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Shanghai hotels bank on Expo

By Shi Yingying (China Daily)
Updated: 2009-05-18 08:05

A hotel worker walks alongside windows that overlook Shanghai's skyline at the Renaissance Shanghai YuYuan Hotel. [Bloomberg News]

Shanghai's hotels are eagerly anticipating the 2010 World Expo, to be held next May to October, hoping it may boost their currently drooping business.

"There were 325 star-rated hotels in Shanghai at the end of 2008 but the number will increase to 500 before the Expo," according to Dao Shuming, the director of Shanghai municipal tourism administration.

"These star-rated hotels along with the city's 4,000 non-star-rated hotels will be able to provide 500,000 beds by 2010," said Dao.

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Some of the new hotels are specifically banking on the Expo.

The Ritz-Carlton Pudong decided to open in April 2010, just in time for the Expo's grand opening in May 2010. The hotel is also in Pudong district, the major exhibition area of Expo.

Shanghai's hotel industry has been hit by the global recession and has seen visitor numbers slump for more than half a year.

But, even with the current lackluster turnover, Shanghai may still need the new hotels to be able to meet demand for rooms during the Expo.

"There is still an estimated accommodation gap on certain peak days when we could have 800,000 Expo tourists in a single day," said Hong Hao, director of the Bureau of Shanghai World Expo Coordination.

Some hotel groups planning to open new hotels are caught between the business drought and wanting to cash in on the Expo.

Two luxury hotel projects, the Jumeirah Han Tang Xintiandi Hotel and the Hilton-managed Conrad Shanghai, were put on hold by developers last February due to the current economic slowdown.

But the Langham Yangtze Boutique Shanghai still chose to open early this month.

"Obviously, we would love to open it in a better time but we will come out of this finical crisis soon and the hotel will be positioned well in the market," said Bob Van Den Oord, vice-president of sales and marketing at Langham Hotels International.

Academics from hotel management schools did not recommend opening a hotel only on the basis of potential Expo visitors but said the event might signal a general increase in business for the city.

"I'm not going to build a hotel because of the Expo; I'm going to build one because there may be a bigger market out there in the future brought about by the Expo," said Michael Johnson, the Dean of Cornell University's School of Hotel Administration.

The performance of Beijing five-star hotels during 2008 Olympics might serve as a warning; Beijing hotels reaped profits in August but spluttered in the other 11 months of the year.

But there are differences between the two events, according to some in the hotel industry.

"One of the major differences is that the Olympics were only for two weeks while the Expo lasts six months," said Lily Ng, vice-president of sales and marketing at Jones Lang LaSalle Hotels.

The six-month event will likely be a big draw for both domestic and international tourists and is expected to attract more than 70 million visitors, including about 5.5 million from overseas, to the city.

The city is looking at meeting some of the temporary surge in demand for accommodation by trying to involve hotels in neighboring provinces.

"To meet the need (that Expo might create) we are negotiating with Zhejiang and Jiangsu provinces, trying to find a solution in joint efforts," said the Bureau of Shanghai World Expo Coordination's Hong Hao.

Around 30 percent of the total 500,000 beds in Jiangsu and Zhejiang could be used during the Shanghai World Expo, according to the Shanghai municipal tourism administration's Dao Shuming.