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Beijing : the record track

08/08/08. The date for the opening ceremony of the Olympic Games in Beijing was written in big letters on many calendars: those of Chinese authorities for whom these Olympics marked the advent of an ambitious nation on the international scene, those of athletes striving for gold medals and, of course, those of hoteliers’. The latter accelerated their development in the Chinese capital in light of the biggest sports competition worldwide. Since the beginning of the year, inaugurations have followed one after the other at a frenetic pace. Park Hyatt and the trendy Hotel G joined an already long list of luxury hotels while St Regis took advantage of the moment to give itself a facelift. Marriott added 4 hotels to its portfolio including a JW, the 3000th the group’s hotel. At Accor, in addition to a Pullman and a Mercure, a Novotel and an Ibis opened their doors just a few days before the flame was lit in the “Bird’s Nest”.With a new wave of hotels yet to come, should we expect tomorrows that are as difficult for Beijing as those experienced by Barcelona or Sydney? Unlike these two cities, it is likely that Beijing, considering China’s economic role and the capital’s interest for the tourism industry, will absorb this new supply more easily. “Beijing now has one of the biggest convention centers in Asia and we feel confident. The Olympics will have a positive impact on the city’s business and dynamism,” concludes Richard Boyer.This race against time produced its fruits. The results of the competition are excellent. Like the champion of the 100 meters Usain Bolt, the RevPAR broke through ceilings with 303.2% growth. Those hotels that were relatively “old” in the city – no more than a few months for some – have all posted no vacancy throughout the two weeks. Starting with the Beijing Hotel which flew the flag of the IOC. “We hosted government and athletic delegations, groups of supporters, our regular clients,” enumerates Richard Boyer, director of the Revenue Management strategy for the Marriott group in China. Accor, official partner of the French, Australian and New Zeeland Olympic committees, and Hilton, sponsor of the American team, both hosted many officials. Even properties that were just in their breaking phase despite the risks of opening late posted ORs higher than 50%.For the occasion, hoteliers adopted the price policy reserved for major events. “Our revenue management strategy was identical to those implemented for other major sports events such as the Rugby World Cup or the Euro 2008,” explains Richard Boyer. The average daily rate per month is 3,000 yuan or 300 euros (+ 316.5%), higher than the average for other months, close to 1,000 yuan. As observed during almost all sports competitions, this increase resulted in tourists turning away from Beijing who preferred to postpone their travel to 2009 or 2010. As proof, the weeks prior to and after the Olympics were disappointing, provoking a drop in the OR by 2.4 pts throughout August.June and July experienced even more significant drops by more than 15%. “We posted 45% fewer customer bookings for the peak season in 2008, which lasts from May to October, than last year,” explains Karine Vampouille, product manager in Beijing for the tour operator Asia. Events in Tibet and a drastic visa policy vis-à-vis tourists and businessmen had an impact on departures to China. In this context, corporate operated hotels are doing well, but independent ones that invested a great deal in the effect of the Olympics are fairing poorly. “My property was practically empty,” laments Mr Wen, manager of an upscale hotel in a tourist neighborhood.With a new wave of hotels yet to come, should we expect tomorrows that are as difficult for Beijing as those experienced by Barcelona or Sydney? Unlike these two cities, it is likely that Beijing, considering China’s economic role and the capital’s interest for the tourism industry, will absorb this new supply more easily. “Beijing now has one of the biggest convention centers in Asia and we feel confident. The Olympics will have a positive impact on the city’s business and dynamism,” concludes Richard Boyer.

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