Shanghai’s many challenges

    Shanghai’s many challenges

    By Pamela Hong Xu

    Shanghai’s conference and meeting sector did well in 2012, having hosted 780 international gatherings last year, up from 754 in 2011.

    But the real figure could be much higher, noted Justin Yang, director, MICE Promotion Department, Shanghai International Conference Management Organization. “There are a lot of domestic conferences and meetings that escape our data collection each year, and we believe that there are, in fact, far more business gatherings held in the city,” Yang said.

    The rising demand for conferences and meetings in Shanghai is met by the lively development in the city’s hotel sector, “allowing ample supply to keep room rates affordable”, said Patrick Chen, deputy director, International Tourism Promotion Department of the Shanghai Municipal Tourism Administration (SMTA).

    He said the average room rate for four- and five-star hotels in 2012 was RMB950 (US$153) – RMB50 lower than was what recorded in 2011.

    “Hotel rates in Shanghai are not as high as most buyers expect from a key commercial city,” he added.

    The number of exhibitions in Shanghai last year stayed flat, however, according to Chen, who explained that the lack of new exhibition centres in the city had restricted growth potential for the trade fair sector.

    While Chen and several MICE sellers in Shanghai are generally optimistic about business performance this year, they are also wary of obstacles to growth. The strained political relations between China and Japan is one of the concerns raised by industry players.

    “The number of Japanese arrivals to Shanghai has declined in the last few months, therefore we will not be investing much (in destination promotion) in this market. Instead, we hope to attract more leisure and business travellers from other Asian sources,” said Chen.

    Chen is also concerned about the limited air capacity into the city.

    “Outbound travel from Shanghai is on the rise and there is no longer any low travel season to speak of. When these travellers return home, they take up air seats that business event visitors need to get into Shanghai,” he explained.
    “Furthermore, airfares are getting pricier. That adds more pressure on event organisers who are already faced with rising costs in the city.”

    Although room rates would not rise in 2013, Cynthia Lim, director of sales & marketing of Grand Hyatt Shanghai, said the appreciation of the Chinese yuan would affect planners’ decision to take their events to Shanghai and China in general.

    Ella Zhou, Department of Exhibitions, Shanghai Spring International Travel Service, also warned that “rising tourism costs” in Shanghai, coupled with an economy still in recovery mode and an anticipated dip in the number of government-led conferences and event spend, would make 2013 a difficult year for MICE players.

    Adding to these challenges is the state of intensive competition between MICE destinations. While acknowledging that such competition is part and parcel of the business, Chen believes that Shanghai has strong advantages.

    “Shanghai is one of the most important cities in China and many international associations want to explore this market,” Chen said, adding that the next step for Shanghai is to focus on improving service and management standards of existing event venues.

    Additional reporting by Karen Yue