Hotel chains still gung-ho despite slower growth in Asia

(From left) Jeanni Kantono, director, Saphir; Pak Djoni Kantono, chairman, Saphir Group;

David P. Berg, CEO, Carlson Hospitality Group; and James Kantono, director, Saphir Group.
Credit: Carlson Rezidor Hotel Group

DESPITE slower economic growth in the region, and previous bright lights of the industry such as Indonesia, Malaysia and Thailand now deemed as “in trouble” by Political and Economic Risk Consultancy managing director Robert Broadfoot, Asia is still seen as the place to be for hotel investors and developers congregating at this year’s Hotel Investment Conference Asia-Pacific (HICAP) in Hong Kong.
Every other economy in the region, save for India and Vietnam, is having slower growth, Broadfoot pointed out. Malaysia “worried me the most, mainly because of the 1MDB (Malaysia Development Berhad) scandal and its potential fall-out (in the region)”. Thailand was unable to openly discuss issues such as the recent Erawan shrine bombing, while Indonesia’s politics and policies were “atrocious” and “protectionist” to a group of insiders, he said.

But even Broadfoot – a “negative person” by his own admission – said Asia was not one to rule out, considering “re-engaged economies” such as India, Vietnam, Sri Lanka and Myanmar while the Philippines was the country that had pulled itself out of the brink of debt, he said. China remained an important source of visitors – up 31 per cent for Thailand, 46 per cent for Japan and nine per cent for the Philippines despite the shrine bombing and political rows with the latter two.

Hotel players interviewed agreed the climate was getting tougher but were upbeat, underscoring the adage that this industry is most profitable in down times. Japan is where everyone wants to be in but barriers to entry are high due to escalating land, construction and labour costs. But Japan aside, there are a host of other markets hotel chains still want to play in.

“The climate is indeed tougher but we have learnt to absorb ‘troubles’ be it a financial crisis or another disaster and remember, there is always a counter balance. So Indonesia is a bit more of a challenge in 2016, but there are opportunities in Vietnam and the Philippines, plus we can never ignore Thailand, which has proven time and again to be resilient,” said Clarence Tan, senior vice president development-AMEA, InterContinental Hotels Group (IHG).

“Strong brands are more appealing to owners in stressful times than when the market is hot and booming.”

Indonesia and India remain the two markets with the biggest opportunities for Tan, because of the growing middle-class. IHG is growing mostly it’s Holiday Inn and Holiday Inn Express brands in both markets. In Indonesia, it has 16 hotels in operation and a pipeline of 27 hotels which will open in the next five years. In India, it has 23 hotels in operation and 49 in the pipeline.

Tan said he also now has the Kimpton brand to introduce to the region with IHG acquiring the San Francisco-based boutique hotel group last December. “We spent the last nine months understanding its DNA…and we’re targeting to grow Kimpton selectively in the right location with the right business partner.”

Carlson Rezidor Hotel Group announced at HICAP its multi-property deal with Saphir Group which will see the conversion of two Ramada hotels in Bali (Legian and Tanjong Benoa) into a Radisson hotel by January 1, 2016, and two new-build Radisson Red in Legian and Jakarta to open in 2018 and 2019 respectively. This brings to nine the number of hotels it has under development in Indonesia.

A Radisson Red will also open in Mohali in Chandigarh, India, by 2017. A new-built, it is part of a multi-use development comprising retail, offices and residences. The deal is part of its agreement with Bestech Hospitalities to develop 49 Park Inn by Radisson hotels in north and central India, which has now been revised to include Radisson Red.

Thorsten Kirsche, president-Asia Pacific, Carlson Rezidor Hotel Group, firmly believes Asia-Pacific will remain in the centerstage while Europe stagnates. “It is such a large market. Indonesia has a huge task to reposition its infrastructure, investment, legislation – progress cannot be overnight for such a huge land mass with 260 million population. Same with India. People underestimate the time it takes to do this. This is part-and-parcel of being in emerging markets.”

Aside from India and Indonesia, Kirsche also wants to make “a big push into Australia” next year, saying the group in “under-represented” there. He said there was potential for mid-scale hotel expansion and was evaluating how and where to penetrate the chain’s Country Inn & Suites brand into the market.

And in a show of confidence for Asia, Hard Rock Hotels has for the first time appointed a senior vice president hotel development (Asia & India), Wy Joon Leong, to expand its footprint in the region. Only five Hard Rock Hotels are in operation in Asia, but projects underway include the first Hard Rock Hotel in China in Shenzhen, a second in Haikou and the first in India in Goa.

Executive vice president and chief development officer-hotels, Marco Roca, has set for himself a target of 100 Hard Rock Hotels worldwide by 2020, saying that with the new senior vice president for this area, Asia will account for a higher percentage of that figure. He aims for the key gateway cities and key resort areas such as the Maldives.

Likewise, Mövenpick Hotels & Resorts is further pursuing growth in Asia by creating a new position of senior vice president Asia which has been filled by Andrew Langdon who spent the last seven years as EVP of Jones Lang LaSalle Hotels and Hospitality Group in Asia.

The chain has eight hotels in Asia, four in Thailand, while the others are in Singapore, Vietnam, China and the Philippines. It is aiming for at least 20 hotels operating in Asia by 2020. Several projects are already in process and by the end of 2016, it plans to be present in Indonesia, Malaysia and Sri Lanka.

Sponsored Post