Building a dream

When Clement Kwok stood on the site of the former Friendship Store, looking at the Oriental Pearl TV Tower across the Huangpu River in 2003, he closed his eyes imagining what the site would be like when the Shanghai Peninsula Hotel was finally completed.

Five years later, Kwok stood again at the site, with the hotel taking initial shape and the Bund area unfolding a modern, gorgeous skyline in front of him belying the global economic turmoil.

"I had a wonderful feeling standing there," says Kwok, who is anticipating brisk business for his hotel. Kwok is managing director and chief executive officer of the HongKong and Shanghai Hotels Ltd, which owns the luxury Peninsula brand.

"We finally found a chance to return to Shanghai," he tells China Business Weekly at the CWI Children's Palace in Shanghai. The children's palace is where the hotel group owner Sir Michael Kadoorie spent his childhood.

Kwok says the Peninsular Shanghai will open its doors next fall as the ninth hotel in the group's global portfolio.

Returning to Shanghai has long been one of the main goals for the Hong Kong-based hotel group. As early as in the first half of last century, the group owned a number of famous hotels in Shanghai, including Kalee Hotel, Palace Hotel, the present south wing of the Peace Hotel and Astor House Hotel.

"I can't wait for the hotel to open," Kwok says.

Competition

The past five years have seen a lot of changes in the Shanghai hotel industry. While there were very few luxury hotels along the Bund in 2003, there are many now and more on the way.

"Every great city must have a number of good hotels," says Kwok. "One hotel will not make a city great."

Shanghai has more than 50 five-star hotels, but in terms of truly posh hotels, it has a long way to go compared with Hong Kong, Tokyo, London and New York.

"Shanghai can have more top-level hotels. It has a strong demand," says Kwok. "And we are quite accustomed to competing with other hotels."

The Hongkong and Shanghai Hotels Ltd owns and operates eight Peninsula hotels around the world. This year, the group celebrated the 80th anniversary of its Hong Kong hotel, 20th in New York and 10th in Bangkok.

"Our hotels are generally performing well and several have long been number one in their cities," said Kwok.

While many hotel groups hasten to expand their presence all over the world, the Hongkong and Shanghai Hotels Ltd sticks with "small is beautiful".

"We have only eight hotels in the world so that we can focus on making each as good as possible," said Kwok. "We want each to have strong market recognition in their cities."

Financial crisis

Having scored a 20 percent increase in revenue last year for the group, Kwok says he foresees smaller revenue from hotels this year, due to the worldwide financial crisis' blow to business travels.

"Yet we have a strong balance sheet and low level of borrowing, so we are financially very secure," he says.

"The most important thing for hotels in an economic downturn is to maintain their quality of services," he says. "If you allow your quality to slip at this time, you will never turn it back."

The 80-year-old Peninsula Hong Kong, nicknamed "Grande Dame of the Far East," has weathered a procession of crises in its history, including the Asian financial storm at the end of the 1990s. "The hotel has created a lot of value for its customers and generated good return for its investors, by perseverance and maintaining its standard in difficult times," says Kwok.

"At this time, you have to look at the long term," he says.

The group's non-hotel properties, making up one third of its total assets, also helped cushion the effect of the economic slowdown.

The group owns the Peak Cham and Peak Tower in Hong Kong and a number of residential properties. "Many of our non-hotel properties have longer leases, usually two to three years, and they are not so volatile," he says.

And the economic downturn can be a good opportunity for the group to further its expansion, as properties will become cheaper.

"We are always looking for new properties around the world, but we are very particular. Our requirement is very specific: we want the best location," he said, adding that for the time being, the group does not have any plan to buy properties in China.

World Expo

According to Kwok, the decision to open the Peninsula Shanghai before the 2010 World Expo was prompted by the Shanghai government.

"When we negotiated with the government about the hotel project, they kept saying 'finish this before the World Expo'," says Kwok.

The CEO believes the Shanghai government will promote the World Expo as strongly as the Beijing Olympics.

"It's now the turn of Shanghai to show the world ... It will be a big and successful event," says Kwok. He was happy to see that the government is renovating the Bund area as part of its overhaul plan.

"It will bring a lot of business to hotels, a real boost to our opening," says the manager.

People business

Before he joined the Hongkong and Shanghai Hotels Ltd in 2002, the 48-year-old Kwok was a financial director and investment banker in other companies. It taught Kwok a lot about company structure and also influenced his management.

Teamwork is Kwok's management style. All the decisions are made in the Group Management Committee where proposals are put on the table for discussion.

"I can't think about only accounts. A hotel is basically a people business," he says. "We try to train and motivate our 7,000 employees around the world, and make our hotels look like one big family."

The Peninsula hotels are known for its staff loyalty and many families have worked there for generations.

Kwok said, the biggest challenge is to surprise guests who have become accustomed to luxury services.

"They usually would assume they will get everything from our hotel, so it is very difficult to give them a real 'wow'," he says.

(China Daily 12/01/2008 page6)