Word: hotelful
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...seeks is global. Shangri-La has confined itself mainly to its home turf of Asia, where it is a well-known brand. But now Rao, a former accountant who became CEO in August, sees opportunity in crisis. He is undertaking a wide-ranging expansion that will take Shangri-La hotels to markets as diverse as Las Vegas and Doha. In January, the company launched its first Shangri-La hotel in North America, with the opening of a 119-room property in Vancouver. Japan will see its first open in March in Tokyo, and Europe later this year in Paris. Others...
...expansion is planned at a time when the hospitality industry appears headed for trouble. Corporations and consumers are slashing travel budgets just as a wave of new hotels is reaching the market. Some 5,400 hotels will likely open globally in 2009 and 2010, the biggest surge in a decade, according to research firm Lodging Econometrics. UBS real estate analyst Eric Wong predicts a glut. As a result, revenue per available room - a common measure of hotel performance - is expected to fall in every major market in 2009. "Everybody was trying to grab a slice of the action," says Wong...
...sure, Shangri-La is dealing with setbacks due to the credit crunch. In the Chinese gambling enclave of Macau, Shangri-La was scheduled to open two hotels along the city's nascent Cotai Strip this year, but casino operator Las Vegas Sands failed to raise the necessary funds and the entire project is on hold. In the U.S., a 223-room hotel in Chicago, due to open in 2011 in Waterview Tower, is also stalled due to the developer's financing difficulties...
...Then there's the challenge of filling rooms, both new and old. The Wall Street meltdown has reduced visits by big-spending bankers, mainstays of the luxury-hotel business. So far, Shangri-La is avoiding widespread discounting of room rates to protect its image. "If you look at all the top brands in the world at the high end - the Louis Vuittons, the Rolls-Royces - they never discount," says Greg Dogan, Shangri-La's chief operating officer. Instead, Shangri-La is targeting new customers, including corporations that might benefit from government stimulus packages, like construction companies, or are recession-resistant...
...While the outlook may be dim today, the slump won't last forever. "This is the time to be reinvesting money and upgrading the product," Rao says. With Asian economies expected to rebound more quickly than those in the West, the hotel industry in the region is expected to follow. Rao forecasts improvement will begin in the second half of 2009. "The moment there is cause for optimism, I think you'll see the whole thing turning around," says Rao. For a CEO with big plans, recovery can't come quickly enough...