Majestica Hotel in Shanghai Essay examples

5223 Words Jul 7th, 2012 21 Pages
MAJESTICA HOTEL IN SHANGHAI?

On March 20, 2005, Richard Roy, executive vicepresident of Majestica Hotels Inc., was in China, for negotiations with Commercial Properties of Shanghai Limited (CPS). They were discussing a possible management contract under which Majestica would be the operator of a new luxury hotel there owned by Shanghai Industrial Holdings.
Majestica Hotels Inc. was one of the world’s leading operators of luxury hotels. The expansion into mainland China had been on management’s agenda since 1999. The opportunity emerged in late 2003 when a close friend of Majestica’s chief executive officer (CEO) revealed that CPS was looking for an operator for its new luxury hotel under construction in Shanghai. Majestica immediately
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Following this strategy, Majestica developed into a luxury hotel chain with service standards among the best in the industry. Majestica hotels and resorts were widely recognized for the exceptional quality of their guest facilities, service and atmosphere.
The Majestica brand was generally considered one of the top luxury hotel chain brands in the world, and its hotels and resorts were named frequently among the world’s best hotels and travel experiences by Institutional Investor, Condé Nast Traveler, AAA Five Diamond and others. Majestica’s success was also reflected in consistently achieving above-market operating results for the properties under its management. During 2003, REVPAR (revenue per available room) for Majestica core hotels worldwide and in North America was 60 per cent higher than that of its competitors in the luxury segments worldwide and in North America. The room rate for a Majestica hotel in Chicago, for example, averaged $50 higher than those of Hyatt Regency, Hilton, Sheraton and Marriott (see Exhibit 3). Majestica’s superior hotel management results attracted the owners and developers of luxury hotels worldwide. By the end of 2004, in addition to the 40 hotels under its management, Majestica had 16 new hotels and resorts under construction or development, and it was evaluating dozens of additional management opportunities around the

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