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Hangzhou attracts new hotels |
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By Prudence Lui
Four Points by Sheraton Hangzhou Binjiang: business from the corporate market is slow but steady
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As a must-see destination with domestic tourists and growing numbers of international travellers, Hangzhou continues to attract serious money for hotel development.
With only a small number of international hotel flags flying over the city – Shangri-La, Hyatt and Sofitel to name a few – the opportunities in this scenic and historic city are bountiful. At least they were, before the financial crisis upended growth projections.
Which accounts for the steady stream of international chains that will enter or expand their footprint in the city over the next two years. The newcomers have their eye on the burgeoning tourism industry, which received 45.5 million domestic arrivals last year, up 10.7 per cent over the previous year, while international visitor numbers hit 2.21 million, up 6.1 per cent.
These numbers helped the city’s 247 star-graded hotels, including 13 five-star and 88 four-star properties, pull in an average occupancy of 63.3 per cent on an ARR of US$43.
The average rate makes Hangzhou one of the mainland’s best value draws for both tourists and MICE visitors, given the extensive range and quality of Hangzhou’s attractions and, increasingly, its business infrastructure.
Opened in March 2008, the 350-room Four Points by Sheraton Hangzhou Binjiang is strategically located in the Binjiang district – home to IT and graphics companies.
General manager, Mr Jack Xiao, said: “The hotel performance is a little behind our expectations for the first year but we can see the growth despite the toll on the economy. In the next few years, demand will grow, while international hotels will bring more competition. So far, MICE groups from our domestic market as well as international companies are bringing in business. We also have a strong corporate market that chooses to stay with us.”
Mr Xiao also insisted a quality hotel would create demand.
This year’s opening schedule kicked off with the city’s first boutique hotel – the 51-room Landison Longjing Resort in March. Landison is followed by the 316-room Crowne Plaza Hangzhou Grand Canal (in the first quarter), the 260-room Holiday Inn Hangzhou Thousand Island Lake (third quarter), the 381-room InterContinental Hangzhou (fourth quarter) and the 245-room InterContinental One Thousand Island Lake Resort in 2010.
Rather than clustering in the downtown centre, new supply is also popping up away from the city. For instance,
Xixi National Wetland Park, which borders Hangzhou’s western front, has been marked as the next new destination with five hotels and a youth hostel under development. The area will have a Banyan Tree opening in October followed by a Sheraton in April 2010, according to the Hangzhou Tourism Commission.
The upsurge of room supply is naturally expected to increase downward pressure on ARR. As far as the industry sees it, the expected rate pressure should stand the destination in good stead amid the credit crunch. A spokesman for the four-star, 223-room Hangzhou Huagang HNA Resort said: “The entry of international hotels will intensify the competition for tapping business FITs. The global credit crunch has prompted corporations to cut travel budgets and business FITs to become price conscious. In the future, a price war is unavoidable.”
The hotel charges a rate of US$54 and enjoys 72 per cent occupancy.
To combat muscular competition from international brands, local players such as the four-star Hangzhou Dragon Hotel have embarked on massive renovations and expansion. By mid-2009, the first batch of 132 new luxury rooms will be ready and by early-2010 the project will be completed with a total inventory of 596 rooms.
The five-star, 285-room Landison Plaza Hotel, which lowered the Radisson flag last year, believes it is sufficiently established in the market for this year’s difficult trading environment. General manager, Mr Michael Murphy, said: “It will be a challenging year for us and our forecast for March will be 65 per cent occupancy (from 70 per cent previously) with our rate around US$146. Cross-strait flights do help the hotel business but the economic downturn may have an impact.”
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