Ex­plod­ing world of Shang­hai’s re­sorts and ho­tels

China Daily (USA) - - BUSINESS - By WUYIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

On Aug 8, Ori­en­tal Pearl Real Es­tate Ltd an­nounced that it is in­vest­ing in a project that will trans­form 50 blocks of vil­lagers’ homes into a bed an­dor B&B, vil­lage, just 5 km from the Shang­hai Dis­ney Re­sort.

A shut­tle bus will link the vil­lage and the theme park.

This is the lat­est ex­am­ple of real es­tate de­vel­op­ers in­vest­ing heav­ily in a va­ri­ety of hospi­tal­ity projects aimed at pro­vid­ing ac­com­mo­da­tion and other ser­vices to mil­lions of visi­tors who are ex­pected to throng the Dis­ney des­ti­na­tion in the years to come.

More than 10 de­vel­op­ers have been build­ing up com­mer­cial com­plexes in the Pudong area which houses the Shang­hai Dis­ney Re­sort. Hospi­tal­ity is one of the sec­tors that will likely ben­e­fit a lot from Dis­ney, said an­a­lysts.

The two in-house Dis­ney ho­tels in Shang­hai re­ceive 1,000 tourists per day who spend 2,950 yuan each on av­er­age. That is, the two ho­tels gross around 3 mil­lion yuan in daily rev­enue on av­er­age oc­cu­pancy rate of 95 per­cent, higher than the city’s av­er­age of 70 per­cent, ac­cord­ing to the Shang­hai Tourism Bureau.

That’s hardly enough to meet the cur­rent and ex­pected de­mand for ac­com­mo­da­tion.

“The Dis­ney ho­tels are fully booked de­spite their high prices, and hos­tels in neigh­bor­ing towns are also fully booked, which shows that de­mand at all lev­els, from bud­get to lux­ury, is huge,” said Wang Hongqing, CEO of the Hospi­tal­ity Al­liance of Chuan­sha area, which hosts the Shang­hai Dis­ney Re­sort.

Wang said ho­tel room rates have more than dou­bled since Dis­ney’s open­ing in May. Fur­ther stud­ies may be nec­es­sary to un­der­stand the na­ture and ex­tent of tourists’ de­mand and mar­ket play­ers’ ca­pa­bil­ity to meet it, he said.

A branded bud­get ho­tel chain 1.5 km from Dis­ney now charges 700 yuan per night for a room, up about 120 per­cent from Au­gust 2015. In com­par­i­son, the cor­re­spond­ing rate at its sis­ter con­cern at Lu­ji­azui, Shang­hai’s fi­nan­cial hub, is about 600 yuan now.

Surg­ing room rates re­flect the huge gap be­tween de­mand and sup­ply.

Ac­cord­ing to the Shang­hai Tourism Bureau, Dis­ney­land may at­tract 15 mil­lion tourists per year, among whom 30 per­cent need to stay in a ho­tel. This means, 4.5 mil­lion visi­tors will likely seek to stay at a ho­tel in the area ev­ery year.

That trans­lates to an es­ti­mated de­mand for 2 mil­lion room nights per year.

How­ever, cur­rently, there are fewer than 20 three-star or above ho­tels within 10 km of Dis­ney. The hospi­tal­ity mar­ket sales in the area are es­ti­mated to in­crease by more than 100 mil­lion yuan ev­ery year, ac­cord­ing to a re­port by Shang­hai-based RET Real Es­tate Con­sul­tancy Ltd.

The higher-than-ex­pected de­mand for Dis­ney-re­lated ac­com­mo­da­tion has sur­prised some mar­ket play­ers such as Xia Jingwu, 36, who owns a two-star youth hos­tel 12 km from the theme park. The hos­tel was orig­i­nally planned to host visi­tors to Xin­chang, a small an­cient town, a hid­den gem of cul­tural her­itage in subur­ban Shang­hai, said Xia, but now al­most all the guests are visi­tors to Shang­hai Dis­ney.

“I quit a bank job and opened this hos­tel be­cause I wanted to en­joy a slow-paced life, hear­ing visi­tors’ sto­ries, drink­ing tea with them. I didn’t ex­pect to see so many guests and fully booked rooms. My sched­ule has once again be­come tight due to this heavy busi­ness,” he said.

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