11/20/2010

Tibet Lures St. Regis as China's Big Cities Crowded by Luxury Hotel Chains

Expansion in China, the world’s fastest-growing economy, is causing an urban lodging glut that’s spurring luxury chains including Starwood Hotels & Resorts Worldwide Inc.’s St. Regis to head to areas as remote as Tibet.

The 162-room St. Regis Lhasa Resort, which opened this week as the first international luxury hotel in Tibet’s capital, is about 12,000 feet (3,680 meters) above sea level and boasts a five-star spa. Shangri-La Asia Ltd. will open a 350-room hotel in Lhasa in 2012, and InterContinental Hotels Group Plc plans to add a high-end, 2,000-room hotel in the city within three years.

The surge of hotel development in China has led to an oversupply, particularly in cities, and it may take five years for demand to catch up, said Jonas Ogren, a Singapore-based director for STR Global, an industry research company. That’s made Tibet and other regions far from Beijing and Shanghai increasingly attractive to expanding hoteliers.

“While Tibet isn’t necessarily the first location that comes to mind for a hotel, these companies usually already have properties in primary and secondary cities,” Ogren said. “So more are looking to smaller markets or resort-type places.”

Hotel occupancies in China climbed to 60 percent this year through September from 51 percent a year earlier, according to STR Global. This year’s level was the fourth-lowest among the 16 countries in the Asia Pacific region tracked by the company.

In Tibet, ruled as an autonomous region in the People’s Republic of China, tourism has surged since the opening of the Qinghai-Tibet Railway four years ago, largely driven by domestic demand. A total of 5.56 million tourists visited Tibet in 2009, up 147 percent from a year earlier, according to the Pacific Asia Travel Association. Of that, 5.39 million were domestic travelers.

‘Demand for Luxury’

“There’s a great deal of affluence in China,” said Judy Reeves, a spokesman for Shangri-La Asia, based in Hong Kong. “So much wealth has been created. The demand for luxury is insatiable.”

Read more with photos at  Bloomberg

Nov 20, 2010 1:23:35 PM | Business, Current Affairs, Economy

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