Singapore: Hotel Market Market Report - March 2019
MARKET REPORT
Shanghai, China:
Jinqiao and Zhangjiang
Industrial Park Area
Hotel Market
MARCH 2020
Shanghai, China: Jinqiao and Zhangjiang Hotel Market Market Report - March 2020
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Introducon
Shanghai Jinqiao Export Processing Zone (hereinaer
“Jinqiao”) is located at Pudong New District, Shanghai.
Jinqiao used to be a state-level economic and technological
development zone established at the beginning of Pudong
New District’s development in 1990, with a planned area
of 27.38 square kilometers.
However, in December 2014, Jinqiao’s 20.48 square
kilometers planned area was ocially incorporated into
the China (Shanghai) Pilot Free Trade Zone. Jinqiao is
a tradional manufacturing industry base with many
research and development headquarters of manufacturing
enterprises.
There are four major industries in Jinqiao, namely
automove and parts industry, modern home appliance
industry, biomedicine and food industry as well as
electronic informaon industry. According to the
latest plan, Jinqiao is transferring and upgrading from
a “manufacturing” focused zone to an “intelligent
manufacturing” focused zone.
Shanghai Zhangjiang High-Technology Park (hereinaer
“Zhangjiang”) is also located at Pudong New District. It
was established in 1992 as the core park of Zhangjiang
Naonal Independent Innovaon Demonstraon Zone with
a goal of becoming a world-class high-technology park.
The planned area of Zhangjiang is 79.7 square kilometers.
In April 2015, Zhangjiang’s 37.2 square kilometers planned
area was ocially incorporated into the China (Shanghai)
Pilot Free Trade Zone. Currently, Zhangjiang has two major
industrial clusters: the “medical industry” cluster focusing
on pharmaceucal related industries and the “Internet
industry” cluster focusing on Internet and mobile Internet
related industries.
Aer almost 30 years of development, especially aer
joining the Free Trade Zone, Jinqiao and Zhangjiang have
developed into a world-renowned export processing
zone and a high-technology park. Their infrastructure and
industrial development have also become more mature.
Considering Jinqiao and Zhangjiang are both important to
the Pudong Free Trade Zone Areas, we have selected the
following upper-midscale to upper-upscale hotels to review
the historical market performance, idenfy the demand
segmentaon dynamics and draw an evaluaon of the
market.
Shanghai, China: Jinqiao and Zhangjiang Hotel Market Market Report - March 2020
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Hotel
Opening /
Renovaon
Room
Count
1 Ramada Plaza Hotel Pudong 2001/2015 269
2 Dongjiao Hotel 2006/2015 180
3 Grand Madison Shanghai Jinqiao 2007/2013 255
4 Regal Jinfeng Hotel Shanghai 2009 380
5 Marrio Hotel Pudong East 2013 394
6 Radisson Blu Pudong Jinqiao 2016 196
7 Evergreen Laurel Hotel Shanghai 2015 273
8 Royal Century Hotel Shanghai 2015 275
9 Onehome Art Hotel Shanghai 2015 319
10 Grand Mercure Century Park 2006/2018 360
11 Jumeirah Himalayas Hotel 2011 403
Room Count (Avg) 3,304 (300)
SKYLINE restaurant overlooking Queenstown
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Historical Market Performance
2015 – 2017:
The increase in hotel supply was mainly contributed by
the opening of Radisson Blu Shanghai Pudong Jinqiao in
2016. Interesngly, the market occupancy experienced a
strong growth and reached 70 percent in 2017 while ADR
declined slightly. This is mainly because:
•
The incorporaon of China (Shanghai) Pilot Free Trade
Zone drove more corporate and MICE demand to
Jinqiao and Zhangjiang. Since then, new companies
from sectors such as manufacturing, automobile,
Internet, and informaon opened oces and seled in
the region, driving up hotels’ occupancy in the region
with more corporate and MICE demand.
•
The opening of Shanghai Disney Resort enhanced
Pudong’s image as a popular tourism desnaon and
induced large demand in the Greater Disney Resort
area, as well as contribung spill-over demand to the
Pudong New District. Jinqiao and Zhangjiang are around
half-an-hour drive from Disneyland. Beneted from
the lack of quality accommodaon products around
Disneyland, a good poron of leisure demand spilled
over to hotels in Jinqiao and Zhangjiang during the
theme park’s rst two years of operaon.
