A NEW report has revealed that business events contributed A$23.1 billion (US$18 billion) to the Australian economy in the last financial year, but industry insiders say the country can still do better.
According to The Value of Business Events to Australia, 37 million people attended more than 412,000 business events held across Australia, generating 179,357 jobs.
Released by the Business Events Council of Australia (BECA) at AIME, the report provided “compelling evidence” of the direct and indirect impacts of business events on the Australian economy, said BECA chairman Matt Hingerty.
Sharing the study findings during a press conference, Karen Bolinger, CEO of the Melbourne Convention Bureau, said: “Business events is a quiet achiever but this new report from BECA, with support from the business events industry, presents a very strong business case to government and industry stakeholders to continue to increase its support and investment in the sector.”
Elaborating on BECA’s next actions following this report, Hingerty said: “Going forward, we will take this report and go to the government to ask for money. We are targeting two sectors that we will be concentrating on for the next few years – health and medical, food and agribusiness.
“For example, we have the new medical research fund announced last year. It could be massive for our sector when you think of the spin-offs we can have, like exhibitions and conventions…and that is an insight on where we are heading for (when we approach the government),” he said.
Yet, Australia has slipped from 13th in 2012 to 16th in 2013 according to ICCA’s yearly rankings.
“The report gives strong evidence of the power of our industry, however, on a world stage, we are losing market share. We believe that business events sector is the ‘sleeping giant’ of the Australian economy. With an end to the mining boom and the decline in manufacturing, the sector has the ability to be a leading force for Australia’s future prosperity,” said Hingerty.
Emphasising the need for government support, he added: “(This further shows) that the business events industry and governments must work together to leverage this great opportunity before us.”
FACED with challenges like a prolonged economic downturn and consolidation in the hotel sector, Banyan Tree Hotels & Resorts (BTHR) is biting the bullet and restructuring the company to be fit, a process that began late last year.
The Singapore-listed parent company is also making large write-offs for doubtful debts such as delinquent payment of management fees, in order to face an uncertain economic environment with firmer footing.
A Project Zero late last year saw the group examining legacy costs, processes and structures with a view towards being flatter in hierarchy, more productive and agile. A Project One, currently on-going, sees the group rebuilding new structures.
Ho: Flatter hierarchy for Banyan
But the restructure is not just about cutting costs, but building the right platform that will enable BTHR to swim in new currents, according to Banyan Tree Holdings’ chairman, Ho Kwon Ping.
Corporate roles that are traditionally standard for a chain – regional vice presidents of operations, and a corporate vice president of sales and marketing – have been eliminated and replaced by new positions. Operational clusters of hotels based purely on geography have also been re-structured to reflect clusters by common ownership of hotels.
Raini Hamdi talks to Banyan Tree Holdings chairman Ho Kwon Ping about how he’s doing it.
Why Project Zero?
In the past few years our hotel management business has grown reasonably, with steadily rising management fee income. But corporate expenses grew even faster, so that the operating margins of the management company declined. This is like a hotel which enjoys increasing revenue but declining GOP margins. It is neither acceptable nor sustainable and the GM would have been sacked.
Even though we currently operate 40 hotels and have another 20 in the pipeline, we need to find increasing economies of scale. After all, with the recent spate of hospitality consolidations, the massive global giants are going to be even leaner than before. What pressures will that impose on the small guys like us?
We are in a unique dilemma: we are neither as small as we used to be, nor as big as we should be, to justify our global structure. We also do not have a “sugar-daddy” parent-owner in the form of say, a big property developer, conglomerate, or private equity, which is quite common in Asia. For example, brands like Langham, Rosewood, Six Senses, Alila, Pan Pacific, Meritus, Mandarin Oriental, Shangri-La, are all owned by larger, very deep-pocketed conglomerates or private equity. We are one of a few independent brands.
So late last year we launched Project Zero, which was to literally start from Zero, to examine all the ways we did things, with a view towards being flatter in hierarchy, more productive in people, and quicker to respond to market trends.
Then we launched Project One, which is to build new structures on the same foundation. The tagline for Project One is ‘One Team, One Goal’. It may sound (cheesy) to people but in our case, our hotel management structure was too fixated on itself and not providing enough synergies for our other ventures in property sales, spa and gallery operations, holiday clubs, etc.
