Mandarin Oriental has no fear of crackdown by Beijing

Hotel firm brushes aside fears that crackdown on wasteful use of public money will hit income

PUBLISHED : Monday, 29 April, 2013, 12:00am
UPDATED : Monday, 29 April, 2013, 4:11am

The luxury hotel chain operator Mandarin Oriental, brushing aside concerns that a crackdown by Beijing on wasteful spending of public money will dent hotel revenues, said it would continue expanding in China to tap into the rising affluence on the mainland.

"For anybody who does a good job of understanding their customers, China will always be a place to be," said Andrew Hirst, the group's operations director for Asia.

"In such a large and diverse market, there is room for everyone to compete, and we will continue to do so in all the cities where we are represented," he said, adding that the group was actively searching for partners and properties on the mainland to consolidate its foothold in the world's second-largest economy.

The mainland is now the luxury hotel brand's second-largest source of businesses, trailing only the United States, and mainland customers account for 13 per cent of all visitors to its hotels in China. "We expect this contribution to grow as we increase our portfolio of operating hotels in the mainland in the next few years," Hirst said.

The group opened the Mandarin Oriental Pudong, Shanghai, in the Lujiazui finance and trade zone last week, its third project on the mainland, with two more hotels, one in Beijing and the other in Chengdu, in the pipeline.

The expansion comes at a time of mounting concerns about a possible oversupply in China's hotel market as global brands aggressively expand in the country. The new mainland leadership's efforts to curb wasteful spending of public money is also believed to be hurting the catering and hospitality sectors.

However, Hirst said, the impact of Beijing's clampdown in his company's business was minimal, and he believed the increasing numbers of wealthy mainland tourists would become a growth engine for international hotel brands. China could become the Mandarin Oriental's largest source of businesses in future, he said, and the company's hotels in Hong Kong would also help its mainland outlets woo more domestic travellers in future.

Mainland visitors account for about 20 per cent of the revenues earned by the Mandarin Oriental Hong Kong and the Landmark Mandarin Oriental.