•
Since the opening of Naonal Exhibion and
Convenon Center (Shanghai) (refers to “NECC” in this
report) in 2015, several large-scale exhibions that used
to be held in Shanghai New Internaonal Expo Centre
(hereinaer “SNIEC”) relocated to NECC, resulng in
a decline of exhibion-related demand in the area.
Although the lapsed exhibion period was replaced by
new exhibions, the scales of these events were much
smaller and the budgets of exhibitors were lower than
that of the previous exhibitors. Therefore, the market
ADR has slightly declined mainly due to the reducing
budget of exhibion demand.
2017 to 2019:
The overall supply of guest rooms declined slightly in
2018 and 2019 due to the renovaon of Grand Mercure
Shanghai Century Park.
During this period, the market occupancy remained stable
while the market ADR fell to RMB 672, with a drop of
around RMB 40. This is mainly because:
•
Since late 2018, the Trade War conict between China
and the United States has contributed to the decline of
business travels in import and export related industries,
such as automobile and parts. The corporate demand
from these industries dropped more than 10 percent,
especially from the US companies. However, with the
development of local communicaon industries, such
as 5G technology, their corporate demand increased
accordingly. The overall corporate demand remained
relavely stable.
•
The budget of foreign business travelers was usually
higher than that of domesc business travelers. But
due to the Trade War, the accommodaon budgets of
foreign travelers are restrained by most businesses.
Moreover, because of the aforemenoned change
of customer mix, the ADR is unable to achieve its
previous level. Hotels, as a result, deployed a “price-for-
occupancy” strategy by lowering prices in exchange for
occupancy rates.
Supply and Demand, 2015-2019 ADR, Occupancy and RevPAR Performance, 2015-2019
6 1%
62%
6 3%
6 4%
6 5%
6 6%
6 7%
6 8%
6 9%
7 0%
7 1%
-
5 00
1,000
1,500
2 ,00 0
2 ,50 0
3,000
3,500
2 01 5 2 01 6 2 01 7 2 01 8 2 01 9
Room Nights Available Ro om Nig hts D ema nd M ark e t Occ.
6 1%
6 2%
6 3%
6 4%
6 5%
6 6%
6 7%
6 8%
6 9%
7 0%
7 1%
0
1 00
2 00
3 00
4 00
5 00
6 00
7 00
8 00
2015 2016 2017 2018 2019
ADR RevP AR M ark e t O c c.
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Demand Segment
Demand in this market is categorized into four major
segments – corporate, MICE, leisure FIT and tour group
and others. The following graph shows the hotel market’s
demand segmentaon in 2019:
Corporate Dynamics
Demand Generators
The majority of corporate demand is mainly generated
by nearby oce towers and industrial parks in Jinqiao
and Zhangjiang.
Budget
RMB 450-650 per person per day;
high-end demand can reach RMB 700-900.
Industries
Jinqiao
Automobile
Mechanical Manufacturing
Communicaons
Zhangjiang
Chip Industry
Semiconductor
IT
Pharmaceucal
Average Length of Stay
2-4 days
Characteriscs and trends
• Demand Characteriscs: Base on the industrial
characterisc of Jinqiao and Zhangjiang, about 70
percent are male corporate travelers with the majority
of them being engineers, programmers, etc. These
travelers are concerned about their trac me to
work, value for money and accommodaon product
quality. On the other hand, corporate travelers with
management tles that possess exible budget indicates
higher preferences for internaonal branded hotels,
mainly due to the guaranteed service quality and hotel
facility condions.
•
Industry Composion: Due to the eect of the US-
China Trade War, the demand from automobile
and related industries declined 10-15 percent,
especially from the US companies. However, with
the development of communicaons industry such
as 5G technology, their corporate accounts increased
accordingly. Overall, the amount of corporate demand
remains stable.
•
Overow Demand: Hotels surrounded by various
businesses, entertainment choices, and F&B facilies
are more aracve to corporate travelers. Therefore,
many higher budget corporate demands overowed
to SNIEC, Century Park and Lujiazhui area due to
the insucient supply of upper upscale hotels and
supporng facilies in Jinqiao and Zhangjiang.
