Shanghai's Luxury Hotel Market Heats Up Ahead Of World Expo

    With upwards of 7 million visitors -- mainly Chinese -- expected at next year's World Expo, newly constructed hotels have added nearly 4,000 five-star rooms to the already vast luxury hotel market in Shanghai.

    Construction Of New Hotels, Expansion Of Existing Chains Shows That Shanghai Is Well On Its Way To Becoming Asia's Top Financial And Business Hub#

    Jing Daily

    Over the past few years, in preparation for the 2010 World Expo, Shanghai has become one of the world's top destinations for hoteliers looking to get a piece of the Chinese business and luxury traveler yuan. With upwards of 7 million visitors -- mainly Chinese -- expected at the expo, newly constructed hotels have added nearly 4,000 five-star rooms to the city's already vast luxury hotel market. The question is, after the World Expo party ends, will 2011 bring a sustained flow of business and luxury travelers to Shanghai? Or will the city's massive building boom lead to lingering overcapacity?

    Today, the Independent UK looks at the city's five-star hotel explosion, and discusses how the relatively low impact of the global economic downturn on the Chinese market has given some hoteliers hope that overcapacity is a word they'll never have to use in major Chinese cities like Shanghai:

    The opulent Peninsula, the only new building on the main part of Shanghai's historic Bund in 60 years, just opened, embracing the city's Jazz Age heyday with a chauffeur-driven 1934 Rolls Royce Phantom and a Great Gatsby-esque pool.

    The Peninsula's owner, Hongkong and Shanghai Hotels Limited, is making a return to the "Paris of the East" where it was founded after a 60-year absence, but it is facing stiff competition.

    Ritz Carltonis building a second hotel here, Hyatt already has three landmark properties and Shangri-La is expanding from one to four hotels.

    Conrad, Jumeirah, Waldorf Astoria and the legendary Peace Hotel -- managed by Fairmont -- are all also preparing to enter the fray, with work done or nearly completed on each property.

    It seems as if there is a mix of factors at play in the Shanghai five-star hotel market. On one hand, you've got the world's top luxury hotels tripping over themselves to establish a strong foothold in Shanghai, and on the other hand you've got a handful of these luxury hotels working overtime to emulate Shanghai's Jazz Age style and reputation as "The Paris of the East." As Shanghai's luxury market develops further, and further away from a slightly adapted copy of the Western market, we should see more hotels, restaurants, nightclubs and fashion boutiques following the lead of the Peninsula and bringing a bit of the city's decadent past back to the forefront.

    As the Independent article goes on to point out, it's probably in the best interests of Shanghai's upscale hotels to be seen not only as expensive and exclusive, but a destination...with Chinese characteristics:

    The number of high net worth individuals in China surpassed the number in Britain last year to become the fourth largest in the world, according to research published by Merrill Lynch this month. China passed France in 2007.

    China now has more than 364,000 people with more than one million dollars in liquid assets, the investment bank said.

    That is a key figure for the luxury hotel sector, executives say -- and one that puts them at ease.

    "China's a very big market and there's a place for everybody and everything," said the Peninsula's general manager Paul Tchen.

    "With our arrival, we're providing another option ... Choice itself is a luxury."
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