China:  Future Hospitality Opportunities Peter LimDirector, International DevelopmentWyndham Hotel Group International Shelley Perkins Vice President, International Human Resources The Ritz-Carlton Hotel Company L.L.C.

Michael Reilly Purchasing DirectorARAMARK Olympic Project Dr Fred J. DeMiccoProfessor and ARAMARK ChairHotel, Restaurant & Institutional Management Lerner College of Business and Economics University of Delaware  

China: Present/Future Hospitality Opportunities

for Students中国 : 现在与将来

Presented at the 2008 New York Hotel Show; New York, NY

Dr. Fred J. DeMicco, ARAMARK Chair& Professor of Global Strategy & Development

Hotel, Restaurant and Institutional ManagementLerner College of Business and Economics

University of DelawareFDeMicco@Udel.edu

302.831.6077

2008 Beijing Olympics

One World, One Dream

Pudong, Shanghai

Pudong, Shanghai

Forecast for World Trade and Tourism: A shift in the “center of gravity”

EUROPE

NORTHAMERICA

ASIA

“Let China sleep, for when she wakes, she will shake

the world.” Napoleon Bonaparte

Urbanization Rate is 10-15 Million People

Cities of 1 million +

Source: CLSA 2005

China Outbound Departure

2002 16.6 million

2003 20.2 million

2004 28.5 million

2005 31 million

2006 34.5 million

2007 40.9 million

U.S.--an increasingly popular destination for Chinese

travelers In 2007, China ranked as the 16th largest international

market for the United States.

397,405 Chinese visitors

$2.56 billion with average expenditure of

over $6,000 per person

Likely Trends for Future

The inbound tourism will continue to grow (UNWTO expects China will be no. 1 inbound destination by 2020).

Hong Kong, Macau & Taiwan will remain as the most important source markets.

Beijing 2008 Olympics & Shanghai 2010 World Expo will accelerate the development of inbound tourism.

Top 12 Foreign Source Markets of China’s Inbound Tourism

The top ten destinations for Chinese outbound departures 2006

1. Hong Kong

2. Macau 3. Japan

4. Vietnam

5. South Korea 6. Russia

7. Thailand 8. USA 9.

Singapore

10. Malaysia

Chinese tourists in the U.S.

A group of Chinese tourists take pictures on Wall Street outside the New York Stock Exchange as New York City Police stand guard.

World Tourism, 2020

Shanghai, China

Exotic and Authentic

Howard Johnson Plaza Hotel, Shanghai

The Howard Johnson Plaza Hotel is an elegant gem steps away from the Nanjing East Pedestrian Mall, a huge Shanghai Shopping District.

Days Hotel & Suites, Beijing

China:  Future Hospitality Opportunities Peter LimDirector, International DevelopmentWyndham Hotel Group International Shelley Perkins Vice President, International Human Resources The Ritz-Carlton Hotel Company L.L.C.

Michael Reilly Purchasing DirectorARAMARK Olympic Project Dr Fred J. DeMiccoProfessor and ARAMARK ChairHotel, Restaurant & Institutional Management Lerner College of Business and Economics University of Delaware  

THE RITZ-CARLTON HOTEL COMPANY

INTERNATIONAL OUTLOOKCHINA/OPPORTUNITIES

China Hotels

• The Ritz-Carlton, Shanghai• The Ritz-Carlton, Beijing• The Ritz-Carlton, Beijing Financial• The Ritz-Carlton, Guangzhou• The Ritz-Carlton, Sanya• The Ritz-Carlton, Shenzhen (upcoming)• The Ritz-Carlton, Pudong (upcoming)

China Opportunities

• LIVE leader program • Valuable experience• Exciting and dynamic environment and

workforce, eager to learn• World Class product• Expertise to train local talent. Expectation

that a foreigner will do so. Number one retention tool is career development.

Things to consider..

• Language can be a challenge• Cultural differences, leadership style and

motivational factors. China culture is unique

• Visa restrictions• Lifestyle

China Facts

• 1.4 Billion People• GDP 1 Trillion, number 1 by 2050• US 1 billion per week in foreign investment• Abundant labor, untrained talent. Low cost

of labor has been China’s advantage…• Salaries increasing 7 – 8.5 % last five

years• New labor law 2008

“Be not afraid of growing slowly, be afraid of standing still”

– Ancient Chinese saying

Upcoming Hotels

The Ritz-Carlton, Shenzhen

• Opening Date – Dec 2008

• Number of rooms – 275 guestrooms

• Additional Information – New CBD area, across from new convention center, outstanding business location.

The Ritz-Carlton, Pudong Shanghai

• Opening Date – Dec 2009• Number of rooms – 276

guestrooms • Additional Information –

Pudong financial area in Shanghai

The Ritz-Carlton, Kowloon Hong Kong

• Opening Date – August 2010• Number of rooms – 302 guestrooms • Additional Information – 118 story building, hotel occupied top 16 floors• This will become the tallest hotel in the world!