Corporate
MICE
Leisure FIT & Group
Others
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MICE Dynamics
MICE
This mainly refers to hotel in-house meengs and lodging
demand generated by large convenon and exhibion
centers.
Budget
In-house meengs: RMB 400-600 per person per day
Exhibion demand: RMB 600-1,000 per person per day
Size
In-house meengs: 30-300 people;
mainly small to medium meengs
Type
• New employee training
• Midyear/year-end conference
• Symposiums
• Auding conference
• Product launches/product purchase
Average Length of Stay
In-house meengs: 2 days
Exhibion: 4-10 days
Demand Generators
• Industrial parks and oces in Zhangjiang
and Jinqiao area
•
Nearby universies/instuon/college
•
Shanghai New Internaonal Expo Centre
Characteriscs and trends
In-house meengs
•
With the improvement of facilies in industrial parks
and oce buildings, more and more enterprises choose
to hold their meengs in internal or community meeng
venues. In such arrangement, hotels are approached
only for catering services. Therefore, the in-house
meeng demand for hotels in Jinqiao and Zhangjiang
area is declining.
•
Academic conferences and courses are also a major
source of hotel in-house meengs other than corporate
meengs, especially from business schools, such
as China Europe Internaonal Business School and
Shanghai Lixin University of Accounng and Finance in
Jinqiao area. This demand is stable in recent years.
Exhibion demand
•
Since the Naonal Exhibion and Convenon Center
(Shanghai) opened in 2015, several large-scaled
exhibions have been relocated from SNIEC to NECC.
Even though the lapsed exhibion period in SNIEC is
replaced by several new exhibions, but the scales are
smaller and the budget of exhibitors are limited. We
have also observed a declining demand of high-budget
exhibitors and aendees.
•
As there are sucient lodging facilies around
SNIEC, MICE demand that spilled over to Jinqiao and
Zhangjiang are mainly price sensive guests. In other
words, high-end demand remains in hotels around
SNIEC, such as Shanghai Pudong Kerry Hotel and
Shanghai Jumeirah Himalayas Hotel.
Shanghai New Internaonal Expo Centre (SNIEC) Shanghai Naonal Exhibion and Convenon Center (NECC)
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Leisure FIT & Group Dynamics
Leisure FIT mainly refers to individual travelers who book
via online travel agencies or directly with the hotel.
Leisure Group mainly refers to domesc and internaonal
tour group.
Demand Generators
Leisure FIT: lodging demand from hospitals, universies,
tourism aracons, art center, etc.
Leisure group: mainly from the overseas tour groups.
Size
Tour Group: 20-50 persons per group
Budget
Leisure FIT: RMB 700-1,000 per room per day
Leisure group: RMB 300-500 per person per day
Average Length of Stay
1-2 days
Characteriscs and trends
• In order to aract leisure demand on weekends and
holidays, many business hotels sell guestrooms with
addional services or admissions to themed parks/
museums. In addion, providing transit services such as
shule buses to airports and popular tourisc sites.
•
Notably, the price-sensive leisure groups are not
the major demand for ADR driven hotels but a
supplementary demand. However, business hotels have
strong weekly seasonality and the demand on weekend
is weak. Therefore, higher-budget overseas leisure
groups are a good demand source during weekends
and holidays. Intesngly, Shanghai is always the rst or
last stop in their inerary as a transportaon hub, while
Beijing, Chongqing and Xi’an are other desnaons
during their stay in China. In addion, leisure groups
prefer hotels with lower price points and short distance
to and from the airports. The tour groups are mainly
from the US, Canada, Europe and Japan, etc.
Others Dynamics
Demand Generators
• Government
•
Long stay demand from internaonal enterprises
•
Aircrew
Budget
Government: RMB 500 per person per day
Long stay: RMB 500-750 per person per day
Aircrew: RMB 300-500 per person per day
Average Length of Stay
Government: 1 day
Long stay: 7-30 days
Aircrew: 1 day
Characteriscs and trends
• Government demand includes the demand from the
government/SOEs and other government related
demand, such as invited guests for investment
promoonal acvies.
•
Long stay demand is mainly made up of expats at senior
management posions or site preopening/project
supporng teams. However, guests staying longer than
a month normally prefer lodging opons such as high-
end residenal compounds and service apartments,
both of which can be easily found in the area.
