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SCMP Reporter

SHANGRI-LA Asia faces setbacks in room occupancy in Beijing and Shanghai but sees signs of recovery in the Hong Kong market.

  Out of the three hotels in Beijing, only Shangri-La Hotel Beijing reported an increase in room sales, with occupancy at 68.1 per cent for the year to the end of October.

   This represented a 2.1 per cent rise over the previous period last year.

   China World Hotel and Traders Hotel, both in the capital, saw their occupancy rates fall by 0.4 and 1.7 per cent, down to 70.6 per cent and 86.6 per cent.

  Group financial controller Frankie Heng said the drop in Beijing was triggered by macro-economic factors.

    Mr Heng pointed to slowing foreign investment into the country.

  'We see a stronger growth in tourists in Beijing than business travellers because of sluggish foreign investment,' Mr Heng said.

  'There are fewer trade and political delegations going to China compared with last year.'   However, the group is still bullish on the Beijing market.

  Shangri-La believes that the Beijing market is far from saturated.

  An expansion plan is under way in the four-star Traders Hotel in Beijing. Plans call for converting staff quarters into 200 extra rooms on top of the existing 298-room premises.

   The project is to start next year.

   In Shanghai, China's third largest hotel market behind Guangdong and Beijing, the group encountered the biggest fall in terms of occupancy.

  The year to October occupancy in the Portman Shangri-La Hotel stood at 69.5 per cent.

      The number was down from 71.8 per cent the previous year.

  An increase in flights to the city had reduced the average number of nights travellers spent in the city from three to two, Mr Heng said.

  The December issue of ING Barings China Stock Market Review estimated the average occupancy for four and five-star hotels in Shanghai to be 70 per cent in 1995.

   The rate was slightly better than the previous year's 69 per cent but lower than the 76 per cent of 1993.

  But the report forecast hotels in Shanghai would have a stronger 75 per cent occupancy in 1996 as China's economy continued to grow.

  Although room sales in Beijing and Shanghai were less promising than last year, this had been offset by a higher room rate.

  Rates among all seven hotels on the mainland grew by an average of 7.5 per cent last year over the previous one.

  In the south, the group's hotel in Shenzhen increased occupancy from 63.1 per cent to 77.3 per cent up to October over a year earlier.

  The rise in Shenzhen came against falling occupancy in Guangdong province.

   The province's average annual rate went from 1993's high of 63 per cent to 56 per cent for the year in November.

  Hotels in Shenzhen appeared to have been spared the knife-edge competition of neighbouring Guangzhou.

    The city of Guangzhou had an oversupply in rooms and a fierce price war continued among several hotel operators.

  Room supply in the Shenzhen special economic zone remained stable.

  The city also benefited from the round-the-clock opening of the border checkpoint.

  Both Hong Kong and mainland businessmen preferred to touch base in Shenzhen because of easier access under the 24-hour opening of the border, Mr Heng said.

    In Hong Kong the Island Shangri-La saw a 2 per cent drop in occupancy for the year to October over the previous year to 74.4 per cent.

    The Kowloon Shangri-La's rate rose to an annual 79.1 per cent from 73.5 per cent.

  However, performance in both hotels was up from the first half of the year, Mr Heng said.

  'From January to April this year, the monthly occupancy in the two hotels was lower than last year except in March.

  'We saw a stronger rebound at the beginning of the third quarter,' Mr Heng said.

  The two hotels had been attracting different clientele.

  The Kowloon hotel had more United States guests, with many engaged in the garment and manufacturing sectors.

   The island hotel catered to more Japanese and professionals from the financial and banking industries.

  The slight drop in the occupancy of the island hotel might reflect the state of the industry, Mr Heng said.



Group awaits recovery