Do hotel chains still see Asia as a boom area?

Opinions differ on how economic and other woes affect future
Asia is still seen as the place to be for hotel investors and developers, despite slower economic growth in the region.
The hotel industry not long ago saw countries like Indonesia, Malaysia and Thailand as bright lights, but the nations are now described as “in trouble” by Political and Economic Risk Consultancy managing director Robert Broadfoot at this year’s Hotel Investment Conference Asia-Pacific in Hong Kong.
Every other economy in the region, except India and Vietnam, is having slower growth, Broadfoot pointed out. But Malaysia “worried me the most, mainly because of the 1MDB [Malaysia Development Berhad] scandal and its potential fallout.
Thailand was unable to openly discuss issues such as the recent Erawan shrine bombing, while Indonesia’s politics and policies are “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 is a country that has pulled itself out of the brink of debt, he said. China remains an important source of visitors for the region.
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, InterContinental Hotels Group’s senior vice president for development in AMEA.
“Strong brands are more appealing to owners in stressful times than when the market is hot and booming.”
Thorsten Kirsche, Carlson Rezidor Hotel Group’s president for Asia Pacific, firmly believes that Asia-Pacific will remain centre-stage 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.”
Kirsche also wants to make “a big push into Australia” next year, saying the group is “under-represented” there. He said there was potential for midscale hotel expansion there and is evaluating how and where to take the chain’s Country Inn & Suites brand into the market.
TTG Asia

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