rooms, and even details such as the slippers provided to guests.

"As competition for good deals intensifies, being an industry insider with a professional attitude has to be a new trend," said Zhang, adding that the company will explore more opportunities in the hotel sector in the coming years.

Liu Zehui, managing director at Legend Capital, told China Daily that there are now fewer investment opportunities in the Chinese budget hotel sector, because brands such as Home Inn and Hanting have been industry leaders for a long time and grabbed a large market share. However, there are still some attractive deals in the hotel industry.

"Investing in middle- and high-end hotels in China can have great potential," said Liu, adding that domestic three- and four-star hotels have the advantage of local knowledge and lower costs when competing with foreign companies.

Liu added that Carlyle's deal to take 7 Days private may be profitable, but that growth will likely not be as high as it would have been in previous years because similar-level hotels have boosted operations, and many new competitors have entered the field.

In June 2012, budget hotel chain Pod Inn received investment totaling $55 million from five equity investment firms including Legend Capital. Pod Inn financed its first equity investment funds worth 5 million yuan with money from Legend Capital in 2010.

Pod Inn's chief operating officer Shi Yangqing told China Daily that Chinese customers are very rational when it comes to choosing hotels, and brand and services are very important.

"Although we operate budget hotels, we will not simply increase the number of branches. Instead, we focus more on details and personality," said Shi, adding that the decoration of Pod Inn hotels is fashionable and trendy and that they have just spent 10 million yuan to improve the beds.

By the end of 2013, Pod Inn plans to increase the number of its branches across China to 300.
Since entering the Chinese market in 1998, Carlyle has made about 70 deals in China. Of these, the amount of equity investment deals totaled $4.7 billion.

In 2012, Carlyle's investment in China totaled $700 million with the money coming from five funds related to the country. Carlyle also cashed out $1.5 billion in the country last year.

In January, Carlyle sold its remaining stake in China Pacific Insurance (Group) Co Ltd in a deal valued at $793 million. The private equity firm began selling its stake in the insurer in late 2010, and it earned about $4 billion from stock sales over that time, five times the $800 million it had invested between 2005 and 2007 for a 17 percent stake in the Chinese firm, according to calculations by Thomson Reuters.

Source: By Cai Xiao (China Daily)