SM enters China hotel business

MANILA, Philippines – The SM group has debuted in mainland China’s hospitality space, offering a property with 325 guest rooms in Xiamen city, as it tweaked its strategy to concentrate future investments in Fujian province, birthplace of the late founder, Henry Sy Sr.

In a chance interview, SM Prime Holdings (SMPH) chair Hans Sy said he had just come from Xiamen for the opening of the group’s new hotel under the label Voco, a four-star hospitality brand under InterContinental Hotels Group PLC (IHG).

READ: SM Prime sets P5.3-B, five-year capex convention centers, hotels

“It’s a business hotel but catering to young families,” Sy said.

Voco is located at the 10-hectare SM Xiamen complex that also hosts SM malls and five office buildings. It offers accommodations for 700 renminbi (P6,300) a night.

This marks IHG’s first partnership with the SM group, as Sy hinted of future collaboration in the Philippines.

“Through us they want to come back [as soon as possible] to Manila,” Sy said.

IHG’s flagship InterContinental hotel brand bowed out of Makati back in 2015.

In March, IHG also announced plans to open a 212-key InterContinental hotel in BGC in partnership with Keyland Corp., Philippine Realty and Holdings Corp. and Greenhills Properties Inc.

For its part, SMPH has built a portfolio of nine shopping malls in mainland China with a gross floor area of 1.8 million square meters that attract 400,000 visitors a day.

Most of these malls are located in Fujian, specifically in the cities of Xiamen and Jinjiang.

“Last year we opened another mall in China, in Fujian,” Sy said, referring to the newest mall that opened in Haicang District.

“We kind of changed our strategy. All will be in Fujian province. Fujian is where our father came from. We’re already known there. We’d rather have a stronghold,” Sy explained.

The previous strategy was to open at least one mall each year in second and third-tier cities.

The first China mall opened in Xiamen 25 years ago. Since then, SM malls have been built in six other key cities, namely, Chengdu, Suzhou, Chongqing, Zibo, Tianjin and Yangzhou.

“I’m maintaining [them] but right now we’re discussing, not anymore opening outside [Fujian],” he said.

By the end of the third quarter this year, Sy said SMPH would open its fourth phase of shopping mall expansion in Xiamen called Chao Block.

“Ibang hitsura. (It’s uniquely designed.) It’s a mall that you can never see here,” he said.

Since building its first China mall in Xiamen 25 years ago, SM group remains bullish on this populous market.

In just two years, Sy noted that the group’s five office buildings at the Xiamen complex have been 75-percent leased out.

“China is still having 5-6 percent growth. Everybody is used to 12 percent but the base is so big, and there are many things are happening. Industry is still growing, especially now that [expensive] fuel prices are driving EVs (electric vehicles). Growth of the export industry is still in double digit,” he said.

“The only thing that’s a bit negative is residential real estate. But it doesn’t mean nobody is [spending]. They call it change in lifestyle. They don’t want anymore to own something and having to labor on it. They’d rather just rent; if they see something better, they move.” INQ