Minutes away from Beijing rises an international port city - For several decades, China's port cities have been at the forefront of the nation's economic development.
In the 1980s, Shenzhen in Guangdong Province rose from a small fishing village to a metropolis.
In the 1990s, Pudong New Area of Shanghai evolved from an impoverished suburb into the financial capital of China. These major economic zones benefit from their strategic location centered around active waterways. Similar to Shenzhen in the south and Pudong along the central coastline, the region in the north around the Bohai Sea is the next to undergo an inevitable transformation.
The Chinese government devised a plan to promote Tianjin's Binhai New Area to emerge as an international port city and the future economic hub of northern China.
In the early 20th century, Tianjin was the most commercially developed city in north China, and its economy was far larger than Beijing's. Headquarters of numerous banks lined Tianjin's financial street, and the city was home to hundreds of local and international insurance companies. China's first car, color television, camera, analog computer, watch, English newspaper, and electric tram, all emerged from Tianjin. Despite its past successes, Tianjin was overshadowed by the development of major cities, including Beijing, Shanghai, and Shenzhen.
However, in China's 11th Five-year Plan (2006-2010), the National Development and Reform Commission of China regarded the Beijing-Tianjin-Hebei Province region as a crucial part of the nation's development strategy.
Tianjin's Location - Map of China
Tianjin Province is one of four municipalities directly under the administration of the Chinese Central Government. The municipality is highly accessible to the vast area of north China and northeast Asia.
Tianjin Province borders the Bohai Sea to the east, and Hebei Province encircles the north, west, and south sides of Tianjin Province. With the Haihe River, one of the five largest rivers in China, crossing through the city, Tianjin's nicknames of "Pearl of the Bohai" and "Stronghold of Rivers and the Sea" are appropriate.
Located within the center of the Bohai Sea rim, Tianjin spans an area of 4,500 square miles with 95 miles of coastline. To put this into perspective, the municipality's land area is slightly larger than that of Los Angeles County (4,000 square miles) or is fifteen times greater than the combined area of the five boroughs of New York City (305 square miles).
With a population of over 11 million, Tianjin is the largest coastal city in northern China. To Tianjin's east, Binhai New Area covers 875 square miles, over four times the size of Shanghai's Pudong (200 square miles).
Map of Tianjin (Source: Asia Times)
TransportationThe municipality is only 70 miles southeast of Beijing, the capital of China. This distance is similar to that between New York and Philadelphia. Tianjin's proximity to the landlocked capital city is of strategic importance as witnessed by the August 2008 premiere of the Beijing-Tianjin Intercity Railway (BTIR).
The BTIR travels at speeds of 220 miles per hour, making it the world's fastest train. The travel time for commuters was shortened from two hours to 30 minutes for downtown Tianjin; commuters must travel an additional 20 minutes on a local train to reach Binhai. This convenient bullet train increases exchange between both cities. For example, during the 2008 Beijing Olympics, the high-speed train facilitated the transportation of athletes and spectators to Tianjin, a co-host city, where the soccer matches were held.
In addition to the BTIR, Tianjin features an excellent rail network, with the primary stations being Tianjin West Railway and Tianjin Train. Tianjin's major railway system is the closest hub to the Euro-Asia continental bridge, a railway system across Europe and Asia that connects the Atlantic and Pacific Oceans. The Tianjin Metro, the second underground railway in China, is currently expanding from two lines to nine lines with 90 miles of additional rail tracks, operating both in the city and in Binhai. The expansion project is scheduled to be completed by 2010. Tianjin is also highly accessible by the city's expressways and inter-province highways.
Tianjin Binhai International Airport, the second largest in north China, expanded its terminal to nearly five times the size of the previous one and is expanding its runway to accommodate the A380 Airbus, the largest double-deck passenger aircraft in the world. This airport served as the first-choice alternative during the 2008 Beijing Olympics and eased congestion for the capital city.
The new terminal is designed to handle up to 10 million passengers a year. Data published by the Civil Aviation Administration of China showed a significant upsurge in the number of passengers arriving through Tianjin's airport in recent years, with this traffic indicator posting an average annual compounded growth rate of 23.0% between 2000 to 2008. Beijing Capital International Airport, the largest and busiest airport in China, added a third terminal in October 2008, increasing the annual passenger handling capacity to 78 million.
