Shangri-la Asia Opens Hotel in Shanghai, More Planned for China

Hong Kong — Shangri-La Asia Ltd. (0069.HK) opened another luxury hotel in Shanghai on February 19, the first of 15 new hotels the company is launching in the next two years in China.

Kerry Hotel Pudong, a joint venture of Kerry Properties Ltd. and Shangri-La, is located in an upcoming business district in Shanghai and connects directly to the Shanghai New International Expo Centre. The opening marked the debut of the five-star Kerry Hotel brand that is geared toward business travellers.

The International Air Transport Association (IATA) forecasts that out of 800 million new travellers, 214 million will travel to China by 2014.

There is a race among hotel brands to tap into the second largest economy in the world, where the demand for luxury products and services has increased manyfold.

International hotel brands such as St. Regis and Intercontinental are spreading inland and opening hotels in China’s interior, including Tibet, in an attempt to boost tourism.

Shangri-La, one of Asia’s largest and fastest growing hotel companies, has 44% of its properties and almost 50% of its rooms in mainland China, according to the company’s website.

The group’s growth strategy has largely been China-centric, showing 63% growth in the number of hotels in the past five years in China.  The Hong Kong-based hotel operator expects to grow by 81% in China by opening 15 new hotels by 2013.

“We will continue to strengthen our position and take a leading role in the growth of China’s hospitality industry,” Chief Executive Greg Dogan said in a company statement.

Last year Shanghai had the largest increase in occupancy rate in the Asia Pacific region, rising 27.7% since 2009, according to hotel research firm STR Global. Beijing came in second, with 21.5% growth in the same period.

“Demand came back strongly across the region due to better economic conditions and events such as the World Expo in Shanghai,” said Elizabeth Randall, managing director of STR Global.

Shangri-La and developer Kerry Properties agreed to a joint venture in real estate development in mainland China last year.  Shangri-La Chief Executive Khoon Ean Kuok is a major shareholder in both companies.