•
The budget of aircrew demand is relavely lower than
other demand, but they can contribute a considerable
amount of room nights every year. Therefore, aircrew
is sll an important demand source for some selected
hotels.
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Naonality Mix
About two-thirds of the visitors are from domesc regions,
while the remaining one-third are from internaonal
markets and Hong Kong, Macao and Taiwan regions.
The visitors are mainly from the US, Canada, India, Taiwan,
Japan, South Korea, France, Israel, Europe and other
countries. Internaonal branded hotels are more favored by
foreign guests because of the guaranteed hotel quality and
services.
New Hotel Addions
Over the next few years, the following hotels will enter the
market, adding a total of 1,281 hotel rooms to the area.
Most of the hotels are set to open before 2024, with a
mix of products ranging from midscale to upper upscale.
In addion, select-service hotels such as Alo and Atour,
previously non-existent in the local market, will greatly
diversify the local supply by providing a value-for-money
alternave to the market.
Hotel
Opening /
Renovaon
Room
Count
1
Howard Johnson Wyndham
Leonora Plaza Shanghai
Jan 2019 192
2
Alo Shanghai Zhangjiang
Haike
March 2019 362
3 Atour Shanghai Jinqiao Oct 2019 127
4 Grand Mecure SNIEC 2020 Q4 200
5 Zhangjiang Science City Hotel 2024 400
Room Count (Avg) 1,281(256)
F&B Performance Summary
All Day Dining Restaurant
Budget: RMB 58-128 per person (Breakfast),
RMB 150-200 per person (lunch and dinner).
•
All-day dining restaurants are used mainly as the hotel’s
breakfast venue. Lunch is usually an a-la-carte menu
and dinner is usually a buet setup. The entry fee for a
buet dinner ranges from RMB 150 to RMB 200.
•
The overall seat turnover rate is not high due to the
limited number of walk-in guests.
Chinese Restaurant
Budget: RMB 200-250 per person.
•
Chinese restaurants mainly serve Shanghainese and
Cantonese dishes.
•
The majority of guests are in-house guests. Dining
demand from oces nearby and local residents are
quite limited. Many hotels oer business lunch sets for
surrounding oce sta, with prices ranging between
RMB 58 to 128.
•
During weekends and holidays, hotels in the residenal
area are able to capture a limited amount of demand
from family gatherings and birthday pares.
•
Most hotels have around 5-8 private dining rooms
with a seat turnover rate of 50 percent, mainly serving
corporate dinning. While the rapid development in
social catering brings impact and pressure to hotel
catering, many hotels try to reduce operaonal risk by
outsourcing restaurants and ballrooms.
Local Banquets and Weddings
Wedding Banquet: RMB 5,000-7,000 per table.
•
The wedding segment in hotels is underperforming,
which is mainly aected by the low marriage rate and
the presence of one-stop-shop wedding halls. The
pricing of a wedding ceremony at these wedding halls is
around RMB 8,000-9,000 per table. The price includes
venue rental, lighng and sound arrangement, bridal
makeup, wedding dress rental, photography and video
recording, etc. The convenience and high value-for-
money posion made these one-stop-shop wedding
halls very compeve.
•
Hotels normally hold less than 60 weddings a year,
most of which are small with 15-20 tables.
•
There are some other banquet types including birthday
pares, business recepons, graduaon dinners and
annual banquets, etc. However, these types of demand
are relavely limited.
Specialty Restaurant
Budget: RMB 400-600 per person.
•
Specialty restaurants are not common in this market.
They are usually Italian, French or Japanese restaurants.
These restaurants are generally low in seat turnover
rate due to limited demand from the local market.
Mainland China
Overseas
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Factors Aecng Demand Growth
Factors
Aected
Segments
Posive
Steady economic development provides a good foundaon for market development.
Jinqiao and Zhangjiang both have disnct pillar industries, solid industrial foundaons
and sustainable economic development potenals. The planning of the Jinqiao and
Zhangjiang city sub centers has also enriched the commercial and living infrastructures in
these two areas, making the establishment of oce buildings and industrial park possible.
