The Ritz-Carlton Hotel Company has identified China as a key area of growth as the country presents gaps to be filled for many more top-end hotels, residences and resorts.
The firm is already the “largest luxury operator” in China, according to its regional vice president sales and marketing Asia Pacific, Simon Manning, and there are cities and “untouched” resort areas that demand expansion of the luxury brand.
“None of our luxury rivals have the coverage that we have — we are in several gateway cities (Beijing, Hong Kong, Guangzhou, Shanghai, Shenzen) plus we have a resort (Sanya) and there are three properties under development,” he said.
“We are putting hotels in Macau, another in Shanghai, plus the tallest hotel in the world in Hong Kong. We are going into China in a big way because there is still a lot more opportunity.”
With the Ritz-Carlton brand performing well in cities, the company is considering rolling out its ‘The Residences’ brand in some of these top locations. However, the company’s potential is not limited to the big gateways.
“We have done the key Eastern coastal cities but there is room for a luxury offering in secondary cities and resort areas,” he explained. Manning argued that China’s “only real beach destination” was Hainan, but predicted that new coastal areas would open up such as the stretch of land between Hong Kong and Vietnam, which was currently underdeveloped.
“When you look at it, China has one billion people but just one resort destination, so we have a lot of middle-income Chinese with nowhere to vacation,” he said. Manning also revealed that despite the global recession, China was faring well and business travel remained robust.
“What we have to remember is that China can support itself because it’s such a big country. In some hotels in China, 76% of business is domestic and the average across all properties is 60%,” he said. He did concede, however, that Beijing had felt the impact of the recession more than other cities for two key reasons.
He said rates across the board at Ritz-Carlton’s China properties were down by around 10% but said the only real source market suffering was financial services. However, Manning forecast that Asia would be the first region to rebound because of its status as the manufacturing base of the world. “Economies that manufacture will do better during a recession than service-based economies and Indonesia, Malaysia, China, Taiwan and Japan all have strong manufacturing sectors and big populations.
“We are getting to a stage where we as a region can support ourselves and we can already see commercial activity picking up.” In fact, Q2 and Q3 were “looking up” for Ritz-Carlton’s Asian properties compared to Q4 2008 and Q1 2009, he said.
“I think the worst of the crisis is over and we will bounce back ahead of the US and Europe.”
The Reserve brand by Ritz Carlton
Ritz-Carlton’s new ‘Reserve’ concept will fill gaps in the company’s brand and make up the shortfall of top-end product in Asia, according to Manning.
“There is no luxury resort in Hainan in China and no branded luxury resorts in Japan – they are all domestic,” he said.
The Reserve brand, he said, would be “for affluent travellers who don’t want branded luxury but want the same standards [as branded luxury]”.
They will be located in remote locations that are not suitable to the Ritz-Carlton brand and will typically be much smaller in size.
“They will have a more intimate feel and a sense of destination,” added Manning.
The first Ritz-Carlton Reserve will open in Phulay Bay in Krabi, Thailand in October.
Others are planned for destinations including Costa Rica, Puerto Rico, Turks & Caicos and the UAE.
“We are also looking at a couple of projects in Vietnam,” revealed Manning.
For more information visit www.ritzcarltonreserve.com
