Shangri-La to open 11 mainland hotels

PUBLISHED : Tuesday, 20 March, 2012, 12:00am
UPDATED : Tuesday, 20 March, 2012, 12:00am


Luxury hotelier Shangri-La Asia will open 11 hotels on the mainland in the next three years, including two scheduled to open this year.

The company also plans to add seven hotels internationally over the same period, including in Turkey and France.

The company said sales last year rose 21 per cent to US$1.91 billion. However, net profit fell 12 per cent to US$253 million in the year to December, from US$287 million a year ago.

It said the profit fall was mainly due to red ink at its Paris hotel, which was in its first year of operations, and a poor performance from its Tokyo hotel after Japan's deadly earthquake and tsunami in March last year.

'Following the earthquake we had to close for four weeks,' chief financial officer Madhu Rao said.

The Tokyo hotel lost US$19.8 million last year, and was expected to lose money this year, but Rao said it would not be 'in the magnitude that we saw in 2011'.

The company's sales on the mainland last year rose to US$844 million from US$713.2 million, and Hong Kong sales rose to US$260 million from US$221.6 million.

'The mainland China segment continued to be the key profit contributor for the group's investment properties portfolio,' the company said.

The company also owns and operates hotels in Singapore, Malaysia and the Philippines.

Executive director Greg Dogan said there was reason for cautious optimism in Japan despite the impact of the earthquake and nuclear crisis at Fukushima.

'The domestic [Japanese] market has definitely picked up and we've seen a lot of movement there,' Dogan said. 'We are seeing a lot of investors going back into Japan.'

Average room rates at group hotels in Hong Kong, including the flagship Shangri-La hotels in Admiralty and Tsim Sha Tsui, rose 16 per cent to US$327 per room last year, and the occupancy rate rose to 80 per cent, from 74 per cent in 2010.

The overall average daily rate for a room with the group was US$182, compared with US$158 in 2010.

On the mainland, the group operated 30 hotels as of last December. The two to be added this year would be in Qufu in Shandong province, and Yangzhou in Jiangsu province. Rao said that the group had been expanding into smaller cities on the mainland in recent years.

Industry researcher CIConsulting said in a report on China's hotel sector that between this year and 2016 that demand for rooms would continue to grow, powered by increasing tourism.

But it said the core had shifted from large cities to second and third-tier ones.

'We have grown into the third-tier cities,' Rao said, adding that hotels in cities like Wenzhou and Harbin were doing well.

'Rising incomes, an increase in domestic travel in mainland China and regional travel in Asia are expected to sustain gradual improvements in the operating performance of the group's hotels,' the company said.

Shangri-La is part of the Kerry Group, which publishes the South China Morning Post.