CHINA’S travel and tourism market continues to grow by impressive rates, creating exciting opportunities for hospitality businesses in Shanghai and surrounding regions.
Q: How did Shanghai’s (or your city’s) hotel market perform last year? What about the performance (prospective) of your property?
Joseph Zitnik: In general, the hotel market in Shanghai showed a relatively good performance last year, and was impacted by the positive trend of the general hotel market, surrounding areas have turned optimistic as well. Both international and local brand hotels’ revenue healthily increased compared to previous years.
2016 was a record year for hotel revenue and RGI rank for Hilton Shanghai Hongqiao since its opening, especially in the MICE segment. We hold optimistic expectations this year to continue growing the business.
Arno Nicolussi: Greenland World Center Hotels feature two hotels and one residence, which are: The QUBE Hotel Shanghai Hongqiao, PRIMUS Residence Shanghai Hongqiao and PRIMUS Hotel Shanghai Hongqiao. The hotels are located in an impressive location for business meetings, banquets and weddings in the heart of Shanghai’s premier convention destination. It’s very close to the Hongqiao hub and has easy access to Hongqiao International Airport and Hongqiao Railway Station, also with easy connection between the two international airports and walking distance to a Metro station, which makes a big advantage for business travelers. With a premium setup of banquet facilities, our Grand Ballroom in PRIMUS Hotel spans 1,200 square meters. Besides we have 18 flexible meeting rooms and one function room equipped with multimedia facilities in the two hotels and one residence, which offer a wide range of event choices for customers. With our prominent location and leading MICE facilities, I can tell that our hotels have a bright future in Shanghai’s MICE market since we are one of the few hotels that can receive 1,200 customers at the same time.
Benjamin Zahh: Shanghai has become a world MICE destination. The demand for international conferences, events, exhibitions and shows is growing. As such, the performance of the hotel’s MICE business last year was very positive and strong. Our hotel’s MICE business has shown a continuous upside trend since the beginning of this year.
Mark Kirk: Shanghai has become one of the strongest MICE destinations in Asia and the city saw substantial growth last year. This is due the continuing effort of the government to create a best in class transportation system and the very high standards of exhibition space the city offers. As for Pudong Shangri-La we experienced a record year with substantial growth in occupancy including almost 100 sold- out days.
Julian Wong: In 2016, Sanya’s overall upper-upscale hotels’ average occupancies declined by 1.8 percent while RevPar declined by almost 11 percent compared to 2015. Hotel performances vary from bay to bay. Haitang Bay was the worst hit as most hotels there lost in terms of average daily rate as well as occupancies, with average RevPar down almost 18 percent. This is due to many new hotel openings there which creates an oversupply situation. 2017 is going to be challenging too as there are many more new hotel openings, many in Haitang Bay still. The Sanya Marriott Hotel Dadonghai Bay did better than market as our RevPar last year improved more than 30 percent over 2015. However, we need to factor in the fact that we opened toward the end of 2014.
Tony Tan: Overall, the Suzhou market still has a very strong demand especially for branded hotels in the Singapore Suzhou Industrial Park region. The first quarter is still showing an up trend while all hotels are having higher occupancy than 2016, but rates were slightly below the same period in 2016.
Novotel Suzhou SIP was opened in March 2016, and soon we will have our first anniversary. We are also in a good trend, and we achieved and exceeded our budget in January and February.
Q: What will be your hotel’s development strategy over the next couple of year? And according to your perception, which particular segment will be the biggest contributor to your future revenue growth there?
Joseph Zitnik: With the high growing demand, Hilton Shanghai Hongqiao will continually focus on the domestic market, and leisure will be the next key segment. Reviewing the market performance of Shanghai after the grand opening of the Disneyland, the leisure market has been boomed quickly in Shanghai. During summer holiday season, occupancy grew a lot compared with the same time last year. I am sure the majority of Shanghai hoteliers had a strong positive outlook for the further growth of domestic leisure demand, and Hilton Shanghai Hongqiao will definitely create related products to attract more leisure guests, such as Meet with Purpose, achieving business and sustainability goals in meetings; family friendly program, trying to open a new business driving section.
