SYDNEY—During the opening session of the Australia, New Zealand & Pacific Hotel Industry Conference, global hotel leaders shared viewpoints on critical issues affecting hotel business.
Top of mind was the impact of the global financial crisis on Australia and the Asia-Pacific region.
One of the good things that came out of the economic maelstrom is owners and operators became closer and worked through the challenge together, said Jan Smits, CEO Asia Australasia, InterContinental Hotels Group.
“There’s no point in going back to the business model of three years ago,” added Christopher Bush, executive VP, Canyon Equity.
Some markets saw revenue per available room levels drop 40 percent or more, Smits said.
“I don’t think any of us in the Asia/Pacific thought the downturn would be so short,” he said. “Some of us thought maybe we would drive RevPAR faster out of the downturn. Maybe it’s a matter of keeping pricing more flexible before a downturn so you can have it coming out.”
Francis Killroy, Jumeirah Group’s VP of development for Asia/Pacific, agreed.
“The recovery in Asia/Pacific has surprised quite a few people,” he said. “Jumeirah is now actively looking for ways to source funds. We do know there are going to be buying opportunities. Even with an asset-right strategy, the industry will present multiple arbitrage opportunities.”
Third-party providers and the financial crisis
“In every downturn these third-party providers increase in volume,” Smits said. “At the same time, we found it’s very market-specific. Other areas of the Asia/Pacific on our own channels were way up, saw a rate premium.
“Branded hotels need to be very clear on what our brand proposition is and the web channels need to be up to date and have the best offers on these. Then you’ll get more share,” he said.
Hoteliers now are seeing the third-party provision is part of the online landscape, Killroy said. “It will never go away. You’ve got to work with them if you want to expand, but you’ve got to manage them.”
In some source markets third party providers are important; in others, it’s not, said Patrick Imbardelli, president and CEO, Pan Pacific Hotels Group.
“We’ve seen in China you can partner with (Ctrip.com) who wants to own the traffic, not the customer, which is a lot more flexible,” he said. “Whilst we say that … 20 million of the trips out of China are being booked on Ctrip. … You select the brands you want and then we’ll get you a deal is what they’re saying. China is just a little bit different.”
Innovation
“Technology is leading the way. We just don’t know where it’s leading us,” Bush said. “All of a sudden there’s an iPad. … Hotels are using it in lots of different ways—check-in it doesn’t matter where or who. If things have been handled correctly on check-in, it’s almost a non-issue at check-out.”
Pan Pacific’s Seattle property is testing a 24-hour room that challenges the standard 3:00 p.m. check-in and 11:00 a.m. check-out times, Imbardelli said. “We’re trying to find a price sensitivity, a premium that customers will pay for that. We’re really thinking about out of the box for what the customer needs.”
Smits said there is a whole generation that wants personalization—from music to color palette. “It’s not that expensive just to start thinking about it. … IHG is testing the iPhone key lock. … A lot of it is how you watch movies in rooms. But old hotels that haven’t got the infrastructure, it is going to be a challenge. For anyone opening a new hotel—you need to own your own backbone, not a third party.”