World Expo likely to boost Shanghai room rates

Home Inns & Hotels Management Inc, China’s second-biggest budget hotel operator, said this year’s World Expo here will boost room rates by as much as 20 per cent, and it’s adding up to 200 hotels nationwide.

‘We’re positive about demand during the Expo,’ David Sun, 46, chief executive officer of Home Inns, said in an interview at the company’s headquarters in the city. ‘We may see full occupancy at our hotels in Shanghai’ during the fair.

Nasdaq-listed Home Inns has 61 hotels in the eastern Chinese city, which plays host to the World Expo May 1 to Oct 31. A total of 192 countries, including the UK, France and Japan, and 50 international organisations will participate, and organisers are expecting 70 million visitors, according to the Expo’s website.

The company expects to add between 180 and 200 hotels this year, according to Mr Sun. That’s up from 145 new hotels last year, when the slowing economy forced the company to miss its forecast of more than 200 hotels, said Mr Sun, who joined Home Inns as CEO in December 2004 from B&Q (China) Ltd, a unit of London-based Kingfisher plc.

Home Inns’ shares have declined 8.7 per cent this year in US trading, compared with a 1.6 per cent gain in the USX China Index, which tracks US companies that derive a majority of their sales from China.

The company had 616 hotels in operation in 120 cities in China at the end of last year. The price for a standard room ranged between 169 yuan and 299 yuan (S$34-$61) in different cities, he said.

At the depths of the economic crisis, China’s expansion slowed to 6.1 per cent in the first quarter of 2009 compared with the year earlier, its lowest level in a decade. Growth rebounded to 10.7 per cent in the fourth quarter, the fastest pace since 2007, on government stimulus measures and record bank lending.

Home Inns’ 2009 profit rose to 256 million yuan from 101.2 million yuan from the previous year. Fourth-quarter profit dropped 40 per cent to 68.4 million yuan from a year earlier.

The company is the second-largest China-based hotel operator by sales after Shanghai Jin Jiang International Hotels (Group) Co.

Mr Sun said he expects the development of high-speed rail services and rising incomes to boost travel demand.

High-speed railways will connect all of China’s provincial capitals and cities with more than 500,000 citizens by 2020, serving more than 90 percent of the population, the Ministry of Railways said.

‘High-speed rail will revolutionize domestic travel and we’re seeing bright opportunities,’ he said.

Source: Business Times, 11 Mar 2010