Arno Nicolussi: Our strategies are definitely focused on MICE, FIT (free independent traveler) and corporate. Due to the location of our hotels as well as the strategy of developing the Hongqiao area in the next couple of years, we will definitely have a bright future in revenue growth both in the MICE and FIT markets. Besides, the MICE business is always a key driver of our hotel performance. That said, from the guest rooms to the dining and meeting space options, everything at our hotels was designed with meeting planners in mind. Nevertheless, MICE, although an important business, is only one of the many business segments for our hotels as any experienced operator would ensure the diversification of their market to endure long-term successful business sustainability.
Benjamin Zahh: Our hotel boasts a central location to attract tourism-oriented MICE goers. With high competition in MICE business, we will search for technological innovation, value-added benefits, and provide creative meeting products. MICE/group segments as well as retail market segments have the potential to grow future revenue for us.
Mark Kirk: We see growth continuing in the MICE business as Shanghai is now on the must-see list and preferred destination for all meeting planners, leisure has also become a key segment for us as the trend is for more families to choose a city vacation rather than the traditional beach vacations. Disney has also played a key role in making Shanghai a first choice for city actioners. Our location is idea for all the major attractions and no other hotel can compete with the view we have over the Bund and Oriental Pearl TV Tower. One of major strengths is our people and we will continue to invest in training and development of our staff.
Julian Wong: With two different and distinct brands under one “complex,” the main goal for us is to ensure we correctly position and differentiate the two brands with clarity, the Marriott and the Autograph Collection, to our potential guests as well as to our strategic business partners. This includes brand positioning, products, pricing, distribution, service delivery, outlets and other facilities. At the same time, we will leverage and open opportunities for our guests from both hotels to dine, wine and cross-use all outlets available through an inter-facing billing system, allowing our guests to charge their outlet and beverage consumption to their rooms irrespective of whether they are staying at the Sanya Marriott Hotel Dadonghai Bay or the Shanhaitian Resort Sanya, Autograph Collection.
On MICE group business and segment, the potential and opportunities are even more enormous. Combined, the complex offers 668 guest rooms, two sets of grand ballrooms and 10 other smaller meeting rooms of various sizes beside 14 restaurants, outlets, lounges and bar and other facilities. To make it seamless, we have interfacing systems available for cross-signing as well as one booking center to handle reservation requests. In other words, besides creating separate and distinct products, we avail to our MICE planners as well as participants a wide array of selection, choices, facilities and conveniences to do business with us. Last but not the least, we can handle a very wide range of MICE groups across a breadth of preference and sizes.
Tony Tan: Our hotel was built as a supplement to Jinji Lake International Convention Center. One of our very important roles is working together with the convention center to accommodate meeting participants. The biggest contributions to our business will be MICE and corporate transient.
Q: What kind of role does MICE play at your property right now and how do you expect that sector to expand this year or in the near future?
Joseph Zitnik: Hilton Shanghai Hongqiao is a well-known business hotel in the market and it is located near the Hongqiao transportation hub, so guests can conveniently travel by airplane or high-speed rail. We were awarded the most preferred hotel for business travelers and best MICE hotel of the year by several in the mainstream media last year. The recognition of the market has showed the important role that MICE plays at our hotel. More and more large-scale events take place at large convention centers like National Exhibition and Convention Center (Shanghai), and we expect the expansion of both domestic and international MICE business. However, challenges still exist since plenty of new international hotels are booming around this area.
Arno Nicolussi: Shanghai is continually developing in terms of infrastructure and facilities and becoming increasingly attractive as a meeting destination. Our hotels are located right next to the new National Exhibition and Convention Center (Shanghai) in Hongqiao area, which will also become the new center of Yangtze River Delta region. The hotels are also part of Hongqiao World Center, a large office, shopping mall and hotel complex from Greenland Group. Customers have the flexibility to enjoy all aspects of services without going out of the complex. We are expecting a large number of conventions at the NECC as well as a large amount of business from Greenland office buildings and the premium location which makes it a great MICE destination.
