News for the Hospitality Executive
Interview: Belinda Yeung, COO, Regal Hotels
Murray Bailey, Travel Business Analyst
|September 2008 - According to a report in The Economist,
“Hong Kong and Shanghai vie to call themselves China’s financial capital”.
Regal Hotels probably does not care which wins; it has three hotels in
key locations in Hong Kong (plus two others) and two in Shanghai.
But...that is all it has; no other cities. However, the following paraphrased interview with Regal’s Belinda Yeung, COO, and Murray Bailey of Travel Business Analyst, indicates that may be about to change.
Corporate. In 2007 we established a new public company, which now owns our five hotels in Hong Kong (HK); so Regal Hotels now has management contracts for those five. The two in Shanghai were already management contracts.
As a result of the public listing, we now have funds available of [US$283mn, HK$2.2bn, so about 2000 rooms excluding land], which we will use for expansion.
We have acquired 315,000sqm land in Chengdu - development of residential, commercial and hotel, opening in 2009. [May’s earthquake is certain to affect this development.]
We have also signed for our third in Shanghai, a 4-star hotel in Pudong’s Jingqiao district, due to open end-2008. We are negotiating in Beijing, Shenzhen, Wengzhou (where we have a location), Xiamen, Yunnan.
And earlier this year we signed an agreement with Nanjing-based Jingling Hotel group - to do marketing etc. We may manage hotels together.
Branding. At the top we will have Regal Royale, then the standard Regal, Regal Metro, Regal I-Club, with Regal Airport as a special section. Our planned hotel in Beijing would be Regal Royale, but in other places in China they would be Regal Metro. We have not decided whether Chengdu will be Regal or Regal Royale. All three in Shanghai and the four in HK (the other is the Regal Airport) will be Regals.
In the first quarter of this year, we set up a team to expand into airport hotels. We will look first for contracts in China, but also all over the world.
The Regal I-Club, like Holiday Inn Express, is also expected to start in China.
[But the message will get mixed because some hotels will, in effect, have two ‘brands’. The Regal in HK’s Causeway Bay has added 50 rooms on its top-3 floors, and this section will be called Regal Royale. Another hotel in HK, the Regal Oriental, will add an I-Club concept, as will the Regal Riverside, on the three floors it is adding this year.]Market place. Occupancy in HK in 2007 dropped only 1%, despite a 17% increase in capacity, and rates increased 11%. At Regal, our occupancy increased 5%, and although our rates increased only 10%, our resulting revpar growth was 15%. There was some rate pressure with getting new business, but overall we have done well.
Marketing/sales. From end-2006, we refocused our marketing. So after opening regional sales offices in China - such as Chengdu, Shenyang, Xiamen - in the past 18 months we have opened in Taiwan, UK, a representative covering Australia/New Zealand, and one in the US. And we are now looking at whether to open in Japan.
We will still concentrate on China, but we will also look at emerging markets like Russia and India. We do not think the US travel market will drop by much this year, because there are still many travel segments, such as doctors. But even with lots of direct flights US-China, HK is still a gateway for many deals.
China business share in our HK hotels - Airport 20%, HK 40%, Kowloon 30-40%, Oriental 30%, Riverside 50% (because hotel is close to station; it was around 70%).
Other changes: we have updated our website; we will finish installing our own central reservations systems by year-end; in 2006 we joined Preferred Hotels; we have grown from about 5-6% electronic to about 15% [over the past two years]; we participate in all shows and road-shows organised by [HK’s visitor-promotion-office], and we have brought international buyers to HK to do mini-trade shows, to promote HK as a MICE city; for corporate and MICE sales, about two years ago we had about 10 people in the team, but now we have 30.
Macau. I have been asked if I think Macau is a threat to HK. It is not; it is complementary to us. But it could compete with the MICE business if HK Tourism Board does not do anything. But with HK expanding its conference centre, we should be ok.
[We lean the other direction. The fact that the question has been asked - nobody would have posed such a question as recently as 2000 - means that the answer is already partly-yes. But, much more importantly, HK’s attractions as a MICE or entertainment centre are meagre compared with those planned for Macau. HK is still ahead in many elements. For instance, HK’s air links are 10-times greater but, of course, HK is close enough to also be considered Macau’s airport.]Outlook. We are positive - looking at double-digit rate growth, in average rate and revpar with unchanged occupancy.
In 2007 we announced our plan to add 20 hotels in the next five years. Initially growth will be slow, but then the rate will be increase. So our new brandnames will come within four years. We will expand either with management, management & equity, or ownership.
Murray Bailey, Editor / Research Director
|Also See:||Interview with Paul Kirwin Head of Carlson Hotels in Asia Pacific and Update on Raffles International and Taj Hotels Marketing Alliance / Murray Bailey / February 2005|