Hangzhou has welcomed its second Shangri-La, which is no longer a "luxury hotel"

On July 27, JEN Hangzhou officially opened at Kerry Centre, the former Hangzhou Oxygen Plant industrial heritage site in Gongshu District. This is Shangri-La's second hotel project in Hangzhou, more than 40 years after the opening of Shangri-La West Lake. While the traditional luxury hotel is backed by a world-class scenic spot and targets long-haul high-end visitors, this new one is rooted in the northern urban renewal zone, targeting light business travelers, urban wanderers and local young communities. From luxury hotels to lifestyle hotels, can this community travel model, which was first developed in core CBDs, continue to operate successfully?

JEN: Brand Complement for Shangri-La

Launched in 2014, JEN was upgraded by Shangri-La Group by integrating its hotel resources across Asia, with its predecessor coming from the Traders Hotel system. When JEN was first established, it was not designed to replicate a new luxury hotel brand, but to explore a new market closer to young urban customers outside Shangri-La's original system.

It has not completely broken away from Shangri-La's service genes, but has weakened the sense of ritual of traditional luxury hotels, focusing more on public spaces, urban connections and usage scenarios for young customers.

JEN Hangzhou is located at Kerry Centre on the former Hangzhou Oxygen Plant industrial heritage site in Gongshu District. Different from traditional high-end hotel gathering areas in Hangzhou such as West Lake and Qianjiang New Town, it chooses to enter a new urban lifestyle scene.

This is Shangri-La's second hotel project deployed in Hangzhou.

More than 40 years ago, Shangri-La West Lake opened in Hangzhou. Relying on the world-class tourism resource of West Lake, it became an important representative of Hangzhou's high-end hotel market. It represents the product logic of the traditional luxury hotel era: attracting high-end business guests and destination vacationers with scarce landscapes, brand endorsement and high-standard services.

What JEN Hangzhou presents is another form of hotel.

In terms of spatial design, JEN Hangzhou is integrated with the local cultural context of Hangzhou. Located on the former Hangzhou Oxygen Plant industrial heritage site, it retains the original red bricks, steel frames and other industrial relics of the factory, matched with large-area floor-to-ceiling glass and native green plants, combining retro industrial style with modern Jiangnan aesthetics.

Inside the hotel, public spaces are endowed with higher operational value. The hotel has a total of 176 guest rooms with different views, making it a relatively small-scale project among all JEN brand properties in China at present.

Compared with the model of some large luxury hotels with hundreds of rooms that rely on conferences, banquets and business receptions to drive revenue, JEN Hangzhou weakens these standard configurations and traditional business hotel attributes, and emphasizes more on being a "community-oriented hotel". Through more open public spaces, the hotel is transformed from a closed accommodation place into part of urban consumption.

The hotel has dining spaces, bars, co-working areas and social event spaces. Among them, the hotel restaurant is defined as a "vibrant space", and the bar KOAN is designed to be a "social crossroads" connecting guests and local residents.

In addition, the hotel extends breakfast time to 11 a.m. to reduce the sense of urgency of "rushing for breakfast" in traditional hotels. For guests who miss breakfast, portable Grab&Go breakfast boxes are provided.

The hotel also provides electric-assisted bicycles and urban exploration maps. After leaving the hotel, guests can follow the guide to go deep into the surrounding blocks and experience the urban style of Hangzhou.

From these details, it can be seen that JEN Hangzhou does not simply add a "younger hotel" label, but tries to change the relationship between the hotel and consumers.

This is also the biggest difference between it and traditional luxury hotels. In the past, the core competitiveness of high-end hotels was usually concentrated on room quality, service standards and hardware configurations, and hotels mostly undertook the function of "reception".

But what JEN Hangzhou hopes to attract is not only staying guests, but also the surrounding office workers, local consumers and urban communities.

In other words, what it hopes to operate is not just accommodation demand, but the time people spend in the city. This positioning is also related to its location.

Kerry Centre at the Hangzhou Oxygen Plant industrial heritage site, where JEN Hangzhou is located, is itself a new type of commercial space under the background of urban renewal. Compared with business hotels in mature CBDs, this type of area is in greater need of composite formats that can connect commerce, office, leisure and cultural consumption, and the hotel is no longer just an accommodation supporting facility, but a consumption node in the city.

Take Shangri-La West Lake on Beishan Street as another example. Occupying a scarce plot along the West Lake, its inherent landscape advantage is almost impossible to replicate.

