Hotels expand as industry recovers - Business Travel - Ritz Carlton Hotel Company L.L.C

Business Asia, July, 2003

Ritz-Carlton Hotel Co is expanding to Beijing and Tokyo under a plan to almost double the number of hotels it manages in Asia.

The luxury chain owned by Marriott International, the largest US hotel company, will sign a contract before the end of July to manage a hotel that is due to be built in Tokyo, according to Mark Lettenbichler, the chain's area general manager in Hong Kong.

It also expects to conclude a deal in September to manage a hotel that will open in Beijing by 2005.

The company's plans suggest Asia's tourism industry is resuming its growth track after the devastation caused by a three-month SARS epidemic that drove visitors away and slashed hotel occupancy to as little as a tenth.

Six Continents and Starwood Hotels and Resorts Worldwide are among other hotel operators that plan to expand in the region.

Moving on

Robert Hecker, a director at Horwath Asia Pacific in Singapore, which advises hotel developers and owners on investment projects, says the industry is moving on. "Now that we've got SARS behind us, tourism will go back to the growth track it was on before," he said.

Beijing is a top target for hotel companies because the city will host the 2008 Olympic Games. The World Tourism Organization predicts China will become the world's top destination by 2020, passing the current top four--France, Spain, the US and Italy.

Ritz-Carlton, which Marriott bought in 1995, has 54 hotels worldwide and operates in seven Asian cities, including Osaka, Singapore and Hong Kong. It plans to raise that number to 12 by 2007, says Lettenbichler.

"We see some great potential throughout the region," he says, adding that Asia is one of the top priorities for the chain as far as expansion is concerned.

Optimism

Other hotel groups are also optimistic about Asia.

Six Continents, owner of the Inter-Continental and Holiday Inn hotels, plans to add 25 hotels in Asia in two years. Starwood, the world's biggest hotel operator, said in November it plans to triple its hotels in China to about 45 in the next three years. Business travellers, who normally comprise about 65 per cent of Ritz-Carlton's Asian hotel guests, steered clear of cities such as Hong Kong and Singapore during the SARS outbreak, but this was now beginning to recover, Lettenbichler says.