What’s a good example of a legacy cost, process or structure?
Example one: A few years ago, we decentralised all support functions across our various BU’s (Business Units) so that each BU, from spa to gallery to hotels to property sales to architectural/interior design, all had their own relatively independent HR and Finance functions. This was to make each BU more accountable in theory, but it also resulted in an unnecessarily large number of senior managers and non-optimal use of people. So now we have recentralised group support functions to become Group Shared Services.
Example two: We organised our hotels entirely by geographic region, but never by ownership status. In an increasingly globalised world with more capable and assertive owners (including our own asset managers), it makes sense to organise by ownership status also. Our Clusters now partly reflect this.
Interesting that you got rid of VP Ops – why is it not needed and how is a chain better served with new positions?
We need a more de-layered hierarchy and regional VPs which constituted an entire layer of decision-making have been replaced by regional directors of operations who coordinate matters between the field and HQ, but are not a separate, decision-making hierarchy or authority unto themselves. Corporate HQ and the GM in the field now deal direct, but facilitated by regional directors of operations.
Will more cost-savings occur at corporate? Where are the other big areas?
I hope we’ve taken care of the big areas and we will digest the changes made before we do more.
One point to note, which we are proud of, is the fact that in the Project One exercise, 18 people have been promoted or have additional concurrent appointments. All of them are internal promotions, demonstrating a key Banyan Tree value, which is that we try to develop our own talent.
There’s less emphasis on marketing and more on sales and business development? What’s the thinking there?
No, not at all a reduced emphasis on marketing. We’re simply delayering. In recent years and in the digital economy, sales and marketing have become very complex disciplines in themselves. Because sales is the lifeblood of a company, we have created a VP Sales role to reflect its importance. Marketing will now report directly to the MD.
What are the challenges specific to BTHR today and, apart from the restructure how are you reinventing the business?
I would be arrogant and presumptuous to say I’m re-inventing the business. Re-invention requires a vision that I don’t think I have. I only try to see some future trends and be prepared for them.
The operating environment is not getting easier for small, independent management companies, with pressure on fees, rates and occupancies, particularly in China. As a response, we launched two more brands to broaden our market reach and we will spend some time to see whether this has traction. We also ventured more into hospitality-related property development and will need time as well to digest this business.
But of course, as we always tell our associates, change is the only constancy. Every five years or so, we need to make changes – some big, some small – to remain relevant.
INDIA’S Ministry of Tourism has announced that six more countries are on track to be granted e-visa services this year, namely China, Malaysia, the UK, Spain, France and Italy.
The six countries were recommended by the tourism ministry, and the Ministry of Home Affairs is expected to approve this soon, TTG Asia e-Daily understands.
The US received the biggest share of e-visas at 24.3 per cent, followed by Russia at 15.1 per cent, South Korea at 11 per cent, Ukraine at 8.2 per cent and Australia at eight per cent.
THE government of Myanmar’s Mon state has green-lighted a local company’s plans to build a US$12 million hotel and beach resort zone in Ye Township, with work on the first resort to begin this year.
Aurum Company, which was awarded the government contract, will construct the first resort along a 12.9km stretch that starts at Ka Byar Wa Village in the township and reaches down to the mouth of the Ma-kyi-chaung stream.
Besides accommodations, Aurum has announced it will carry out local development projects to upgrade road infrastructure and build healthcare services, libraries and markets, etc.
Other long-term plans include inviting more domestic and foreign investment to the area, and nurturing nature tourism, environmental protection and marine research schemes, ethnic literature and cultural development.
IN A marriage between two of Asia-Pacific’s established hotel companies, Thailand’s Dusit International and Prince Hotels Japan have tied up in a marketing alliance.
Aiming to grow both companies’ reach in the region and beyond, the partnership, signed last week in Bangkok, will allow each side to benefit from the other’s local expertise and sales and marketing resources, while providing a platform for cross-selling, marketing and promotions.