The main building has 198 guest rooms, which continuously maintains premium prices relying on lake views. It also has a 900-square-meter West Lake Grand Ballroom, and its business mainly depends on non-local high-end tourists and government-enterprise conference teams. Local individual visitors are just an added bonus, and it is difficult to form a stable passenger flow.

The two hotels, one in the west and the other in the north of the city, essentially follow two completely different business logics. Shangri-La West Lake holds scarce destination resources and earns premium revenue from tourists coming from afar.

While JEN Hangzhou is rooted in an urban renewal complex, it needs to actively attract local residents and short-distance urban wanderers. This side-by-side comparison in the same city also clearly shows the fundamental difference between the JEN brand and the Shangri-La brand.

Why Does Shangri-La Need JEN

If the launch of JEN in different cities is an exploration of product form, then from the perspective of Shangri-La Group itself, the emergence of this brand actually reflects an old Asian hotel group's active adjustment to market changes.

Founded in 1971, Shangri-La Group has long built its brand influence relying on luxury hotels. From landmark hotels in core cities such as Beijing and Shanghai to destination projects in Sanya and Lijiang, Shangri-La once represented a mature model in the Asian high-end hotel market: stable service quality, distinct Asian cultural characteristics, and brand premium formed for high-end business and vacation customers.

After entering the Chinese mainland market in 1984, Shangri-La began to build public recognition through landmark projects in core cities, and Shangri-La West Lake in Hangzhou is one of the representatives.

Relying on the non-replicable urban resource of West Lake, the hotel has long served high-end leisure tourists and business guests, and has become the epitome of Shangri-La's traditional luxury hotel model.

However, as China's hotel market enters the stage of stock competition, this once successful development path has begun to face changes.

On the one hand, the supply of high-end hotels in core cities continues to increase, and the competition between traditional luxury hotels has gradually shifted from "whether there is a brand" to "how to create new consumer value".

According to the latest financial report of Shangri-La (Asia), the revenue of hotel properties in Chinese mainland has declined year-on-year, and the traditional luxury hotel business is also under pressure. On the other hand, the demands of the new generation of consumers for hotels are also changing. They not only pay attention to the scale of the lobby and the sense of ritual of service, but also care more about whether the hotel can integrate into urban life and provide richer social and experience scenarios.

For Shangri-La, the problem is not whether to continue operating luxury hotels, but how to find new growth space while maintaining high-end brand assets. Therefore, Shangri-La has gradually improved its own brand matrix.

Around 2016, the group launched the Kerry Hotel brand, hoping to enter a younger urban business and lifestyle market. The previous Traders Hotel brand mainly met the demand for business hotels, while the emergence of JEN further filled the group's gaps in young urban customers, community-style stays and open public spaces.

Compared with Shangri-La's main brand, which emphasizes luxury, classicness and service ritual, JEN plays a different role.

It is not the "younger version" of Shangri-La, but an extension based on the original service genes, narrowing the distance between the hotel and the city, and making the hotel shift from simply providing accommodation to connecting work, socializing, leisure and urban experiences.

From JEN Beijing at The Grand Summit to JEN Shenzhen Qianhai, and then to JEN Hangzhou, the brand has been constantly trying to find its foothold in different cities.

JEN Beijing at The Grand Summit, which opened in 2017, is an important attempt of this brand after entering the Chinese market. It is located in Beijing CBD, not completely breaking away from the logic of business hotels, but exploring new hotel space forms in mature business districts.

Compared with traditional business hotels that rely on guest rooms and conference functions to attract corporate customers, JEN Beijing opens up more spaces for co-working, social events and dining scenarios, hoping to make the hotel a communication space for business people outside of work.

If JEN Beijing explores "how to make business hotels more youthful", then JEN Shenzhen Qianhai, which opened in 2023, further tries "how to integrate hotels into new urban spaces".

As an emerging business area in Shenzhen, Qianhai is different from Beijing CBD and is still in a stage of rapid development. The hotel needs to undertake more functions of connecting the city, people and industries. Relying on Kerry Centre Qianhai, a composite urban space, JEN Shenzhen Qianhai integrates co-working, sports and fitness, and social spaces into the hotel.

