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Luxury hotels and restaurants suffer amid gloom

By Guan Xiaofeng (China Daily)
Updated: 2008-11-18 17:26

Lining up for a tasty meal in a good restaurant used to be a common phenomenon in a shopping center in Shekou, Shenzhen. However, the line has recently disappeared, with everybody talking about the financial crisis and the depressed stock market.

Related readings:  Hotels facing meltdown blues  Hotels brace for financial storm

The buoyant mood in the capital market, lifted by the 4 trillion-yuan stimulation package, apparently hasn't filtered down to mainstreet yet.

"We've lost about 20 percent of our customers recently," said a front desk receptionist in the Liu-Qian-Guan, a fashionable restaurant in Shenzhen, Guangdong province.

 "We had about 20 customers waiting in a line at the busiest time but now they take seats immediately almost every time they come." Chen Shaohua, secretary-general of the Shenzhen Restaurant Association, said 5 percent of the city's restaurants had closed down since July.

"The global financial crisis has certainly hit China's hotels and restaurants, especially those high-grade ones," said Liu Dingjun, an associate professor with Nankai University's tourism department.

He said the national inbound tourism foreign exchange earnings had dropped for three consecutive months from July to September as China's main tourist generating countries, including the United States, the EU, Japan and South Korea, were heavily hit by the global financial crisis.

In 2007, the average room occupancy rate in China's four and five-star hotels was about 64 percent, which brought just slight profits. The reduction of foreign tourists and business people is sure to result in an even lower room occupancy rate.

Xu Jinzhi, vice-chairman of the China Tourism Hotels Association, said hotel room prices are expected to drop next year when competition to attract customers becomes more heated.

Chen Guoyao, general manager of the four-star Minzu Hotel in Beijing, said the hotel has tried to attract more domestic customers so as to maintain a stable room occupancy rate.

However, Liu said the domestic demand could not cover all the losses caused by the reduction of foreign customers and the hotel industry will remain slack in the near future.

"China has seen a sharp increase of high-grade hotels in the past three years, which has caused a degree of excessive supply, " he said. "In addition, local governments put undue emphasis on the quantity of high-grade hotels while neglecting their quality, management and distinguishing features."

Some hotel insiders, however, seem to be more optimistic.

Dong Miban, a manager of the Shanghai-based Jinjiang Hotels, said economy hotels are relatively less influenced by the financial crisis, as the number of domestic business people and tourists has remained stable so far.

"We will not slow down the expansion of the Jinjiang Inn, our chain economy hotels," he said.

The Hong Kong-based Shangri-La Hotels and Resorts told China Daily that the company's plans to double the number of hotels in China by 2012 remain unchanged.

"There are no cancellations of scheduled new hotels at this point in time," said Judy Wang, director of public relations of Shangri-La (China). "Shangri-La remains on course to have an inventory of more than 100 hotels over the next four years."