Masanori Kobayashi, president of Prince Hotels, which is Japan’s largest hotel chain, commented in a release: “We expect that the synergies between Dusit, a company that delivers the ‘Gracious Hospitality’ of Thailand, and Prince Hotels which fosters the spirit of Japanese omotenashi hospitality, will successfully enhance international awareness of both brands.”
Likewise, Chanin Donavanik, managing director and CEO, Dusit International, said: “We are pleased to enter into his partnership with Prince Hotels as Japan is a key feeder market for Dusit across the group. This is especially significant as we prepare to launch our highly anticipated Dusit Thani Guam Resort in 2Q, the tallest building on the island and the newest resort to open since 1999.”
Dusit has long been keen to tap the Japanese market, which is among the top three inbound markets for Thailand and Dusit Hotels and Resorts. The hotel group established a Japanese centre at its Bangkok headquarters in 2002 and opened a regional sales office in Tokyo in 2013.
Prince Hotels operates some 51 hotels internationally, with properties also in China, Taiwan, Malaysia and Hawaii, and runs a further 28 golf courses and 10 ski resorts.
SOUTH Korea is plugging medical tourism in its new tourism offensive throughout Asia, hoping to leverage the popularity of K-pop and the relative affordability of its services.
The Korea Tourism Organization (KTO) last Friday went on a marketing sortie to the Philippines for the first time, bringing a host of medical tourism suppliers.
One supplier, Youngjin Kwon, senior researcher, Daegu Medical Tourism Promotion Institute, said one of KTO’s aims in visiting Manila is to network and find a local travel agency partner.
“We have no partner agency in the Philippines although we do in other countries. We don’t have that many Filipino clients yet but we do get a lot of foreigners, including those from China, Canada, Vietnam and Cambodia,” she said.
KTO’s ramped-up approach towards in this segment can be seen through the recent launch of www.visitmedicalkorea.com and its new slogan for medical tourism: Let’s talk beauty and fun: Trust Korea, the new heart of medical tourism in Asia.
“We want to attract more people in Asia and we are doing this through the new medical tourism website, marketing and promotions, leveraging the popularity of K-pop culture,” said Jiwan Kweon, English manager, The Alliance of Korea Medical Tourism, which has 78 hospitals and 38 travel agencies as members.
She also observed that medical costs in South Korea, while higher than Thailand’s, are slightly lower than Singapore’s. According to KTO, the same service costing US$100 in South Korea would be priced US$75 in Thailand, US$105 in Singapore, US$149 in Japan and US$338 in the US.
KTO statistics show that medical tourism grew at an annual rate of 50.6 per cent to welcome 211,218 arrivals in 2013. South Korea aims to have a million medical tourists by 2020. Major markets are China, the US, Russia and Japan, while South-east Asia takes up only 4.8 per cent of market share.
KTO has conducted similar showcases in Russia, Vietnam, China and Japan, and will visit Indonesia and Malaysia in March.
THE Kuala Lumpur City Hall tourism unit will soon introduce helicopter city tours targeted at high-end tourists keen on getting aerial views of the Malaysian capital and its surroundings.
In collaboration with a local helicopter service company, the rides will take off from the Lake Titiwangsa Kuala Lumpur heliport from mid-March, said Noraza Yusof, head of tourism, tourism unit at Kuala Lumpur City Hall.
Customers may choose from 15-, 30- or 60-minute rides. The first two cover Kuala Lumpur City, Batu Caves, Bukit Lanjan, Petaling Jaya and Subang, while the 60-minute ride covers Kuala Lumpur City, Batu Caves, Bukit Lanjan, Subang, Sunway, Petaling Jaya and Bukit Jalil.
Prices start from RM250 (US$68.50) per person for a 15-minute ride and RM880 per person for a 60-minute ride. The helicopters can accommodate groups of up to four or six passengers, dependent on the chosen vehicle.
Adam Kamal, deputy president 2 of the Malaysian Inbound Tourism Association, said: “This is a good new service to have as it gives an additional optional activity for high-end tourists in Kuala Lumpur. The location is also good as it is centrally located near five-star properties, which makes it convenient for visitors.”
Arokia Das, senior manager at Luxury Tours Malaysia said the helicopter tours are a good alternative to ordinary city tours by bus.
