The growing Chinese upper class is just beginning to become a major force in luxury markets worldwide, an executive at the Peninsula Hotel chain said in Tokyo.
“What we’re seeing right now is only the tip of the iceberg. It’s quite phenomenal,” Peter Borer, chief operating officer of The Hongkong and Shanghai Hotels, Ltd., said in an interview last week.
The Hong Kong firm operates the Peninsula Hotels, which have high-end resorts located from Tokyo to Beverly Hills. The company announced last month that net profit for the first half of the year rose 31 percent as conditions improved from 2009. Borer said he is “cautiously optimistic” that performance will continue to improve next year.
Business has been strong at its flagship Hong Kong location, driven in large part by the increase in Chinese travelers from the mainland, who have overtaken European travelers to become a mainstay. The Peninsula also opened a hotel in Shanghai in March.
From carmakers to watches and handbags, global firms are increasingly looking to tap the Chinese luxury market, as the economy there balloons and makes portions of the population wealthier. Upscale shopping districts around Asia are actively competing to woo the country’s shoppers.
Borer said his company’s properties in New York and Chicago have been struggling along with the U.S. economy, while its Bangkok location has been hit by the political turmoil there and is “limping from crisis to crisis.”
He said the company is looking strongly at India for its next expansion, with London and Mexico also future candidates. The Peninsula is planning a Paris opening in 2012.
The hotel chain’s bookings allow it to judge how business will be several months into the future, and the picture is stronger that it was a year ago, though still below normal. Bookings are up more than 5 percent at its New York location, and Chicago is recovering from a “tough ride” as large conventions return to the area.
Despite a global shift to budget, bare-bones travel, the Peninsula will not branch out to launch cheaper offerings, as some rivals have.
“We are trying to stand up for luxury,” he said.
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