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Hotel Industry Preparing for World Expo - Shanghai, 2010

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As China prepares for World Expo, hotel industry are flocking into Shanghai. China in overall are experienceing overheat from room supply, major cities like Beijing and Shanghai were already impacted …

As China prepares for World Expo, hotel industry are flocking into Shanghai. China in overall are experienceing overheat from room supply, major cities like Beijing and Shanghai were already impacted from Olympic 2008, economic crisis and the flu.

But China is still positive that there will be over 70 million people attending the exhibition.

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  • sorry for a late reply. I was in Shanghai during the last couple of weeks towards end of expo and for sure the government is the driving force in making the event a success. The city was full beyond its capacity in terms of accommodation, people that had confirmation at hotel will have to double confirm at the time or they will loose their room. I went around to a lot of hotels and found stranded traveler that were not able to get a room, despite their in advance bookings. I would say 70% is definitely from mainland China, while the rest is just a mix from other countries pavilion that promotes via other medium. But getting to the expo was a problem, not mentioning the most popular pavilion will take you about 2-3 hours of queue.
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  • Any idea how many actual visitors will be from outside Aisa, specifically North America and Europe? Advertising 70 million expected attendees and 20+ million tickets already sold, but there is no info on expected attendance by nation. Just wondering, Dave at http://www.worldexpohotels.com
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  • 1. WORLD EXPO - SHANGHAI, 2010 Prepared by Adhiyanto Goen
  • 2. History World's Fairs originated in the French tradition of national exhibitions, a tradition that culminated with the French Industrial Exposition of 1844 held in Paris. It was soon followed by other national exhibitions in continental Europe, and finally came to London where the first real international exhibition was held. From the first World Expo held in London in 1851, the world expos have been held successively for many years. After the 1933 World Expo Chicago has set up its theme, the following expos also began to have their special themes. Click here for more background
  • 3. 1993 - Taejŏn, South Korea From 7 August to 7 November, 1993 108 nations participated 15 million visitors Official web (Korean) - http:// www.expopark.co.kr/ Archive - http://en.wikipedia.org/wiki/ Expo_%2793
  • 4. 1998 - Lisbon, Portugal From 22 May to 30 September, 1998 155 countries participated 10,128,204 visitors Official web - http:// www.portaldasnacoes.pt/ Archive - http://en.wikipedia.org/wiki/ Expo_%2798
  • 5. 2000 - Hanover, Germany From 1 June to 31 October, 2000 155 nations participated 25,210,000 visitors Official web (Germany) - http:// www.expo2000.org/index1.php Archive - http://en.wikipedia.org/wiki/ Expo_2000
  • 6. 2005 - Aichi, Japan From 25 March to 25 September 2005 125 countries participated 22,049,544 visitors Official web - http:// www.expo2005.or.jp/en/ Archive - http://en.wikipedia.org/wiki/ Expo_2005
  • 7. 2008 - Zaragoza, Spain From 14 June to 14 September 2008 104 countries participated 6 million visitors Official web - http:// www.expozaragoza2008.es/ Archive - http://en.wikipedia.org/wiki/ Expo_2008
  • 8. World Expo Visitors 70M 15M 25M 10M 22M 1993 1998 2000 6M 2005 “95 percent of the 70 million visitors would be native Chinese, and the 2008 remaining 5 percent were foreigners” said Zhong Yanqun, deputy director of the Expo National Organizing Committee 2010 (forecast)
  • 9. 2010 - Shanghai, China From 1 May to 31 Oct 2010 200 nations and international organisations participation forecasted 70 million visitors forecasted Official web - http://en.expo2010.cn/ Archive - http://en.wikipedia.org/wiki/ Expo_2010
  • 10. INTERNATIONAL PARTICIPANTS' PAVILION Concepts
  • 11. Shanghai Intro Shanghai is the largest city in China, and one of the largest metropolitan areas in the world, with over 20 million people. The famed Bund and its statues have for decades symbolized Shanghai's glamour and positioning as the country's premier financial centre. The focal point of the Yangtze River Delta economic development, Shanghai has become a global business destination. The development of Pudong, as the designated new financial hub of modern China (PRC) and home to the Shanghai Stock Exchange and Shanghai Pudong International Airport, has also elevated Shanghai's status in the financial sector. The re-development and expansion of various industrial zones, as well as a booming tertiary sector has resulted in strong economic growth over the past couple of years, averaging 16.5% per annum. By 2010, GDP is estimated to reach CNY 150 billion.