The Ritz-Carlton Reserve, Krabi Thailand

• Opening Date – December 2008• Number of rooms – 54 villas• Additional information – Great location,

destination resort airlines from Bangkok, Singapore and Europe.

The Ritz-Carlton, Macau

• Opening Date – 2011• Number of rooms – 256 guestrooms

THANKYOU!!

China:  Future Hospitality Opportunities Peter LimDirector, International DevelopmentWyndham Hotel Group International Shelley Perkins Vice President, International Human Resources The Ritz-Carlton Hotel Company L.L.C.

Michael Reilly Purchasing DirectorARAMARK Olympic Project Dr Fred J. DeMiccoProfessor and ARAMARK ChairHotel, Restaurant & Institutional Management Lerner College of Business and Economics University of Delaware  

40

Hainan

Hong Kong

Shanghai

Tianjin

Shandong

LiaoningHebei

BeijingShanxi

Anhui

Jiangsu

Hubei

ShaanxiGansu

Inner Mongolia

Ningxia

Xinjiang

Xizang

Qinghai

Guizhou

Hunan

GuangdongGuangxiYunnan

Heilongjiang

Jilin

Henan

Sichuan Zhejiang

FujianJiangxi

Chongqing

The Diaspora55 mio peopleGDP: USD 1000 bn

The Coast375 mio peopleGDP: USD 550 bn

The Rust Belt110 mio peopleGDP: USD 120 bn

The Margins200 mio peopleGDP: USD 110 bn

The Hinterland580 mio peopleGDP: USD 400 bn

The Five Chinas

Asia and Tourism

More than ½ of world’s population

Stage of development of tourism greatly differs by countries and regions.

Growth of Inbound Visitors, 1978-2006

China’s Outbound Tourists’ Overseas Spending. USD. bn

2008 Beijing Olympics

One World, One Dream

2008 Beijing Olympics

Questions?

Fred J. DeMicco, PhDProfessor and ARAMARK ChairGlobal Strategy & Development HRIMFDeMicco@Udel.edu

Forecast for Asia: Opportunity or Threat?China as an economy: Second-largest economy in the world in terms of purchasing

power Share of global trade up from under 1% 20 years ago to 6%

today 2025: Asia will generate 60% of global economic output

(according to Asian Development Bank) Today, China accounts for 24% of the global economic output China as a trading partner: #1 to Japan, South Korea and Taiwan #2 to the EU #3 to the USA

GDP Growth: Asia and World’s Advanced Economies

Travel Explosion

Minting Millionaires

According to the UN World Travel Organization

China is the fastest growing travel market in the world,

China is estimated to reach 100 million international travelers by 2020.

China will continue to be the largest travel market in Asia.

Success of Asian Hospitality Industry

China’s Hotel Industry

In 1978, China had 137 hotels with 15,539 rooms.

In 2006, China had 12,80 hotels with 1,420,000 rooms.

Growth of Hotels by Star Rating

HR Challenges

Developing human resources capacity 1979– two institutions of tourism in China

(one in Shanghai and one in Hong Kong) 2007– close to 2,000 institutions in China

teaching tourism– Some universities develop tourism as“flagship” program for the university– Some universities specialize only in tourisme.g. Guilin University of Tourism

SHTMs teaching hotel to open 2010

Faculty offices Classrooms Laboratories Library 290 rooms 3 restaurants Indoor swimming pool Spas Conference center Ballroom (500 seats)

plus function rooms Training restaurant

The Way Forward:

Understanding Asian market and consumers will be critically important for tourism industry in the U.S. and Europe.

Exchanges and collaboration between U.S. European and Asian institutions and industries will further enhance value creation to both parties.

2008 Beijing Olympics

One World, One Dream

2008 Beijing Olympics

One World, One Dream

FACT: A new global middle class is rising up from poverty in emerging economies around the world. Coca-Cola's sees this market as critical to the company's future and describes the scale of the opportunity as equivalent to:

“ adding a city the size of New York to the world every three months”.

Olympics Cube is all ship-shape

The number of Chinese citizens traveling overseas will hit 100 million a year by 2020 from 34 million in 2006, (World Tourism Organization)

Chinese visitors to the U.S. have doubled over the last decade to 397,000 last year, Commerce says. The number is expected to reach a robust 755,000 by 2017, according to research firm Tourism Economics.

The China National Tourism Administration estimates that nearly 30 million Chinese traveled abroad in the first nine months of 2007, up 17% vs. the year-ago period. Hong Kong, Macau and Japan were top destinations. But many are expected to turn their sights to the U.S.

On December 11, 2007, the U.S. and China signed a memorandum of understanding (MOU) to facilitate Chinese group leisure travel from China to the United States.

About 250 Chinese travelers from Beijing, Shanghai and Guangzhou ended their four-day tour in Washington D.C. on Friday, saying that they have received unprecedented high-level welcome.

