DESPITE signs of Asia’s economic growth slowing and an average of three to four per cent room supply growth in the next five years throughout the region, Asia remains the focal point of hotel development, with destinations such as Myanmar and the Philippines drawing higher interest than ever before.
Christopher Nasseta, president & CEO of Hilton Worldwide, said that demand growth was “much, much greater” than the supply growth, pointing to the region’s massive population, its growing middle class and huge infrastructure investment.
“It’s the most powerful demographic story on earth for travel and tourism,” he said during a panel at the just-concluded Hotel Investment Conference Asia-Pacific (HICAP) 2012. “We remain super confident in Asia in the short, medium and long term.”
Richard Solomons, CEO of InterContinental Hotels Group, agreed. “It’s a long-term business. You don’t build a hotel for tomorrow but 20, 40, 50 years, so you got to look ahead…But there will be winners and losers, in terms of cities, brands, etc. We have to make the right choices,” he said.
In terms of countries, the Philippines and Myanmar are evidently on the radar of some CEOs and developers. Gerald Lawless, president and CEO of Jumeirah Group, picked the Philippines when asked where he would put his money.
“The Philippines is at last getting some kind of political stability, there is dedication to rid corruption and the recent peace agreement in Mindanao is pretty significant. I think the Philippines is a country long time coming, especially when you also consider the wealth of talent (Filipino hotel staff) in Dubai and the rest of Asia,” he said.
Daniel Corpuz, Philippine Department of Tourism undersecretary, said a US$25 million global tourism campaign would be rolled out, and the Philippines is working to improve accessibility, institutional governance and human resource. There are currently 96,000 rooms, with 14,000 rooms in the pipeline that will be operational by 2014 “and more rooms are needed, especially in the countryside”, he said.
But Christopher Pockette, president of Tabor International, in response to a question from the floor on investing in the Philippines, said: “The Philippines is like a promised lost. I don’t mean you can’t get it back, but it’s 12 families controlling the wealth and just look at the number of Filipinos working here (Hong Kong, where they can’t get jobs back home).
“It has a vibrancy, but it will take time.”
Meanwhile, a packed session on investing in Myanmar concluded that the destination was not a one trick pony. But high land costs and its yet non-conclusive new foreign investment law were among concerns of hotel investors.