Another mode of transportation is through China's largest man-made port located in Tianjin. Tianjin Port is the most comprehensive and busiest commercial port in north China and ranked sixth in the world by volume in 2007. Servicing more than 300 ports in over 170 countries, the port operates as a hub of commerce for north China and functions as the gateway for the capital city.
Tianjin's transportation system is expected to receive more than $5.3 billion for 20 key projects in 2009, including the redevelopment of its rail network, highway system, airport, and harbor. With the improved infrastructure, the city is striving to increase its capacity, thus further supporting investment in and development of this modern city. This extensive capital invested in the city's infrastructure is expected to promote increased commercial and leisure travelers to the area in the near future, which bodes well for the city's lodging industry.
Tianjin - Binhai New AreaThe focus of development lies within Binhai New Area, the eastern coast of Tianjin. This area's strengths are expected to contribute to the overall economic growth of China.
Its modern manufacturing and research and development base, international shipping and logistics industries, high-tech development, and port are Binhai's key assets. Sustainable development is also highly regarded as the city implements energy saving and environmentally friendly policies.
As a coastal city, Tianjin provides the best access to the sea for foreign business to enter north China.
Map of Tianjin's Districts (Source: DTZ Research)
Tianjin's Binhai New Area comprises three administrative coastal districts: Tanggu, Hangu, and Dagang.
Within Tanggu District are Tianjin Economic-Technological Development Area (TEDA), Tianjin Port, and Tianjin Port Free Trade Zone, as well as parts of Dongli District and Jinnan District.
The strategic layout of Binhai New Area consists of eight functional zones as well as an eco-city.
Major InnovationsIn addition to Binhai's functional zones and development, Tianjin's notable innovations have attracted a significant amount of interest from investors. Tianjin Statistics Bureau reports that from 2004 to 2007, foreign direct investment recorded double-digit growth rates increasing to USD 5.3 billion by 2007; this strong activity is evidence of Tianjin's favorable investment climate.
Tianjin, where the first stock exchange in China opened in 1921, is in the process of launching a nationwide over-the-counter (OTC) stock trading market in the Binhai New Area. This market will be the first of its kind in China and will deal with equity transactions of unlisted public companies in the Shanghai and Shenzhen stock markets. Additionally, in late 2006, the city began the Bohai Industrial Investment Fund with $2.75 billion, serving as venture capital for innovative enterprises of transportation and energy projects.
Binhai New Area Functional Zones 
In October 2008, Airbus opened its first assembly plant for its A320 Family aircraft outside of Europe, in Tianjin's Binhai New Area. Consequently, China's aviation industry is expected to develop in the future, as this is the first step toward building its own aircraft independently. However, due to the global recession, Airbus may cut production of aircraft to maintain a balance between supply and travel demand in the short term.
Another innovation includes the country's largest helicopter manufacturer, the Aviation Industry Corporation of China, which plans to transfer its headquarters, including a research and development base, assembly facilities and customer service center, to Binhai this year. Other notable innovations include the construction of a high-thrust rocket facility and a planned ten-million-ton oil refinery joint venture with Russia.
While Tianjin is taking giant steps towards modernization, a principal focus for the municipality is to protect its natural resources and become a model of environmental protection for the rest of China. The new flagship eco-city project between Singapore and China would showcase how rapid economic growth can be balanced with sound environmental protection. The area will consist of 12 square miles in the Hangu and Tanggu Districts, featuring residences, a business park, schools, clinics, shopping malls, parks, and a light rail, as well as vehicles powered by electricity or natural gas. Led by Singapore's strengths in environmental services and technology, the eco-city aims to promote green living for 300,000 people in 10 to 15 years.
Tianjin Economic-Technological Development Area (TEDA)Since 1997, the Ministry of Commerce has evaluated the investment climate of all national-level economic zones based on economic indicators, such as overall economic strength, infrastructure, operation cost, human resources and supply, society and environment, facilitation for technology innovation, management system building, and development and efficiency. For over a decade, TEDA consecutively achieved the highest performance and is recognized as one of the most desirable investment zones in China.
TEDA benefits from four main industries represented by global corporations:
TEDA Industries and Major Corporations
As of year-end 2007, there were reportedly 4,485 foreign enterprises and roundly 11,000 domestic enterprises established in TEDA including over 130 Fortune 500 companies. This dynamic area of China promotes foreign investment and boasts considerably lower labor costs than Shanghai, Guangzhou, and Beijing. TEDA is acknowledged by overseas investors as the zone with the highest rate of return in China.
