Cover Story

Ready for the long run

Updated: 2011-05-27 10:37

By Andrew Moody (China Daily European Weekly)

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Henssler joined Kempinski 17 years ago and was managing the group's flagship hotel in Geneva before coming to Beijing last year.

He has worked extensively across the group and had a key role in opening hotels in Kuwait and Dubai.

Although Dubai has also witnessed a hotel construction boom similar to China, Henssler believes it is more sustainable than in the emirate.

"One of the biggest problems with Dubai actually was the airlift capacity. You had 20 full planes arriving and leaving but in front of the airport there were only five taxis since the people were often on the way to somewhere else and not stopping," he says.

"The big difference here is that you have healthy sustainable growth with a fantastic outlook and you feel as though you are standing on several solid legs."

Henssler says the hotel market in China has been transformed over the past 20 years. The bigger hotels were once the total preserve of foreign business travelers with the only Chinese being the hotel staff.

"When we opened it was 100 percent foreigners and zero percent Chinese. Now it is around 55 percent foreigners and 45 percent Chinese. In the second-tier cities it used to be all Chinese but now you have 25 percent foreigners and 75 percent Chinese," he says.

"What you are seeing is some form of osmosis between the national and international markets."

Kempinski co-owns its hotel in Beijing, which is part of the Beijing Lufthansa Center of retail and commercial development.

Like most other major hotel groups in China, it normally acts as a manager for developer owners for a fee under a contract and so is continually looking at schemes presented to it by developers.

Henssler says the company prefers to enter into arrangements with State-owned enterprises, which account for 60 percent of its current agreements.

"We give priority to State-owned companies, yet we are also happy to work with private investors and private companies," he says.

"The problem with some private sector schemes is that there can be major changes half way through the project, where a scheme might be altered to have more of a hotel component or more of an apartment component or in some cases with the developer losing interest. It is important to do strong due diligence to make sure the finding is in place and that your partner has the right vision."

Kempinski will be opening its first hotel in Shanghai in August and will soon open another one in the third-tier city of Yixing in Jiangsu province.

Henssler says it is very difficult to assess sites in China because of the pace of development in many areas.


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