Benjamin Zahh: MICE definitely plays an important role in our property. With the city center location, comprehensive meeting venues and facilities and a huge inventory of spacious modern rooms, various hotel restaurants serving cuisine from around the world as well as its unique brand culture, LRMS is one of the best MICE hotels in Shanghai and caters to every need of our MICE guests. In our market mix, MICE business maximizes our RevPAR, strengthening food and beverage revenues and enhancing our reputation as a business hotel which benefits the growing transient segment as well. We are going to maintain the MICE sector in rooms, but focus on driving group F&B business and creating market awareness.
Mark Kirk: We saw MICE business account for 30 percent of our business in 2016, and are expecting the same trend to follow in 2017, as Shanghai continues to maintain its attractiveness as a destination with well-developed infrastructure and numerous attractions including a vibrant arts and dining scene.
Julian Wong: The MICE segment is critical to both hotels — the Sanya Marriott Hotel Dadonghai Bay and The Shanhaitian Resort Sanya, Autograph Collection. It is one of our core business segments in both hotels. I am seeing an increased trend in terms of MICE group inquiries as well as confirmation in the first quarter of 2017 compared to the same period of last year, and this is a very positive trend as it indicates a rebound in this critical business segment. I’m optimistic that the MICE segment will continue to grow this year and most likely in the near future.
Tony Tan: MICE is a very important segment to us. As mentioned, our hotel is inside a complex at Jinji Lake International Convention Center, besides bringing business to our own hotel, we also need to work together with the convention center to host various events. Suzhou is getting more and more popular as a MICE destination. I believe that the MICE business will be further expanded in the coming years.
Q: Any major trends you’ve seen in the tourism and hotel industry?
Joseph Zitnik: China’s tourism industry is one of the fastest-growing industries in the national economy and data show both inbound and domestic tourism markets growing tremendously with the launch of many big government-supported tourism projects recent years. Driven by the flourishing tourism industry, the hotel industry is expanding rapidly. Meanwhile, it can be easily forecasted that fierce competitions within the industry require hotels to have higher service standards as well as more creative and competitive products.
Arno Nicolussi: Shanghai is one of the world’s largest MICE markets and one of the most powerful business and financial cities in the world. China has also attracted a lot of investment. The MICE market is booming quickly since Shanghai continues to invest in infrastructure and meeting facilities. It has become increasingly attractive as a meeting destination. Shanghai is connected to the rest of the country and the world via its expanding infrastructure; this attracts even more tourism and MICE opportunities to the city, and also brings challenges to the city in terms of the logistic and service industry, including the hotel. As per the new development plan for the Hongqiao area, Shanghai will definitely move its MICE market in a positive direction. It will become more challenging, of course, however with our commitment to training and service quality, I believe that we will be able to deliver the best service possibility to customers.
Benjamin Zahh: Going mobile is the trend, not only for Transient, but also other business segments as well as hotel services. As more and more hotels open in Shanghai and every hotel is vying for the same business, the MICE battle is ongoing and the service competition is at the highest level. Hotels are trying to offer choices on customer interests and convenience to cater to a growing MICE market looking for cost efficiency and creativity.
Mark Kirk: Shanghai continues to be a highly desirable destination for travelers due to its strength in providing a multitude of personalized experiences that cater to traveler’s unique preferences. Amidst the dynamic tourism landscape, demand for luxury tourism continues to grow. However, as consumers become more travel-savvy, and seek differentiated and diverse experiences, there is a need to further develop offerings to offer a holistic destination experience and not focus solely on luxury. As a hospitality provider, we continue to step up our game to stay relevant.
Julian Wong: There are significant shifts in terms of customer behavior as well as hotel industry focus. We see a major shift in terms of how customers book especially with millennials, migrating from traditional platforms to mobile devices, whether it’s for rooms, outlets or payment modes. We see too, the shift of guest preferences to a more localized immersive experience and the need to share their experiences with their friends and family through their social networks.
In terms of the tourism market, Suzhou, especially the SIP, is becoming a top choice as a weekend and holiday travel destination for people in surrounding cities.
There are a lot of new landmarks appearing in the SIP area: Elite Bookstore, Harmony City, and the upgraded Suzhou Art and Culture Center, etc. These will make the SIP and Suzhou more attractive for tourists. One of our best features is that all of these new landmarks are within walking distance from our hotel.