Summary of Economic ConditionsThe Bohai Sea coastal area's development is strategically important for accelerating the country's overall economic and social development. With the support of the central government, Tianjin's focus has been placed on improving the standard of living and accessibility through the city's infrastructure. Tianjin serves the North with its modern manufacturing and research and development base, and international center for shipping and logistics. Adjacent to Beijing and with links to northeast China, north China, northwest China, and northeast Asia, the port city of Tianjin is set to drive the next wave of economic growth and global integration. Binhai New Area's rapid development is balanced by the planned Sino-Singaporean eco-city.
While Shenzhen and Shanghai led China as financial centers in the past several decades, Binhai New Area's diversified industries provide a favorable and solid foundation that is less prone to deteriorate in times of financial crises.
Tianjin is positioned as a manufacturing and logistics center, instead of a financial hub. As the political and cultural center of north China, Beijing also acts as a financial center, with its domestic and overseas financial institutions and multinational headquarters. As a result of Tianjin and Beijing's complementary industries and their continued collaboration, the Beijing-Tianjin-Hebei Province region is expected to rise as China's next engine for economic growth.
Tianjin Hotel Market OutlookSince Tianjin is no longer overshadowed by other major cities, investors from around the world are searching for opportunities to enter this emerging market. Tianjin serves as a platform for development and has already seen much growth in the past decade. The city is well positioned to accommodate an increasing volume of commercial and leisure travelers. As a result of the growing number of corporations establishing offices in Tianjin, the city's lodging market is expected to derive demand predominantly from the commercial segment.
According to the Tianjin Tourism Bureau, both domestic and international visitor arrivals to Tianjin exhibited significant increases between 2000 and 2007. In 2007, domestic visitors rose from the previous year to 60.17 million, and international visitors increased to 1.03 million. Domestic travelers represented roundly 98.0% of the total number of visitor arrivals; meanwhile, international travel displayed double-digit growth during the period reviewed, with the exception of the global recession in 2003. Japan accounted for the largest number of foreign arrivals (36.8%), followed by South Korea (20.6%), USA (6%), Singapore (4.7%), Taiwan (3.9%), Hong Kong (3.5%), Philippines (3.4%), and Malaysia (3.2%).
Similar to the trends in visitor arrivals, the Tianjin Statistics Bureau indicates a strong correlation with the growth in tourism revenue. As a result of increased travel and spending in the region, demand for lodging is expected to spark investors' interest in local hotel development opportunities.
In 2008, the Tianjin Municipal Tourism Administration reported that 118 star-rated hotels were in operation. According to Smith Travel Research, which tracks 42 of these hotels, the top three segments, by number of hotels, are mid-scale with F&B, upper upscale, and economy. By number of rooms, the luxury segment ranks third due to the larger room count per hotel, when compared with the economy segment. Tianjin's hotel market comprises global branded hotels, such as Holiday Inn, Sheraton, Best Western, Renaissance, and Hyatt, as well as independent or locally affiliated properties; the hotel mix is approximately 40.0% and 60.0%, respectively. InterContinental dominates the market with roundly 1,400 rooms. Of the company's five mid-scale Holiday Inn/Express properties, four were built within the last two years. Similarly, the second most popular brand in Tianjin is the economy flag, Super 8; also with five hotels, most of their properties opened in 2007.
In recent years, it is evident that the rapid economic development of Tianjin has spurred new hotel supply in the market. Global brands, independent hotels, and locally affiliated chains are aware of the continued growth and potential success of this northern port city. In the near future, some examples of new brands approved to enter the Tianjin market include Radisson, Crowne Plaza, Hilton, Westin, and St. Regis.
Despite the city's surge in planning and development, the impact of the global economic recession has been felt by Tianjin and markets around the world. Hotels in Tianjin have experienced declines in occupancy and average rate since September 2008.
As the market incurs considerable increases in supply, while demand continues to soften, overall marketwide performance is expected to be negatively impacted over the near term. However, as the economy recovers and the new hotels stabilize, it is anticipated that Tianjin's market will rebound and post increased growth rates. The future of the Tianjin hotel market is generally optimistic, and investment in the hospitality industry is expected to flourish over the long term.
SOURCES CITEDwww.hvs.com 
