Fairmont's art-deco springboard into China - Geofrey York

SHANGHAI -- China's most famous hotel has survived a civil war, Chinese bombs, Japanese occupation, Communist takeover and the fanatical Red Guards of the Cultural Revolution.

Throughout it all, the art-deco icon on the Shanghai waterfront has remained largely open - even if its rooms were sometimes requisitioned by Japanese troops or Communist apparatchiks.

But now, 78 years after its birth, the celebrated Peace Hotel is entering one of the most radical phases in its history: a three-year shutdown and a top-to-bottom renovation, with a key role being played by Fairmont Hotels & Resorts Inc.

The architectural landmark on the riverfront Bund is due to reopen in 2010 under a new name, waving the flag of the company, although still owned by a Chinese state corporation. It will be called the Fairmont Peace Hotel Shanghai.
Fairmont was bought by Prince al-Waleed bin Talal's Kingdom Hotels International and Colony Capital last year, but is still operated out of Toronto.

The $65-million (U.S.) refurbishment will be one of the toughest challenges in the history of one of the world's biggest luxury-hotel chains.

With heritage techniques honed at famed Canadian icons such as the Royal York and the Chateau Laurier, the company will try to transform the crumbling Peace Hotel into the most valuable luxury hotel in China, without jeopardizing its sensitive site and unique architecture.

At the same time, Fairmont will be using the Peace Hotel as its springboard into the fast-growing Chinese market. The stakes are high.

If the renovation is successful, it could pave the way for a rapid move by Fairmont into other historic hotels in Shanghai and other major cities across China.

"It's a terrific launching pad," said Matthew Sparks, senior vice-president for development at Fairmont Raffles Hotels International.

"We're getting into China in a splashy way. We've been working on this for almost two years. The Peace Hotel is one of the few hotels we've identified in China that keeps with our brand. We think it will be really magnificent."

Not everyone is so sanguine about the shutdown and renovation. Heritage experts are watching nervously, worried that the art-deco architecture could be endangered. And the Peace Hotel's most famous occupants - a group of elderly Chinese jazz musicians who survived the worst years of the Maoist era - are moving to another hotel and might not return intact to the Peace Hotel when it reopens in time for the 2010 Shanghai Expo.

Cao Ziping, an 82-year-old pianist in the Peace Hotel jazz band, says the aging hotel is certainly in need of repairs. Water pipes were sometimes bursting and leaking during the band's performances, he said. But the band's leader, 85-year-old trumpet player Zhou Wanrong, says he is not sure whether he will return to the hotel when it reopens.

Lu Jiansong, a professor of cultural heritage at Fudan University in Shanghai, says he is "gravely worried" that the renovations could damage the hotel's historical architecture. Shanghai's cultural authorities are too weak to supervise the project properly, and national heritage laws have too many loopholes, he said.

"Financial motivations are causing threats to our architectural heritage," he said. "This project will inevitably challenge the historical value of the Peace Hotel. I really doubt it will meet the standards for cultural preservation."

The 12-storey hotel, originally called the Cathay, was built in the 1920s by British tycoon Victor Sassoon, who lived in the pyramid-shaped rooftop penthouse. Among the guests in the 1930s were actor Charlie Chaplin and playwright Noel Coward, who wrote Private Lives in room 314.

After the Communist revolution, the Cathay was nationalized, briefly turned into an office compound, and then merged with the adjacent Palace Hotel under a new name, the Peace Hotel, in 1956. For many years it was one of only two hotels in Shanghai where foreigners could stay.

The hotel is now owned by state-run Jinjiang International Hotel Management Co., the biggest hotel operator in China. Under the new plan, Jinjiang and Fairmont are setting up a joint venture to renovate and manage the main tower of the hotel - the former Cathay. They'll also add a modern new wing with a spa and meeting rooms. The other tower, the former Palace Hotel, will be turned into an arts centre and a shopping centre for Swatch brand watches, to be managed by Jinjiang and a unit of Swatch Group AG.

"I think it's going to be a huge challenge for Fairmont," said Spencer Dodington, an expert on art-deco architecture who runs an interior design and restoration business in Shanghai.

"Shanghai is full of five-star hotels, but none of them are historic. The Peace Hotel will be the first combination of five-star luxury and historical preservation in Shanghai. It's a big opportunity for Fairmont. If they can pull this off and make money from it, there will be a lot of other opportunities for Fairmont to make a splash in China."

The Peace Hotel has suffered a series of cheap renovations under state guidance since the 1980s, he noted. "So they'll have to demolish a lot of the old renovations. It's going to take a lot of delicate effort. But there's every indication that they're going to do a very thorough and positive renovation this time."

Peter Hibbard, an historian in Shanghai who is regarded as the leading expert on the history of the Peace Hotel, has been retained as an adviser to the renovation project. "This building is a national treasure," he said. "It was the finest hotel in the world, in my view, but it fell into a very poor state of repair. It had really decayed, and it was badly renovated in the 1980s. It's going to be a long process to get this right."

Fairmont is aware of the potential pitfalls, Mr. Sparks said. "We have a strong sensitivity to maintaining and enhancing the historical aspects of our hotels. There's always a bit of tension between that and providing a 21st-century experience for our guests."

As for the challenges of the Chinese hotel market, Mr. Sparks said the key will be Fairmont's partnership with Jinjiang. "We have very well-motivated and well-connected owners," he said. "They're experienced and well-regarded, and they'll navigate the Chinese business world for us."

Fairmont Raffles, a sister company also controlled by Kingdom and Colony investors, is also planning a 3,000-room hotel in Macau, the former Portuguese enclave in southern China that is the casino capital of Asia.