Forward bookings can be made by contacting pelancongan@dbkl.gov.my, and reservations should be done at least three days in advance.
PERFORMANCE in Phuket’s hotel market declined across the board last year as a direct result of the May coup d’etat and an overreliance on mass tourism, new research reveals.
The Phuket 2014 Hotel Market Update report from C9 Hotelworks, released this month, shows year-on-year hotel performance in Thailand’s second largest destination after Bangkok dropped in all sectors.
Occupancy contracted by six percentage points, spurring a nine per cent contraction in RevPAR, while average room rates fell by just one per cent.
Nevertheless, the fact that the destination was able to recycle demand during the last four months of the year was hailed as a “silent victory” by Bill Barnett, the report’s author and managing director of C9 Hotelworks.
He told TTG Asia e-Daily: “Phuket, much like Bali, punched the ticket and took the ride on mass tourism…it’s impractical to believe that the trend of sustained growth could continue unabated.”
Meanwhile, the Tourism Council of Thailand projected last year that Thailand could see annual arrivals surge to 40 million, up from about 25 million, within 2018. Such growth would necessitate dependence on volatile mass markets, something which played a factor in Phuket’s poor performance last year when the Russian market collapsed, warned Barnett.
Last year, growth from Phuket’s top two source markets of China and Russia fell from respective four-year averages of 53 per cent and 39 per cent to a yearly rise of just six per cent and four per cent.
Barnett said that geopolitical issues are creating region-wide volatility and that “the toxic triple threat of currency depreciation, travel warnings and the diminishment of resource driven economies has to take a toll on travel”.
“You cannot bury your head in the sand and say, ‘China will save us’, given that every other challenged tourism market in Asia is doing the same thing. Let’s not forget China is vulnerable to broader issues.”
Arrivals from Taiwan plummeted 56 per cent last year, as did the Norway, South Korea and India markets. But Phuket saw growth from lucrative source markets such as Hong Kong (20 per cent), the UK (17 per cent), Japan (nine per cent) and Singapore (five per cent)
FORMER Diethelm Travel Group CEO, John Watson, is back in the industry as CEO of Trails of Indochina, replacing Matt Masson who is relocating to Singapore.
Saying he is “so pleased to be back to the industry with such a fine company”, Watson said he would focus on “continuing to build on the firm foundations within the organisation and developing new markets and income streams”.
He added: “I am hugely impressed with John’s (Tue Nguyen, founder and owner of Trails of Indochina) ambition and drive and look forward to playing my part in leading and expanding the business.”
Watson is based in the agency’s head office in Ho Chi Minh City.
Trails of Indochina operates in Cambodia, China, Hong Kong, Indonesia, Laos, Myanmar, Singapore, Thailand and Vietnam.
Better known as a historical destination, Xi’an has woken up to the potential of luxury travel thanks to a fresh crop of posh hotels in the city
The growing presence of international luxury hotels has added a glamorous tone to Xi’an in China’s Shaanxi Province, which for decades has been drawing history buffs since the 1974 discovery of the terracotta army that forms part of the mausoleum of China’s first emperor.
Li Shuyan, MICE and general manager of Xi’an-based China Travel Service Head Office Northwest, has seen the changing face of Xi’an in the last 15 years. “Back then, foreign tourists who came to see the terracotta army stayed in the city centre where most hotels were. They had to wake up very early to make the long journey to Lintong where the terracotta pits are. Their main concerns were a clean bed and food that would not give them diarrhoea,” he recalled.
“But ever since international hotel chains like Shangri-La, AccorHotels and Starwood entered the market with their five-star products, the demographic of travellers has changed. Xi’an not only received more foreign tourists, it also welcomed wealthier ones.”
Today, numerous prominent hotels dot the city’s map, some in the commercial centre and others close to key tourist landmarks.
Agreeing that Xi’an is “increasingly on the radar of the luxury traveller”, Hajar Ali, founder of luxury travel company Urbane Nomads, said: “There is a correlation between the opening of luxury hotels and a destination becoming popular with the well-heeled. Xi’an has its history going for it but with the opening of new luxury hotels, it has become an easier choice for high-end travellers.”