Their arrivals at the International airport were awaited by a U.S. jazz band and senior officials of U.S. Commerce Department including assistant Secretary William Sutton with greeting banners.

Welcome!The first travel group from China

The first Chinese tourist travel group in the U.S. 6/19/2008

comments

The Chinese are no different," "They opt for bargains. They spend mostly on what they want to take back home. And they eat food they're familiar with.“

"The U.S. has always been a place that many Chinese would like to see and with agreements like this, we can safely say that many will now get their wish," said Coley Dale, Ctrip's Shanghai-based business development manager, in an e-mail interview.

comments

Reports and anecdotal evidence show they like visiting famous places in the U.S. in big, air-conditioned buses and buying brand-name goods at upscale shopping malls.

Some Culture differences

1. Chinese people use chopsticks rather than fork and knife.2. Chinese people usually don’t tip. 3. Chinese people tend to be loud when together, especially

when dining with friends or family. 4. Chinese people like to bring along cash and other valuable

things such as Digital cameras and Digital Recording Devices.

http://www.investors.com/editorial/IBDArticles.asp?artsec=16&artnum=1&issue=20080709

The jump in personal wealth is also creating a growing class of Chinese who can easily afford to travel to the U.S.

The number of China's millionaires surged 20.3% to 415,000 in 2007, according to a Merrill Lynch and Capgemini report. The ranks of U.S. millionaires grew by only 3.7%.

"Travel is increasingly viewed as an indicator of status in China. It's something to tell your friends about when you get home," Expedia's Kjellberg said. "China also has a relatively strong currency, making international destinations more affordable."

Kjellberg says Expedia hopes to open its air, hotel and other travel inventory to Chinese tourists via its tie-up with Chinese Web travel firm eLong.

HRIM Strategic Plan“ To be the Innovative, International leader in HRIM teaching, research and service…”

Goals: Attract new students to UD, opportunity for study abroad for our UD HRIM students, strategic global alliances for research, scholarship and continuing education for professionals

Asia---Taiwan 2007-2008

Signed distance learning agreement to offer a 4-course hotel certificate

with : Yaun Ze University in Taipei (owned by The Far Eastern

Company- Shangri- La Hotel) Soochow University in Taipei Hong Kong Polytechnic University

April 3, 2008

UD Student Team Visit

China Market Overview

Leehun Lee – China Market ExecutiveWendy Lo Annie Zheng

As mature markets continue to exhibit slowing growth, investors are looking to Asia as a source of superior returns

Asia increasingly becoming the primary choice of investment worldwide

By 2015, China should join the United States and Japan as the three largest economies in the world; with expectation of being the largest within 40 years

It is this disparity in national growth stages – and the associated changes in consumer behavior -- that gives rise to opportunities for those who seek out global partners

Opportunity in Asia

Urbanization Rate is 10-15 Million People p.a.

Cities of 1 million +

Source: CLSA 2005

Questions?

Fred J. DeMicco, PhDProfessor and ARAMARK ChairGlobal Strategy & Development HRIMFDeMicco@Udel.edu

Asia---Taiwan 2007-2008

Signed distance learning agreement to offer a 4-course hotel certificate

with : Yaun Ze University in Taipei (owned by The Far Eastern

Company- Shangri- La Hotel) Soochow University in Taipei Hong Kong Polytechnic University

“Let China sleep, for when she wakes, she will shake

the world.” Napoleon Bonaparte

April 3, 2008

UD Student Team Visit

China Market Overview

Leehun Lee – China Market ExecutiveWendy Lo Annie Zheng

As mature markets continue to exhibit slowing growth, investors are looking to Asia as a source of superior returns

Asia increasingly becoming the primary choice of investment worldwide

By 2015, China should join the United States and Japan as the three largest economies in the world; with expectation of being the largest within 40 years

It is this disparity in national growth stages – and the associated changes in consumer behavior -- that gives rise to opportunities for those who seek out global partners

Opportunity in Asia

85

Hainan

Hong Kong

Shanghai

Tianjin

Shandong

LiaoningHebei

BeijingShanxi

Anhui

Jiangsu

Hubei

ShaanxiGansu

Inner Mongolia

Ningxia

Xinjiang

Xizang

Qinghai

Guizhou

Hunan

GuangdongGuangxiYunnan

Heilongjiang

Jilin

Henan

Sichuan Zhejiang

FujianJiangxi

Chongqing

The Diaspora55 mio peopleGDP: USD 1000 bn

The Coast375 mio peopleGDP: USD 550 bn

The Rust Belt110 mio peopleGDP: USD 120 bn

The Margins200 mio peopleGDP: USD 110 bn

The Hinterland580 mio peopleGDP: USD 400 bn

The Five Chinas

Pudong, Shanghai

2008 Beijing Olympics

One World, One Dream

2008 Beijing Olympics

One World, One Dream

Chinese tourists in Euro