Hoteliers eye new destinations as market grows

Q: How did the hotel market perform last year? What about the performance of your property?

Anthony Ha: The hotel industry in Shanghai is continuously booming due to rapid economic development and the increasing levels of capability of consumption. We completed last year with very positive numbers and have over-achieved on our budget. Open for 18 years, Grand Hyatt Shanghai is well known for its location, rooms with breathtaking Bund views, extraordinary guest service and 10 outstanding dining outlets. Therefore, we have become a preferred destination for the majority of corporate guests and tourists who want to stay with us.

Joachim Heineke: The overall market development was positive. We are the first hotel to be managed by Jin Jiang Premier Hotels and have only recently rebranded to Hongqiao Jin Jiang. Last year our hotel enjoyed one of the strongest growth in its 25-year history.

David Katemopoulos: The market performed well above expectations in 2016 even though additional room supply came onto the market with the opening of another three five-star hotels in Xiamen. While demand remains strong especially from the leisure sector, MICE demand was flat and the additional room inventory continues to depress average room rates throughout the hotel market in Xiamen.

Danthan Xu: Shanghai’s MICE market was stable while some of the medium and small-sized groups started to consider Suzhou and Hangzhou as their new destinations. But the large group still prefers Shanghai. Our hotel performed well last year, slightly increasing its market share.

Q2: What will be your hotel’s development strategy over the next couple of years? And according to your perception, which particular segment will be the biggest contributor to your future revenue growth there?

Anthony Ha: In order to remain competitive in the Shanghai market, we are currently conducting numerous uplifting to our facilities as well as incorporating latest technologies to meet the requirements of contemporary travelers. In addition, we will continue to seek opportunities to collaborate with luxury brands to increase market awareness to further enhance our brand image.

For the future, even though the majority of our guests are business travelers, we are also seeing an increasing number of leisure guests who are traveling with families and staying with us. We will incorporate additional leisure activities to attract this segment. For instance, launching children’s cooking class — we will invite children to learn the art of cooking while their parents can relax and conduct other activities.

Joachim Heineke: We are scheduling to renovate the hotel’s restaurants and public area to give the hotel a new look and introduce new food and beverage concepts in Hongqiao. At the same time we will renovate our 587 rooms. Our focus is on MICE, corporate and leisure. All segments will be growing and will contribute.

David Katemopoulos: The two biggest challenges over the medium term are: a) talent recruitment and retention and, b) growing occupancy and average room rate to offset rising labor and inflation costs. With the scheduled opening of three hotels in 2017, four in 2018 and so on, labor costs will continue to climb because of new hotel demands, and retaining talents will be a big challenge for operating hotels in the coming years.

Our priorities here at Le Meridien Xiamen will be able to grow and develop talents with individualized training and career planning so that our associates will not only perceive their current responsibilities as a job but rather, it should be a career path that they can follow and grow into. This, in turn, will enable us to provide exceptional service to our guests.

Both the leisure and corporate segments will continue to be our key revenue streams. Xiamen is fast developing to become the economic and financial center of Fujian Province that will drive the corporate demand, and building and expanding access by land, air and sea will appeal to the leisure markets in China and the region.

Danthan Xu: First, identify the target market and particular segment contributor. Medicine, cars, finance, IT and FMCG (fast moving consumer goods) are the main sources of MICE industry in Shanghai, and the preference of event dates as well as budget are totally different. Until now, and in the near future, we can see that these industries will continue to provide most part of MICE business.

Secondly, cooperation with third-party distribution channels. The development of third-party MICE reservation platform has grown faster and faster in recent years. Hotels may try to cooperate with some of the successful platforms in order to attract and target potential event company.

Third, customer loyalty programs. Make full use of customer loyalty programs to attract and maintain customer resources. Our SPG Pro, Marriott Rewards, and Ritz Carlton Rewards program provide various benefits for everyone.

Q3: 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?

Anthony Ha: MICE is one of the most important business segments for our continuous revenue growth as well as maintaining our fair share of the market. Hotel rooms, meeting space and restaurant outlets are all designed with the needs of meeting planners in mind. We are highly recognized in the Shanghai market for having the capability of handling large events inside and outside the hotel. We have successfully hosted the 2016 Special Olympic charity dinner, ITB China opening dinner and the Norway China business forum. During this year’s China Auto Show, we managed to provide outside catering services for Porsche, BMW, Lamborghini, Rolls-Royce, Volkswagen and other top auto brands.

Joachim Heineke: Our hotel has won several awards for being one of the top MICE hotels in Shanghai. We are building on this reputation to grow this segment even more in the future.

David Katemopoulos: MICE is a key market segment for Le Meridien Xiamen as the hotel has over 2,000 square meters of meeting space with a 830-square-meter pillar-less ground floor ballroom — 10 meter-high ceiling — that is perfect for automobile and other product launches. Xiamen’s geographical location (close proximity to Shanghai, Hong Kong, Taiwan and Southeast Asia) and its service-based industries will continue to drive MICE demands from local, regional and multinational companies.

Danthan Xu: MICE business is and always will be an important engine for this hotel’s growth and revenue. As Shanghai government continues to invest in infrastructure and meeting centric facilities, it has become increasingly attractive as a meeting destination. The city also has plenty on offer for incentive and leisure groups. The MICE market in Shanghai tends to be cyclical and rising.

Shanghai hotels are facing the impact of Suzhou and Hangzhou on MICE. Hangzhou especially has become the MICE destination after the G20 Summit held last year in the scenic city.

On the other hand, when government makes efforts for a city, it will also create potential development opportunities for hospitality industry. For example, we’re looking forward that more and more large groups would choose the Shanghai Expo Center and Mercedes-Benz Arena as their exhibition and event show, in that case hotels in Shanghai could get more MICE business.

Q4: Any major trends you’ve seen in the tourism and hotel industry?

Anthony Ha: As the young generation is now the dominant consumer demographic in the market, they expect a higher quality of lifestyle, services and experiences to be provided by hotel hence hotels are expected to be more diversified than ever before in order to live up to their expectation.

Joachim Heineke: The biggest two trends in the past few years that will continue to develop are the connection between the hotel and guests through social media and booking through mobile devices. We are watching every change and will make sure to be up to date as not to miss out on these two great opportunities.

David Katemopoulos: With the rapid development of alternate sightseeing attractions and hotels that are being built outside of Xiamen Island, the average length of stay of visitors will continue to grow as they will be attracted to visit these new venues and attractions in addition to visiting Xiamen. The expansion of regional and international air routes now and in the near future will provide long missed access for visitors from long haul markets such as North America, Australia and the European Union to visit Xiamen and Fujian. These in turn will continue to attract new hotel investments in and around Xiamen over the coming five years.

Danthan Xu: The market of government events and meetings is decreasing in recent years, while that of corporate will increase.

More and more industries and corporates will benefit from the Belt and Road Initiative, and start international communication and corporation that will see the MICE program growing internationally. Shanghai will consistently be one of their top options, but tier-two and tier-three cities are increasingly attracting companies from overseas. This is a challenge to Shanghai.

Reservation channel — shifting from traditional PCO booking to online booking platform — will continue to grow.

Online meeting is developing as a popular meeting option. The development of first-class digital technique will play an important role in MICE industry’s development.