Hotel Investment in Shanghai
The hotel occupancy rate keeps at a high level during the Expo in Shanghai. It is difficult to book hotels in Shanghai during Expo. Many visitors lodge in the suburban district that’s far from the city center when they come for the Expo. It seems positive for the hotel industry. Should I invest hotels in Shanghai?
After investigation in Shanghai for half month, an investor from Sichuang Province said that some hotels are not much profitable. He explained that although the hotel business is doing so well, the operation cost is terrible too.
He took a three-stars hotel as an example. The rent of most hotels is about RMB 3.5 per square meter, which means that it costs about RMB 105 for a single room. Then including the cost of labor and electricity and water, the final cost of a single room is about RMB 150.
Even though the market price of this kind of room is near RMB 400 during the Expo, given that the occupancy rate is about 80%, there will be no profit when the price falls to about RMB 200 in normal situation.
He estimated that some hotels will bankrupt after the Shanghai Expo because tourists coming to Shanghai will decline.
