Orient-Express On The Hunt For Property In Shanghai, But China Success Won’t Be Easy

by Jing Daily

Hotelier And Experiential Luxury Brand Built Name On Iconic Train Trips

Orient-Express has luxurious outposts around the world (Image: Orient-Express)

Over the past five years, China has been in the midst of a hotel-building boom that has seen the number of hotels throughout the country jump 62 percent. But despite the country’s vast population and growing demand from business travelers, a study late last year by the consulting and research group STR Global found that China’s hotel occupancy rate is the lowest among 15 Asian countries, sitting at just 61 percent for the first nine months of 2011. Too heavily weighted towards four- and five-star hotels or high-priced international brands in some cities, China clearly remains a difficult hotel market despite the bullishness (and continued construction) of the world’s largest chains. According to Jones Lang LaSalle Hotels, by 2013 the number of hotels in China should rise another 52 percent.

Low occupancy rates and creeping market saturation notwithstanding, hotel and tourism chains angling for the emerging, wealthy Chinese traveler continue to eye expansion into the country. Last year, Club Med opened its first resort in China at Yabuli Ski Resort in the country’s northeast, looking to take advantage of growing interest in winter sports among the Chinese middle- and upper-middle class. And this week, according to the Financial Times’ Beyondbrics blog, another experience-focused luxury hotelier, Orient-Express, has shown an interest in the China market, eyeing properties in Shanghai to buy or manage. Orient-Express, which markets its brand as a “curator of unique experiences,” operates a global network of hotels, restaurants and trains offering five categories of tourism experience: Heart of the City, Secluded Retreat, Town & Country and Explore & Discover. Currently with 46 properties worldwide, Orient-Express now has eight resorts in Southeast Asia, but a potential China location would be its first in East Asia.

Though the China market — with its growing interest in experiential tourism and rising incomes — is an enticing prospect, the FT notes that Orient-Express would have far from an easy time finding success there. From the blog:

Orient-Express is actually a top-end hotel chain more than anything else, with boutique properties like the historic Mount Nelson Hotel in Cape Town, a ‘remembrance of things past’ kind of place at the southern tip of Africa.

But the brand it trades on is inextricably linked with that most iconic of train journeys, the London to Venice Orient Express (which, once a year, goes all they way to Istanbul).

But in China, trains are hardly viewed as places to a) relax and enjoy the scenery b) eat sumptuously c) spend £1,800 per person for a journey of one day and one night (the price from London to Venice).

Though Orient-Express would undoubtedly be focused on the hotel end of the market with its potential China outpost rather than promoting its rail associations, COO Filip Boyen told the FT that he is confident that a property in China could be a great way to lure outbound Chinese tourists to his company’s dozens of resorts overseas. Still, Chinese tourists have thus far shown a knack for seeking out international travel experiences on their own, showing up on Japanese ski slopes, at private shopping events in New York, and at wine tastings at French vineyards. As such, potential guests in China would likely be somewhat older and extremely wealthy, preferring ready-made tourism itineraries over independent travel. In general, while Orient-Express has shown a knack for giving European or North American tourists a taste of the high life from centuries past, Chinese outbound travelers will likely prove a harder sell.