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Big Interview: Luxury Leaders

Big Interview: Luxury Leaders
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You have been in China since 1984, when you opened your first hotel, in Hangzhou. What was the rationale behind moving into China?

First, there was a family connection; the owners of the Shangri-La chain are Malaysian Chinese. But the primary motive was commercial. Once Deng Xiaoping launched his open-door policy, the company saw the potential in the Chinese market. Today, thirty-two of our properties are in China, as well as nearly half of our rooms, making us the largest luxury hotel group in Mainland China.
On top of that, we have ambitious plans. In the next three years we will open 12 new hotels in new markets and new cities. Not only do China’s regional cities offer tremendous prospects and make ideal markets for new hotels, but places such as Dalian and Chongqing are building cities within cities.

What segments of the market are you targeting?
In the 1980s, we were primarily targeting foreign businessmen and tourists, but China is changing. Now, we have three markets: foreign businesses and travellers, Chinese tourists and, increasingly, Chinese visitors with means. China’s middle class is growing very fast.

You have many Shangri-La Hotels, but this year you opened under new brand, Kerry. What was the reason for this?

In February, we opened Kerry Hotel in Pudong and are planning another in Beijing next year. Kerry is a different experience for our guests, catering for younger people and incorporating more sports facilities. In fact, the Pudong Kerry has the largest hotel-based sports club in the city. We want younger guests to be attracted to Kerry, and then to move onwards and upwards to the Shangri-La.

Are your China hotels profitable?

Very profitable; China is in our top three markets. That is why we have many more resorts in development.
Many businesses find China a difficult market because of changing regulations, a difficult bureaucracy and so on. What are some challenges you face in China?  
As with anywhere, we pay attention to studying and working within the market; as a result, we have never had any regulatory or bureaucratic problems. Our biggest challenge is recruiting sufficient staff and then training them to achieve our high standards. In 2004, we opened the Shangri-La Academy in Zhuhai, which ensures we can deliver the service our guests expect from Shangri-La

Are you targeting other markets?

Having won a large share of the Chinese market in China, we are now catering for them when they go abroad. As there is increasing Chinese investment overseas, we want to create a home away from home for our Chinese guests. We are opening in London and Paris, and will open in other cities.

Tell me about Shangri-La’s environmental policy.

Our environmental policy is part of our overall corporate social responsibility (CSR) programme. Last year we released our first sustainability report, which spelled out our activities in the areas of environment, health and safety, as well as employee, supply chain and stakeholder relations. We will track improvements every two years.
Our CSR policy has three dimensions: “Enhance, Enrich and Embrace.” We have reduced our CO2 emissions and energy and water consumption, and insist our suppliers comply with our environmental policy and code of conduct. We have invested more than HK$2 million on health and education projects, offering over 3,000 school children better school facilities and enhanced learning environments.

It is often said that China professes to be concerned about the impact of growth on the environment, but does not carry that through. Do you find that to be the case? 

That is not true. I believe China is genuinely tackling environmental issues and following initiatives through. Beijing used to be very dirty, but they have cleaned up; once the Chinese people decide to do something, they move quickly. In Chengdu, we are building our hotel around a hundred-year old tree to demonstrate our commitment to the environment.

Are British companies doing enough to get into the China market?

Yes, and no. Yes, because the UK’s direct exports to China are growing. There is a lot of investment, and we know from our own records that more British businesspeople are coming here. No, because we see Germans and Italians marketing more aggressively. My advice to British companies is to be smarter and more assertive.

Finally, you have been members of China-Britain Business Council (CBBC) for 20 years.  What do you derive from your membership?
CBBC has always been very good for us, and being part of the organisation for so many years has proved how useful it is. Over the last 20 years, we have seen the benefits of our membership both in getting market information, and bringing us together with other UK companies.


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