Visitor growth gives Shanghai rates big boost

INDUSTRY recovery allowed hotels in Shanghai to increase room rates in January and April - the first rises since 1991.

About one million international visitors went to the city last year - 30 per cent from Japan, 20 per cent from Taiwan and 10 per cent from Hongkong. The rest came from Europe, North America and the Pacific.

According to Hotel Sofitel Hyland Shanghai general manager Gerhard Zimmer, international visitor arrivals are expected to reach 1.3 million by the end of next year.

''At present, 70 per cent of international arrivals are business travellers and the rest tourists,'' Mr Zimmer said.

''I believe the tourism industry would do even better if there were more flight capacity into the city.'' He described the hotel industry's performance as ''very good'' in view of the dismal performance in 1991 where the average occupancy rate was between 35 per cent and 55 per cent and average room rate ranged from US$35 to $70.

Hotel Sofitel opened in January this year, reaching an average occupancy of 85 per cent at an average room rate of $76.


The hotel, which cost $43.5 million, is owned by a joint venture between the Shanghai New Asia Group, Shanghai International Trust and Investment Corp and Niko Niko Do Co of Japan.

Mr Zimmer expects the joint venture to make a return on investment in less than 10 years.

''We should be able to make an average room rate of $110, which is 0.1 per cent of the room cost, shortly,'' he said.

''Looking at the way business and competition are going at the moment, the forecast of 75 per cent occupancy for the year-end is conservative.'' The hotel industry's recovery was driven by the city's booming economy, leading to a demand for quality rooms.


According to the Shanghai Municipal Tourism Administration, there are 15 joint-venture hotels in the city, supplying 7,700 rooms.