Shanghai About to Repeat the Beijing Oversupply Trick?

In Beijing, the oversupply of hotel and retail property that peaked before the Olympics is so obvious it’s painful to behold. Deserted malls stand alongside each other as the rush to build meant developers forgot to ask who was going to patronise these places. Now, worryingly, perhaps Shanghai is following the trick in the run up to EXPO.

The thinking seems to be that we’ll work out what it’s all for later, but for now just Build! Build! Build!

Sometimes your jaw just drops open, and you stand there looking like a drooling, slack-jawed yokel at the County Fair who just saw his first mobile phone!! That was Access Asia at a recent meeting of hotel managers in Shanghai, when they all passed the microphone around, and each announced their latest projects and how many rooms they were adding across the city. Over a thousand new rooms around Hongqiao alone; more out in the Pudong suburbs; hundreds for Qingpu; plus continued room addition in downtown Shanghai. And this was just the better chains – not including all the rooms being added by the budget guys at a rate of knots.

Then consider the malls. So far, Shanghai hasn’t followed Beijing down the over-malled route. A fair number of malls in Shanghai are doing OK, while there are a few notable disasters and a couple of touch-and-goes. But still, the city is not technically over-malled, yet. But recently we’ve seen Shanghai handing out new mall development permissions like pies at a football match. Where are these new developments? Well, Hongkou, Yangzipu and Zhabei are the locations – good, solid, working class Shanghai. Of course, the developers (idiots that they tend to be) are all announcing luxury, high-end, international-lifestyle malls.

Oh deary, deary me! Isn’t it amazing that, in the key cities of the world’s most populous nation, so much unpopulated space can be created?

It seems Shanghai officials have had enough of residential property developers – too risky – financially and politically (and, we now know all too obviously, structurally too). So give the land to the mall developers – they cough up plenty of cash and there’s less political risk – no dictatorship we know of ever got overthrown for the crime of having too many half empty Starbucks outlets, while the urban middle class of China seems unlikely to revolt over the issue of yet another Nike flagship store (unfortunately).

Add to this new large-scale retail developments out in Minhang and Putuo (which, we’ve been told, will be laughingly branded-up as Shanghai’s Central Business District!!!). Hundreds of thousands of square metres of new upscale mall space all in the pipeline with thousands of new hotel rooms surrounding it all. No doubt the marble floor polish manufacturers and bored shop girl recruitment agencies will be rubbing their hands with glee.

So, Shanghai it seems is falling headlong into the Beijing trap – more hotels, more malls, more international luxury lifestyle whatever. The only thing missing of course are the hotel guests and the shoppers!!

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Cocktails and networking with Christine Lu, founder of the China Business Network

Christine will share her experiences of the recent Geeks on Plane tour to Japan and China and discuss the future of internet and social media in China.

24 July 2009, Friday 5 – 7 PM, London, UK

via Conversation with Christine Lu: The China Internet space -… – Eventbrite.

Now seriously, will foreign tourists rush to Anyang because they can save 7 dollars? The truth is, most Chinese attractions suffer from complete lack of any marketing and promotions and most foreign tourists simply do not know about them or do not think they are interesting enough,  because of poor information available.

Not so long ago, foreigners visiting tourist attractions in China could expect to pay special “overseas guest” prices that were often several times higher than prices for Chinese citizens. (Until the mid-1990s, foreigners even had their own currency, known as foreign exchange certificates, or FECs).

Nowadays, most places allow foreigners and locals to enter for the same price, even though foreign tourists generally have more disposable income than their Chinese counterparts. A recent trend toward making China’s public museums free to all comers has inspired debate about whether foreign tourists should be excluded from the free admissions program, since they don’t pay taxes, and museums in other countries have adopted admissions policies that offer citizens of some countries free admission while charging others.

One city in central China has gone in the opposite direction, offering free admission to a dozen attractions to foreigners through the end of the year, while making local tourists pay. Tourism officials in the city of Anyang, home to the ruins of the Shang dynasty’s last capital at Yinxu, hope the move will attract more overseas tourists to its ancient sites, according to the China Daily.

A local tourism official told the China Daily that out of the 12 million tourists who visited Anyang last year, only 35,000 were foreigners. “This obviously is not a good proportion for us, and is not in accordance with the fame of Anyang,” he said. Yinxu was added to Unesco’s World Heritage List three years ago.

The numbers of Chinese tourists, however, is apparently deemed to be sufficient, since they are expected to continue paying 50 yuan ($7.30) to see Yinxu’s archeological remains. Local tourists are also offered a one-year pass to all of Anyang’s historic sites for 90 yuan and have received 10 million yuan worth of free tickets since December, according to the report.

via Free Admission for Foreigners Riles Critics – China Journal – WSJ.

At the same time, group tour services to Mexico, which had been suspended for over two months, had been resumed, according to the statement.

via China cancels travel warning in Mexico _English_Xinhua.

A healthy optimism or head stuck in the sand? The future will tell…

Rupert Hoogewerf (Hu Run) is quoted extensively.

