Shangri-La’s Property Ladder

Last year was a good one for Shangri-La hotels. The Hong Kong-based luxury hotel group, whose name was inspired by the mystical land featured in James Hilton’s 1933 novel Lost Horizon, announced its 50th hotel opening; its CEO, Giovanni Angelini, picked up the Hotels magazine Corporate Hotelier of the Year award; and the group rose from 43rd to 38th on the Top 300 Hotels Ranking.

But expect more to come as Shangri-La plans its North American entry.

“Until now, we have focused very much on China and Asia as a home base,” said Martin F. Waechter, chief marketing officer for Shangri-La Hotels & Resorts. “But between 2008 and 2010, we will go to both North America and Europe.”

Shangri-La’s globalization strategy began at the turn of the millennium, and its 49 hotels (totaling 23,000 rooms under the five-star Shangri-La and four-star Traders brands) are now spread across Asia, as well as in Australia and the Middle East. Forty new projects are now under development in Canada, China, France, India, Japan, Macau, Malaysia, Maldives, Philippines, Qatar, Seychelles, Thailand, UAE, United Kingdom and the United States.

Having opened its first hotel in Singapore in 1971, Shangri-La initially grew slowly, before opening in Hong Kong in 1981, and in mainland China (in Hangzhou) in 1984. Unlike many international groups, Shangri-La’s business model is primarily ownership based it owns 36 of its 49 hotels. However, just like most hotel groups, it is now heavily China-focused.

“China is the most important market for Shangri-La; 45 percent of our total revenues are there, and that will grow,” Waechter said.

The company aims to double its China presence to 40 hotels by 2010, with ownership being a key factor.

“This is significant in China, particularly for the brand,” Waechter said. “If you own and operate, it is easier to retain consistency.”

China, he added, is developing as a domestic market along similar lines to the U. S.

“In 10 to 15 years, China will resemble the United States in travel patterns, with key gateway international cities but also key domestic and regional travel,” he said.

This concentration on China forms part of the global strategy, however.

“We want to be seen as an international hotel group,” Waechter said, “but one with an understanding of the expectations of Chinese and Asian travelers.”

Four North American hotels in Vancouver, Miami, Chicago and Las Vegas have been announced, as well as two in Europe (Paris and London).

“It is likely we will have four or five hotels in Europe and 10 in North America in the foreseeable future.” Waechter said. “We want to be present in gateway cities where Chinese and Asian travelers are going to travel in the future. People will look for a familiar brand.”

Inbound traffic into Asia is another consideration.

“European and North American markets also have great future potential for travel to Asia,” Waechter said. “Eighteen percent of our total hotel business comes from Europe, without us having a hotel in that continent, and 13 percent from North America. With a presence in those markets, we can communicate more to people.”

New York, Frankfurt and Vienna are among the cities under consideration for future openings.

There’s also the possibility of another brand in the future to boost the group’s portfolio in an increasingly marque-centered industry.

“Brands are very important in today’s world,” Waechter said. “The Shangri-La name itself was inspired by James Hilton’s book, which is about hospitality to strangers in a paradise setting.”

Vancouver, 2008: 120-room hotel in a new 62-floor landmark building, the city’s tallest, one block from West Georgia and Thurlow streets.