Sanya catches cold from economic chill

By Xiao Changyan (China Daily)
Updated: 2009-01-03 16:09

With the cold current sweeping across most areas in China, the only tropical island in the country, Hainan, has entered its best climate and tourism season.

Brilliant sunshine, soft sandy beaches and delicious local food have always drawn visitors to spend a few days in the "Chinese Hawaii".

But this winter's financial crisis seems to have cooled tourism in the resort destination. Unlike previous years, there are no surging house prices and the number of foreign visitors, especially from South Korea and Japan, has been shrinking.

Sanya, one of Hainan's premier destinations, saw a drop in overseas visitors for the first three quarters of 2008. The hotels did just 55 percent of their forecast annual business, the first time the island has witnessed such poor figures for six years.

"Days are gone when local 5-star hotels charged 6,000 yuan ($878) for one night," says Pueet Singh, general manager of Kempinski Resort & Spa Sanya.

Singh says he has halved the business forecasts made at the beginning of 2008.

"Demand has softened," agrees Karl Hudson, general manager of Marriot and chairman of the Sanya Tourism Association. "The international financial crisis has changed people's travel plans and cut their budgets for luxury services."

"But there are always unexpected turns," observes Chris Tsoi, general manager of Sheraton Sanya Resort.

The political turmoil in nearby Thailand refocused many travelers on Sanya, whose beautiful sea and beaches are equally charming.

"That has been a surprising highlight for our winter business," Tsoi says, smiling.

However, the three hotel industry leaders also agree that "the worst time has not arrived yet".

Hudson says most hotel managers in Sanya are worried about how bad things will get after the Spring Festival, the Chinese lunar New Year in late January, marking the end of the busy season.

"Business usually gets slack then and with the global economy recession, it will be a real hard time," Hudson says.

"No one knows where the economy is heading next year but 2009 will definitely be a challenging year for all."

He believes the Marriot and other hotels must reorganize their business plans for the leaner times, be vigilant to whatever happens in the economy but also be ready to embrace the next good cycle.

"Slashing prices is not the answer," Singh says. Providing value-added services has become the unanimous choice of all 5-star hotels in Yalong Bay. Marriot now provides guests with 81 activities, including calligraphy lessons, kids' movies, tennis and face painting, all of which are free to customers.

Sanya's hotel industry is certainly having to adjust following several boom years. "Since the first five-star hotel in Sanya was built in 2001, luxury hotels have experienced an explosive expansion and harvested huge profits," Tsoi says. "Now is a good time for us to slow down, retrospect and find better solutions for future development."

As for long-term business in Sanya, Hudson and Tsoi are both confident that economic growth will be strong.

"Sanya has amazing potential," says Hudson. "It is just starting to gain international fame and in the future, will be as famous as other popular island destinations like Hawaii and Phuket."

He says international hotel giants are still looking to Sanya to grow their business.

The local government plans to open the bay areas of Haitang, Xiangshui, Qingshui and Shimei in the near future and by 2016, the number of international hotel brands in Sanya will be around 80.