Shanghai push for luxury crowd despite tough times

via Shanghai push for luxury crowd despite tough times – Forbes.com.

1. The MOU that is planned to be signed is just for show – Italy and China already have ADS in place via the European Schengen visa agreement.

2. Tourism from China to Italy has grown 20% in the first 5 months of 2009 (compare with UK where Chinese visits dropped 25% in the same period).

3. CNTA Chairman is stressing the bi-directional nature of tourism. This is the main thought in China whereas us in the West only think about tourism promotion (ie. one-direction).

Heading a tourism promotion delegation to Italy, Shao said China and Italy could use the opportunity of next year, which marks the 40th anniversary of the establishment of diplomatic relations between the two countries and is also the Chinese Culture Year in Italy, to strengthen cooperation in the field of tourism.

During his visit, Shao was due to sign a memorandum of understanding on tourism cooperation with his Italian counterpart, which is designed to facilitate visits by tourists from both sides.

He would also attend the opening ceremony of a Chinese tourism office in Rome, while Italy has planned to do the same in Beijing.

“The memorandum will open a new page for the tourism cooperation between China and Italy. One of the most important aims is to guarantee mutual flow of tourists,” he said, “Chinese tourists will come to Italy and we also welcome Italian and other European tourists to China. It is bidirectional.”

Shao said all these moves showed that the Chinese government stands for an open market for tourism despite the current difficulties and hopes others would not slide into protectionism.

“We want to keep tourist flow with major source countries or areas. We need support each other to get over the crisis,” he said.

Europe is currently a major source of foreign tourists for China. Among those European countries, Italy is a fast developing market.

There are almost 200 thousand trips paid by Italian tourists to China last year, and nearly an equal number of Chinese tourists had their first stop of European tours in Italy.

Despite the overall slump of world tourism, visits paid by Chinese tourists to Italy still increased by 20 percent in the first five months of this year.

via Interview: China’s top tourism official eyes trip boost with Italy to fend off difficulties_English_Xinhua.

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The emphasis of the Chinese government is clearly on developing inbound and domestic travel. The holiday economy is focused on promoting consumer spending within the country. Inbound tourism has priority as it brings in foreign currency.

As for outbound private travel tourism, the policy is chiefly concerned with controlling and regulating the travel trade and maintaining a sustainable gradual development of this sector

ADS was first introduced in the early nineties for destinations in Southeast Asia such as Singapore, Thailand and Malaysia. Prior to ADS, travelling abroad was only allowed for business purpose and official visits with government approval needed for every single visit. ADS policy was created to account for the growing interest of Chinese citizens in foreign travel and the fast increase in disposable income.

ADS is granted to overseas destinations through a bilateral government agreement. The ADS only concerns tourism groups handled by assigned Chinese local travel agencies. Business and official travel to overseas destinations are not included in ADS agreements.

The purpose of ADS is to have a control mechanism on the organising parties on both sides local travel agencies and international tour operators in order to guarantee safe and reliable tourism services for the Chinese customers.

Read the full chapter via ChinaContact press centre » The China Outbound Travel Education Series – part 3 Approved Destination Status Policy.

Second, that the Taiwanese hoteliers should wake up a year after tourism started en-masse and find it surprising. Could they not have checked with Thailand or even Europe?

But the truth is other nationalities have similar behaviour when travelling abroad for the first time. Many of the Chinese groups to Taiwan are first time international tourists and need to have more things explained to them by the travel agents and tour guides.

Asking for a deposit is fine – this is how it is done in China anyway so they are used to it (But as the article shows, in Taiwan it is a problem since no other nationalities are asked to pay deposit).

One year ago yesterday, Taiwan allowed the first Chinese tourist groups to enter the country on direct cross-strait flights. However, one year later, Taiwan’s hotel and tourism operators have more to complain about than to praise regarding their guests from across the Strait.

Although Chinese tourists did increase occupancy at hotels and boarding houses, they have also caused a lot of trouble, hotel and boarding house operators said at a meeting with Taipei County Tourism and Travel Bureau Director Chin Huei-chu ??? earlier this week.

Keep reading via Taipei Times – archives.

Read more via Mexico begins new, lighter visa regime targeting BRIC nations_English_Xinhua.

Asia Luxury Travel Market, the region’s leading event exclusively for the luxury travel industry, took place in Shanghai from 15th – 18th June for the third consecutive year, with exhibitors describing it as “the best yet”.

The three day event brought together the top 300 Asian luxury travel buyers from 19 countries, close to 280 exhibitors from 36 countries and over 100 media from 11 countries.

The world’s most sought after destinations, ultra-luxurious accommodation, resorts and spas, elite transportation and unique travel experiences were represented at the exhibition where buyers and sellers meet on a unique pre-arranged appointment system. Throughout the three day event over 12,000 private, face to face appointments took place.

“ALTM 09 has been a great success and we have received very positive feedback from the attending exhibitors and buyers,” said Debbie Joslin, Group Exhibition Director, ALTM. “It is now clearly established as a “must” for key players in the luxury travel industry who are targeting the important and still growing Asian markets.”

Continued via e-Travel Blackboard MICE News.