  • 12. Market Condition The MICE segment has been a key demand generator for Shanghai hotels over recent years. Favored for its international reputation and world-class facilities, the expansion of the New International Expo Centre and hosting of World Expo in 2010 will reaffirm Shanghai's status as a premier MICE destination. Diversification of the city's leisure offerings, such as Chongming Island's "Green Tourism" and the "Pedestrian Zone" in front of The Bund, are also expected to boost tourism demand. While market fundamentals remain generally strong, Shanghai's five- star hotels experienced a slight softening in ADR in 2007 for the first time since 2000 to record CNY 1,603. An influx of new high-end rooms over the past three years has put some downward pressure on occupancy levels and this is not expected to abate until mid-2009. The majority of new properties are under construction in Lujiazui Central Financial District (Pudong), Jing'an and Huangpu districts, while some properties are also under construction in satellite areas. Source: Jones Lang LaSalle Hotels - Asia Overview Digest 2008
  • 13. SHANGHAI CITY ARRIVALS Source: Shanghai Municipal Tourism Administrative Commission 6M 6M 7M 4M 6M 3M 4M 4M 4M 4M 2004 2005 3M 2006 2M 2007 2008 2009 (July) Foreign Total (not including Domestic)
  • 14. International Flights Capacity to Shanghai Domestic Flights Capacity to Shanghai Origin Airline Company Frequency Per Week Origin Airline Company Frequency Per Week Dayong Eastern Airlines 15 London England Airlines 5 Fuzhou Eastern Airlines 31 Guangzhou Eastern Airlines 45 Milan International Airlines 9 Guilin Eastern Airlines 14 Rome International Airlines 2 Haikou Eastern Airlines 21 Hefei Eastern Airlines 23 Paris Eastern Airlines 14 Huhehaote Eastern Airlines 7 Moscow Eastern Airlines 4 Jinan Eastern Airlines 12 Kunming Eastern Airlines 44 Frankfurt International Airlines 7 Nanchang Eastern Airlines 29 Vienna Austrian Airlines 14 Qingdao Eastern Airlines 27 Shenzhen Eastern Airlines 53 Vancouver Eastern Airlines 3 Xiamen Eastern Airlines 45 Los Angeles Eastern Airlines 7 Wuhan Eastern Airlines 33 Yantai Eastern Airlines 21 Sydney International Airlines 5 Wuyishan Eastern Airlines 7 Melbourne Eastern Airlines 3 Chengdu International Airlines 35 Chongqing International Airlines 21 Hong Kong Eastern Airlines 105 Guiyang International Airlines 12 Macao Shanghai Airlines 14 Beijing Shanghai Airlines 49 Haerbin Shanghai Airlines 14 Singapore Eastern Airlines 21 Xian Shanghai Airlines 28 Bangkok Eastern Airlines 14 Changsha Southern Airlines 14 Changchun Southern Airlines 17 Tokyo Eastern Airlines 21 Dalian Southern Airlines 31 Osaka Eastern Airlines 26 Sanya Southern Airlines 17 Shantou Southern Airlines 17 Seoul Eastern Airlines 30 Shenyang Southern Airlines 22 304 704
  • 15. Market Analysis Significant setbacks in travel from the largest source markets Japan and Korea, reflecting the impact of the financial crisis on these two countries. Travel from Japan recorded the largest decline, down by 54,292 overnight visitors, 19% less when compared to the first quarter of 2008. Arrivals from Korea dropped by 36,321 overnight visitors, down by 25%. Visitation from the rest of Asia saw only a relatively modest contraction, at 1.6% on average, with Thailand and Indonesia actually showing positive growth by 19% and 2% respectively. Americas and Europe generated significantly less overnight visitors when compared to first quarter of 2008, down by 14% and 17% respectively. Source: Cushman & Wakefield - Shanghai Hospitality Report
  • 16. Market Supply 5-star hotel supply has been growing rapidly in Shanghai over the last decade. In the year 2000, there were less than 10,000 5-star rated hotel rooms in the Shanghai market, however by the end of 2008 that number grew to more than 25,000 rooms representing a compound average annual growth rate of approximately 13.4%, most of which were added to the Central Business District. Several major projects in the Shanghai CBD area have been postponed, the number of 5-star rated hotel rooms in the city is still set to increase to more than 40,000 by the end of 2012. Source: Cushman & Wakefield - Shanghai Hospitality Report