Hajar observed that longhaul travellers tended to go for longer stays and relax at luxury hotels and resorts in Xi’an at the end of a lengthy trip to “pace the itinerary”, while shorthaul visitors from Hong Kong and Singapore favoured Xi’an as a stopover en route to Tibet.
Tourism players noted that the city’s luxury market is dominated by corporate travellers and special interest leisure groups.
Steven Wang, director of sales and marketing at The Westin Xian revealed that 85 per cent of the hotel’s guests are corporate and the rest leisure.
“Business travellers and meeting delegates have bigger budgets,” said Wang, adding that individual travellers and small-size groups on tailored programmes that focus on history, food or nature made up the majority of his leisure clientele.
Li opined that Xi’an’s booming industries, fuelled by Chinese president Xi Jinping’s commitment to developing cities on the Silk Road trading belt for international commerce, is luring wealthy businessmen to the destination. These travellers would extend their trips for pleasure, requesting for special activities such as a session with a local archaeology professor who can explain the history behind historical finds.
Diethelm Travel (China) is hence rolling out “extraordinary programmes” to differentiate itself from the market, said the company’s general manager, Julia Shi, general manager of Diethelm Travel (China).
The DMC can take visitors into areas that are off-limits to regular tourists, such as the reconstruction site within the Mausoleum of the First Qin Emperor, where archaeologists fix broken terracotta statues, as well as special vaults in the Shaanxi History Museum and Xi’an Museum. They also can offer unique activities such an archaeological digging experience at The Yangling Mausoleum of the Han Dynasty or a visit to Fei Yuan Private Musuem, which carries a large collection of porcelain and rubbings of stone tablets done by famous Chinese calligraphers.
However, Jean Philippe Jacopin, general manager of Shangri-La Hotel, Xian cautioned against over-reliance on Xi’an’s heritage to lure travellers. He said: “These tourists usually stay for only a few days and they rarely return. Xi’an needs to cooperate with other (attractions) to improve product diversity which will then entice travellers to book longer stays (and return).”
Jacopin suggested that more eco tours, spa experiences and golf games should be promoted to enhance travellers’ experience, and urged trade players to join forces in destination marketing.
The good news is that fresh products are emerging in and around Xi’an. One of Singapore’s leading outbound agencies, Dynasty Travel, has observed stronger interest in Xi’an over the last five years due to new attractions such as the Tang Dynasty Music and Dance Show at the Shaanxi Song and Dance Theatre, and natural wonders like Hukou Waterfall and Mount Hua.
The sleepy district of Lintong, about 50 minutes by car from Xi’an, is also stirring with recent tourism developments including the year-old Angsana Xi’an Lintong and its adjoining Angsana Hot Spring Xi’an Lintong, art museums, a park and an outlet mall for big fashion labels.
Jerry Mong, Angsana Xi’an Lintong’s general manager, believes that his property is key to advancing Xi’an’s luxury appeal.
He said: “We are changing travellers’ mindsets by reminding them that Lintong used to be a favourite retreat of Tang Emperor Xuanzong and his consort Yang Gui Fei. They used to luxuriate in Lintong’s hot springs, and we are offering travellers the chance to do the same at our hotel.”
Angsana Xi’an Lintong has been attracting ladies of leisure from other Chinese cities and Taiwan, who would come as a group of friends for spa retreats.
Meanwhile, tourism players have agreed that air access improvement is top priority for Xi’an.
“Xi’an has fewer direct international flights compared with first-tier cities, which makes it less convenient for international travellers to visit,” said Wang.
While Dynasty Travel has seen a two-fold increase in bookings to Xi’an from 2014 to 2015, thanks to new flights by Tigerair (Singapore-Xi’an, launched in May 2014) and Xiamen Air (Singapore-Hangzhou-Xi’an, launched in March 2015), its spokesperson Alicia Seah noted that they were for package tours.
“New LCC links have little impact on luxury demand. High-end travellers prefer flying by full-service carriers even if it requires a transit in another city,” she said.
This article was first published in TTG Asia, February 8, 2016 issue, on page 15. To read more, please view our digital edition or click here to subscribe.