Corporate
Internal and external trac accessibility enhances the regional appeal. Pudong New
District has planned new metro lines such as Lines 14 & 21 as well as a new high-speed
train staon - Shanghai East Railway Staon. This will improve the regional accessibility
for corporate and leisure related demand.
All
Demand
The new generaon of hotel products is expected to induce more demand. As the
hotel market was developed early in the area, the current supply is outdated and
homogeneous. In recent years, new supply such as Alo was quickly absorbed by the
market. This shows that consumers of the market have a higher acceptance of new
products.
All
Demand
Negave
Submarkets
The development potenal of Jinqiao is relavely limited and demand is becoming
increasingly more locaon specic. The industrial development of this area started
from the 1990s and is mainly based on export processing industries. Such economic
structure proves to be stable but lacks the potenal to develop further. On the other
hand, Zhangjiang has a large development area and a sound planning, with a future
development focus heading south away from Jinqiao. Thus, we expect the demand from
each market will become more locaon specic in the future.
All
Demand
The MICE demand is declining because of the relocaon of large-scale exhibions and
the compeon of conference venues from industrial parks and oce buildings. The
relocaon of large-scale exhibions from SNIEC to NECC results in the loss of high-end
lodging demands. More and more industrial parks and oce buildings are now equipped
with mulfunconal conference venues, which became a strong competor to hotel
meeng facilies.
MICE
Demand
Strong weekly seasonality. Corporate demand is strong on weekdays, but leisure FIT and
group demand on weekends and holidays are weak. Aected by the weekly seasonality,
it is dicult for the hotels to break through such demand paerns.
All
Demand
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Summary
“Compromising rate for market share” as a
response to the market changes.
Due to the Trade War and other macro-economic factors,
the overall accommodaon budgets of travelers are
restrained by most businesses. Hotels, as a result, are
sacricing rate for market share by lowering prices in
exchange for occupancy rates.
The main demand segment is corporate business
travelers, while the MICE market is relavely
weak.
Jinqiao and Zhangjiang areas are not tourist desnaons
but industrial parks. Therefore, the main source of
customers is corporate business travelers. MICE demand,
however, has not shown a great growth potenal in either
area.
Compared with Jinqiao, Zhangjiang’s
development potenal has obvious advantages.
Zhangjiang will focus on developing two major industry
clusters in the future, precisely medical and Internet
related industries. Both of which are scienc research
heavy and possess great future prospects. On the other
hand, Jinqiao is commied to the development of “new
intelligent manufacturing” industry, which is sll focusing
on manufacturing. Therefore, the potenal of the future
overall development in Jinqiao is smaller than that of
Zhangjiang. Furthermore, we believe even with new
hotel supplies penetrang the market in the short term,
Zhangjiang’s stronger industrial and economic development
will become a good foundaon for a stronger, self-
sustained hotel market in the future.
Zhangjiang and Jinqiao will each form
an independent hotel market with the
establishment of sub city centers and the future
southbound development of Zhangjiang.
The establishment of Zhangjiang city sub center will further
improve the commercial, oce, leisure and entertainment
infrastructures. Jinqiao and Zhangjiang will form two
independent hotel markets. It is expected that the previous
corporate demand spill over will gradually return to
Zhangjiang in the future.
F&B has lackluster performance, and
hotel F&B outsourcing is becoming a trend.
Hotel F&B demand mainly focuses on breakfast. However,
banquet demand is relavely limited, with very few
wedding and business meeng requests in the local area.
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Authors
Zoe Wu
Execuve Director
Horwath HTL Shanghai
[email protected]
Kelvin Ip
Project Director
Horwath HTL Shanghai
[email protected]
Emily Wang
Analyst
Horwath HTL Shanghai
[email protected]
Horwath HTL
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AFRICA
Ivory Coast
Rwanda
South Africa
ASIA PACIFIC
Australia
China
Hong Kong
India
Indonesia
Japan
Malaysia
New Zealand
Singapore
Thailand
EUROPE
Andorra
Austria
Croaa
Cyprus
France
Germany
Greece
Hungary
Ireland
Italy
Netherlands
Norway
Poland
Portugal
Serbia
Spain
Switzerland
Turkey
United Kingdom
LATIN AMERICA
Argenna
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MIDDLE EAST
UAE & Oman
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Atlanta
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Miami
Montreal
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