For JEN Hangzhou, the brand's exploration has further shifted from business scenarios to urban life scenarios. It has not chosen the scenic spot resources or mature business core areas favored by traditional luxury hotels, but entered the renovation project of the former Hangzhou Oxygen Plant industrial heritage site, placing the hotel in an urban renewal environment where commerce, offices, residences and cultural spaces are intertwined.

In the past, Shangri-La attracted consumers relying on its brand prestige. Now, JEN hopes to explore the new role of hotels in future urban life through more open spaces, lighter service methods and stronger urban connection capabilities.

But for Shangri-La, whether JEN can become a new growth curve still requires further verification by the market over time.

The Real Test for JEN Comes After Opening

For JEN, the real challenge is not to create an attractive space, but how to make these spaces continuously generate value in long-term operation after opening.

JEN's advantage lies in that it is backed by Shangri-La's mature operation system and international brand resources, and does not have to rely purely on internet celebrity traffic.

Judging from several existing JEN projects, this brand has formed a relatively clear product logic: weakening the attributes of traditional hotels, and connecting the relationship between the hotel and consumers through more open public spaces, catering and social activities.

In recent years, a large number of lifestyle-focused hotels have actually emerged in the Chinese market. Some take industrial style and minimalist style as selling points, some emphasize art curation, some focus on community culture, and others move bars into hotel lobbies.

In the initial stage of opening, these hotels can quickly become popular relying on their design, and become popular check-in spots on social platforms.

However, after the popularity fades, many projects begin to encounter similar problems: consumers are willing to come to take photos, but are not necessarily willing to stay repeatedly. The public spaces look lively, but it is difficult to continuously bring stable and steady revenue. Hotels keep holding markets, exhibitions and music events, but once the events are over, the flow of people also decreases.

Different from these projects that rely more on spatial design to create short-term attention, JEN has taken public space operation as part of its hotel model from the very beginning of product design. But at the same time, this also means that it needs to meet higher operational requirements.

JEN Hangzhou only has 176 guest rooms, JEN Beijing at The Grand Summit has 450, and JEN Shenzhen Qianhai has 369 rooms, with the number of guest rooms in JEN Hangzhou being less than half of that of the latter two.

Fewer rooms mean less room revenue and greater pressure on RevPAR (Revenue Per Available Room). It is more necessary to rely on diversified scenarios such as catering, bars, event spaces, co-working and local consumption to make up for revenue. Public areas are no longer a nice-to-have supporting facility, but the core foundation that supports annual profitability.

In the industry, the hotel model with open public areas is called "tidal operation": it is used as co-working space during the day, as a bar at night, and as event space on weekends, and the same venue switches between different functions at different time periods.

Theoretically, it can maximize the value of space, but according to observation from *Space Mystery*, multiple risks still exist in actual implementation.

The first is the test of public area operation capability. Frequent use of public areas accelerates asset wear and tear, and maintenance costs rise significantly. Multiple scenarios impose higher requirements on service standardization and staff capabilities.

A more direct problem is that if the public areas attract a large number of non-staying guests, while the room revenue drops due to the reduced number of rooms, an inverted situation of "lively public areas but losing money on rooms" may occur.

The second is the intense competition in Hangzhou's local market. Most of the leisure consumption tracks in Hangzhou are already saturated, with a dense number of cafes, independent restaurants, cultural and creative spaces, and consumers have extremely rich choices.

Compared with professional local leisure formats, the hotel's public area operation is not an absolute advantage. If it cannot continuously output high-quality local activities, characteristic experiences and refined services, and only relies on the industrial-style spatial appearance, it may only gain short-term opening check-in traffic.

What is more critical is the test of cultivating local customer groups. Judging from the performance of the already operating stores, JEN Shenzhen Qianhai in the CBD can more easily achieve revenue generated from public areas relying on stable daytime business passenger flow, and JEN Kunming, which is backed by a cultural tourism business district, faces lower risks.

JEN Hangzhou is a rare project in China that is independently located in an urban renewal area, without the support of all-day business passenger flow. The cultivation cycle of such customer groups is long and consumption fluctuates greatly, which extremely tests the brand's local deep cultivation capability.

The opening popularity will eventually fade, and people may get tired of the spatial aesthetics. For the high-end hotel industry, which is fully entering stock competition and accelerating lifestyle transformation, this lifestyle experiment of JEN Hangzhou has just begun. Whether it can become a feasible industry sample may still need time to give the answer.

This article is from the WeChat official account "Space Mystery", written by Li Jiaru, and authorized for release by 36Kr.