  • 17. Market Performance Between years ending March 2008 and 2009, market-wide average occupancy of Shanghai’s 5-star hotels declined by 10.7- percentage points from 67.7% to 57%. Pressured by falling occupancies, hoteliers resorted to discounting, with market-wide average room rate declining by 14.1%, from CNY 1,380 to CNY 1,185. Both negative trends combined resulted in a significant overall drop in average RevPAR by 27.3%, from CNY 935 to CNY 675 between YE March 2008 and 2009. The most significant decline was recorded in the first quarter of 2009, when Shanghai 5-star hotels experienced an alarming 40.3% drop in RevPAR, plummeting to CNY 447 compared to CNY 749 in Q1 2008. This negative trend has been experienced across all sub-markets in Shanghai. Source: Cushman & Wakefield - Shanghai Hospitality Report
  • 18. HOTEL PERFORMANCE Source: International Branded Hotels of Shanghai (IBHS) Y1,500 Y1,000 2006 Y500 2007 2008 2009 (July) RevPAR ADR
  • 19. OCCUPANCY Source: International Branded Hotels of Shanghai (IBHS) 70% 35% 2006 2007 2008 0% 2009 (July)
  • 20. Market Analysis Source: hotel investment and advisory firm Jones Lang LaSalle Hotels in its Hotel Intelligence Report 2009, research based on a sample of more than 9,700 guest rooms.. The average daily room rate of the city's luxury hotels dropped 24 percent year on year to CNY 1,225 (US$180) in the first five months while the occupancy rate dropped 14 percentage points to 45%. “The weakened global economy and the consequently tightened travel budgets have dramatically affected overseas tourist arrivals to Shanghai,” said Andreas Flaig, managing director with Jones Lang LaSalle Hotels China. "As a result, the city's five-star hotels have started to significantly lower their room rates in a hope to bolster the dwindling occupancy rates.'' Overseas tourist arrivals in Shanghai fell 6.2% year on year to 2.04 million between January and May. The global economic crisis began to have a major effect on the local market in the second half of last year. 2008, the average daily room rate at Shanghai's five-star hotels fell 4% to CNY 1,552 while occupancy rates dropped 10 percentage points to 56%.
  • 21. World Expo Preparation Currently there are more than 230 countries / organizations have confirmed their participation. As one of China’s commitment when it bid for the event, room accommodation will be arranged by respective country/organization/participant at their own desecration. 6 hotels located in the World Expo Village will be the main host/official appointed hotel: InterContinental Hotel (400 rooms, owned by World Expo Bureau) http://www.ichotelsgroup.com/intercontinental/en/gb/new-hotels/shanghai-expo Jin Jiang Group Service Apartment (914 rooms) Donghu Service Apartment (816 rooms) 3 economy hotels. The balance for room shortage, it will be replenished through either service apartment or economy hotel within 20 minutes away from the Expo site. Other than that, it also needs to be prepared rooms for temporary visit for the respective country senior government officer who comes to their country pavilion for celebration of own National Day. Reservations Centre has been set up for the above case. All related software and hardware is sponsored by the HUBS1 - http://www.hubs1.net/en/index_en.asp
  • 22. Ticket Official partners - China Mobile, China Telecom, Bank of Communications, China Post are also the only authorized ticket agent. Currently there are 24 approved travel agencies authorized as the ticket agent, however the ticket must be packaged together with either flight or rooms. (travel agents listed on next slide) i.e. - 6 days/5 nights for east China travel, incl. Expo site visit, etc. more authorized agents to come soon.
  • 23. Province / City Name of Travel Agency / Telephone Beijing CITS HO / Tel. 4006008888 Shan Xi Province Shan Xi Business International Travel / Tel. 0351 5278652 Inner Mongolia CTS, Inner Mongolia / Tel. 0471 6281554 Jilin Province CYTS, Jilin Province / Tel. 0431 88529006 CTI Shanghai/ Tel. 021 62998278 Spring Travel Shanghai / Tel. 021 62520000 Shanghai Shanghai Airlines Travel / Tel. 021-62121029 Shanghai Tour Bus Center(SSBC) / Tel. 021 64265555 Shanghai Jingjiang Travel / Tel. 8008208286 CTS Wuxi / Tel. 4008860077 Jiangsu Province Jiangsu Overseas Travel / Tel. 4008284008 CTS Zhejiang / Tel. 0571 87553583 Zhejiang Province Zhelun Overseas, Ningbo / Tel. 0574 87733098 Anhui Province CYTS Anhui/ Tel. 0551 4296688 Fujian Province CTS Fujian / Tel. 0591 88371688 Henan Province Tourism Group Henan / Tel. 0371-68262878 Guangxi Province CTS Guangxi / Tel. 0771-2630616 Hainan Province CTS Hainan / Tel. 0898 66782882 Chongqing Overseas Travel Chingqing / Tel. 4008899922 Tibet Tibet Tourism Travel HO / Tel. 0891 6836626 Shanxi Province CTS Shanxi / Tel. 029-82403537 Yunan Province CITS Kunming / Tel. 0871-3566600 Gansu Province Comfort International Travel, Gansu / Tel. 0931-8725292 Ningxia Province CITS, Ningxia / Tel. 0951-6719795