HotelsMag January-February 2012 | Page 32

SPECIAL REPORT : CHINA
The new Hilton in Guangzhou
Forward thinking ? With extraordinary growth comes the question of inventory absorption . China ’ s national occupancy rate was 61 % through the first three quarters of 2011 , according to STR Global , leading some to worry the market is overheated . Few analysts or hotel executives argue supply is not outpacing demand overall . Given the seismic shifting of the country ’ s demographic landscape , though , there is confidence that projects that may seem difficult to justify today will be obvious relatively soon .
“ Some of the cities will have more than enough hotels in the next three to five years ,” says Nigel Summers , the Hong Kong-based director of consultancy Horwath Asia Pacific . “ The thing with China is , you do get enormous demand growth , as well . In the markets that we analyze , it ’ s not unusual to get anywhere from 20 % to 40 % demand growth in a year , and at the same time , in some of these markets exactly that much supply growth coming in , and in some cases more . So in the short to medium term , some of these markets will be soft .”
JLLH China has identified 10 markets that will experience intense competitive pressure in the short-term : Chongqing , Dalian , Guiyang , Kunming , Qingdao , Shenyang , Tianjin , Wuxi , Zhengzhou and Zhuhai . In most of those cases , new inventory is disproportionately in the luxury segment , or development is outpacing anticipated population growth , or both . “ These are markets that are growing ,” says Lily Ng , executive vice president of JLLH China . “ This is a timing issue .”
When the state identifies a market for growth , Ng explains , it means more attention — financial , infrastructural and developmental — but it also places undue pressure on early openings . Tianjin , for example , was identified as China ’ s secondary financial capital , joining

HUMAN

RESOURCES

CHALLENGES

Only within the past decade has the service industry become a significant source of employment in China , so the pool of educated workers is smaller than in other travel hot spots . International hotel groups are addressing the situation with training programs — IHG has 27 academies in China , and Marriott International
is partnering with Florida International University on a hospitality school in Tianjin — but training the local workforce is only part of the challenge .
“ Everybody is expanding in China , and everybody is going after the same talent pool ,” says Patrick Ghielmetti , vice president of human resources in Asia for Four Seasons Hotels and Resorts , Toronto . “ Part of the issue is that China is new for everybody , and it ’ s different than the rest of the world .”
Ghielmetti explains
that Chinese employees , in his experience , are often not driven by the same motivations as staff in other regions — in particular , company loyalty seems to be lower among Chinese . “ A lot of Chinese recruits primarily focus on compensation and title ,” he says . “ The only way for us to be successful is to create a Four Seasons distinction .”
Differentiators for Four Seasons — which has four hotels open in China and two more launching in 2012 — include
professional development , a commitment to work-life balance , English training and pre-opening opportunities . Compensation is competitive , Ghielmetti says , but the company avoids wage wars .
Operational success in China requires international hotel companies to adapt to local cultural norms . Ghielmetti identifies one point of contention in particular : as a traditionally top-down society , Chinese managers have , in some cases , been reluctant to treat
lower-level staff as equals . Four Seasons has tried to find a balance between respecting that cultural difference without compromising core corporate beliefs . “ If we say , ‘ Look , we as an international company need to have a great cultural sensitivity , we need to learn from you what makes us successful in your country , and we ’ re to bring expertise to the table that currently China doesn ’ t have ’ … I think it ’ s a marriage ,” Ghielmetti says . “ Different parties bring different skills .”
30 HOTELS January / February 2012 www . hotelsmag . com