Competition heats up among Shanghai's luxury hotels

Cao Qian
Partially due to the delayed opening of some projects in 2021, about 5,756 hotel rooms in the high-end segment are expected to enter the market in 2022.
Cao Qian

Competition among five-star hotels will remain heated in Shanghai this year with a spike in new supply adding further pressure to an industry which is still striving to claw back some of its losses racked up since the start of the pandemic.

Partially due to the delayed opening of some projects in 2021, about 5,756 hotel rooms in the high-end segment are expected to enter the market in 2022, a year-on-year surge of 55 percent, international property consultancy JLL said in its latest research.

RevPAR, or revenue per available room, a key metric used in the hospitality industry to measure hotel performance, rose 42 percent in 2021 from the previous year, mainly fueled by a spurt in local leisure demand.

The average occupancy rate, however, stood at 57 percent, still around 70 percent of the pre-pandemic (2019) level, JLL data showed.

"Provincial travel restrictions are expected to be in place for at least the first quarter of this year due to fears over the transmission of new virus variants and precautionary measures for the ongoing Winter Olympics, which will impact leisure and business travel demand to Shanghai," said Zhou Tao, head of Hotels & Hospitality Group for JLL China.

"Nonetheless, hotels, particularly suburban resorts, are expected to receive a boost from strong family staycation demand."

Competition heats up among Shanghai's luxury hotels
Jiang Xiaowei / SHINE

J Hotel Shanghai Tower opened its doors last year.

The new hotel pipeline began to pick up in 2021 with 3,718 high-end guest rooms being added across the city. Notable new openings include urban landmarks such as J Hotel Shanghai Tower (165 rooms) in Lujiazui and Shangri-La Qiantan (564 rooms), both in the Pudong New Area, as well as suburban resorts including Hilton Shanghai Songjiang Guangfulin (244 rooms) and JW Marriott Hotel Shanghai Fengxian (265 rooms).

Competition heats up among Shanghai's luxury hotels
Dong Jun / SHINE

The iconic Le Royal Meridien Shanghai on Nanjing Road E. has recently been converted to Hilton's luxury brand Conrad.

"The pandemic has accelerated the pace of reshuffling of the city's high-end hospitality industry which began its major development in the 1980s and didn't see a real lift-off until the arrival of the new century," said Guo Derong, chief analyst with the Meadin Tourism Academy.

"Still on their way to recover, high-end hotels in Shanghai are expected to face intensifying brand competition with some niche market players, often characterized by differentiated products and services and rather small scales, most likely emerging as winners as the industry enters its next stage of development."

Key development stages of high-end hotels in Shanghai (Source: Meadin Tourism Academy)

  • 1980s: Emergence of high-end hotels, mainly managed by domestic operators
  • 1990s: Tapping of global hospitality brands including Radisson, InterContinental, Shangri-La and Hyatt
  • 2001-2010: Surging in the number of high-end hotels with 62 openings registered between 2001 and 2010, up 210 percent from the previous period (20 new openings in 2010 alone, a record for the city)
  • 2011-2020: Opening of 110 new high-end hotels with international branded ones accounting for 62 percent of the total
  • From 2021 to date: Return of Chinese hotel brands, with 14 of the 21 newly opened high-end hotels being managed by domestic operators

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