Industry leaders from Radisson, H World Group International and Club Med have said they are eyeing expansion in Asia, boosted by its massive user base and rising middle classes.
Elie Younes, global chief development officer at Radisson, told the audience at IHIF Asia that “APAC is as important, if not more important, than other regions such as EMEA simply because of the opportunity that APAC represents”. He explained: “The region has the largest population overall – more than half the world is in Asia. We currently have more hotels in India than we have in Asia, but our pipeline for Asia is larger than our pipeline for EMEA.”
He said that the landscape in Asia “is very similar to EMEA in some respects – it’s very heterogeneous, with some very mature markets – Hong Kong, like Paris and Milan, is very institutionalised. You also have emerging markets where the investor profile is quite different.” He underlined that Radisson’s approach in Asia would remain “asset light”.
Tangible benefits
Several years ago, the Europe-founded business moved under Asian ownership as a Jin Jiang International Holdings-led international consortium took a majority stake in the firm. Younes said that the takeover had had “tangible and intangible benefits”. “The intangible benefit is that it improves our cultural diversity,” he noted. “We are a European business which is now Asian owned, which translates into an ability to be more global. We feel local in Asia, we feel local in Europe, and everywhere we go.” He added that the firm’s familiarity with Asia enabled “management to make decisions based on long-term benefits for the business”. Other tangible benefits, he said, included “having more access to Chinese customers - there are some 160 million members in Jin Jiang’s loyalty programme”.
Despite the group’s size, he said that the firm focused on “eliminating all the corporate nonsense when it comes to brand positioning, decision making… common sense prevails”. He said that they were focusing on growing seven or eight brands in the region which added simplicity. When inking contracts with landlords, he said that the group preferred “contracts which are tailor-made to each owner”, offering everything from franchising to traditional management contracts, joint ventures and co-planned business models. “We are probably the only major global brand that does that,” he said.
Looking forward, he said that growth in the region would focus on upscale and upper upscale, but that lifestyle was also an expanding segment with key openings planned for the coming years. It would also grow its serviced apartments offering within the existing stable of brands.
Strong base
Another major group exploring expansion in Asia, H World Group International, was also leading from a “strong base”, according to Murphy Zhu, the firm’s president for Asia Pacific.
“Today we have more than 10,000 hotels in operation, with more than 3,000 in the pipeline,” he said. “That’s over a million rooms across 18 countries across 31 brands; we are particularly rooted in China.” The firm completed its rebranding to H World earlier this year, also transitioning its European business, Deutsche Hospitality, to the new name. In 2019, the group notably acquired the parent of Germany’s Steigenberger Hotels for around €700 million, securing some 130 leased and managed hotels in the process.
Zhu said that the firm’s next goals included expansion into southeast Asia, with a focus on six brands, “building on the legacy and strength of our European brands and exporting our Chinese brands”. He said that the latter was inspired by the “massive, moving population of outbound Chinese travellers”.
Zhu said that H World’s strengths included not only its branding and technological capabilities, but also its supply chains. “Through our 10,000 hotels, we are very much focusing on bringing down costs for the owners, taking our combined buying power when securing construction materials and other supplies” he said.
All-inclusive
Another firm eyeing expansion in Asia is France’s Club Med, which is determined to bring its take on “all-inclusive” to the region. Gregory Lanter, the firm’s chief development & construction officer, said that “all-inclusive” travel was relatively rare in Asia, not due to a lack of demand, but a lack of exposure. Club Med, he said, which has “75 years’ experience providing all-inclusive” had experienced a shift in the past two decades towards a more upscale take on the amenity trend. “With a luxury approach, all-inclusive is not the end goal, but the means to make lives easier,” he explained. “Upscale all-inclusive is valuable if it can be multicultural and attuned to families.”
With a number of brands such as Marriott now exploring “all-inclusive” in Asia, Lanter said that market expansion would be good for the concept as a whole. “Today, all-inclusive in Asia is just 3 percent of the global all-inclusive market,” he said. “Club Med is behind about 30 percent of the Asian all-inclusive market.” He said that more market players would help diffuse the idea. “We need to explain the difference between simple all-inclusive, with room, food and beverages, to something that represents an elevated experience, which creates emotions for your guests.”
Lanter said that Club Med’s openings in the regions had demonstrated the appetite for the business model. All three of the brand’s launches in the mountainous area of Hokkaido had proved profitable, bringing “all-inclusive” to the world of Japanese skiing. “The all-inclusive model has double the properties’ turnover,” he said. “We have been able to offer our guests a seamless experience of a ski resort, when usually going skiing is the oppositive of seamless.”