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AHICE 2023: RIPE FOR GROWTH
from HM June 2023
Ripe for growth
NO TOPIC WAS OFF LIMITS AT THE 2023 ASIA PACIFIC HOTEL INDUSTRY CONFERENCE AND EXHIBITION (AHICE) WITH LOCAL AND INTERNATIONAL LEADERS TAKING TO THE STAGE IN FRONT OF A PACKED HOUSE. RODERICK EIME REPORTS.
It was standing room only from the word go at the Adelaide Oval for the 2023 Asia-Pacific Hotel Industry Conference and Exhibition (AHICE), which took place on May 3-4.
Addressing AHICE delegates, South Australian Minister for Tourism and Multicultural Affairs, Zoe Bettison, enthusiastically talked up the impressive growth of her state. “South Australia is the place to be,” she said.
On the back of over 90% hotel occupancy and AU$8.3 billion flowing into the state through a resurgence of interstate and international visitors, “We’ve seen the highest ever 12-month tourism spend,” she said, “This reinforces that SA really knows how to put on an event.”
It was also confirmed that AHICE 2024 will also be held in Adelaide.
In an Industry Outlook session, Matthew Burke of STR acknowledged that the surge, “could well be the unwinding of pent-up demand” he was still bullish about the outlook. “Now has never been a better time to open a hotel,” he concluded.
Get ready for some reality plugs to be pulled.
- Gilda Perez-Alvarado, JLL
In conversation with James Wilkinson, IHG’s Kenneth Macpherson was keen to stress the importance of sporting event driving travel, noting “assets must complement the events.”
The slow return of the Chinese market and the prohibitive cost of airfares was mentioned while greater optimism was held for Thailand which had demonstrated a greater rebound performance.
Howard Kemball of KCom moderated what was playfully dubbed the “Billionaires Panel” with party hats and colourful leis denoting a sense of cheerful optimism. Leading the festive theme, was Dr Jerry Schwarz reflecting his motto of flexibility and personalisation.
Jeff Wagoner from Outrigger Hospitality Group discussed the prospect of returning to the Australian market, as well as a recent entertainment coup with Cirque du Soleil beginning a residency at the Beachcomber Resort at Waikiki next year.
Minor Hotels CEO, Dillip Rajakarier, revealed the business is quickly outgrowing its modest moniker.
“We don’t aim to be the biggest hotel group,” Rajakarier confided, “but the most profitable. Some of the big brands don’t care about owner returns, just planting flags.”
On the question of the Anantara brand coming to Australia, Rajakarier made his thoughts known. “Sydney would be ideal because it attracts the best rates. But we need to take our time and get the brand in the right place.”
Wyndham’s Joon Aun Ooi introduced developing brands: Echo Suites for the extended stay market and Alltra Resorts for the all-inclusive sector.
“What is also refreshing is that 20% to 30% of all our new deals are with repeat owners,” he said, underscoring his confidence in Wyndham’s ability to satisfy their clients in every respect.
South Australian Senator Don Farrell, Federal Minister for Trade and Tourism and Special Minister of State, highlighted the importance of employment in the tourism sector citing the fact that “23% of all new jobs in the Australian economy were in tourism, up 14% from 2019”.
“The government will work to increase the occupancy rate, “he promised, noting “20,000 extra rooms are coming to SA.”
In another Q&A, Rajeev Menon of Marriott was proud to announce that his company would be opening two hotels a week in 2023 as part of “a decades-long growth story”, before Paul Salter elaborated on the AU$130 million Spicers acquisition from Flight Centre founder, Graham ‘Skroo’ Turner late last year.
Girish Jhunjhnuwala, the founder of Ovolo Hotels, eschewed the notion of loyalty programs. “We’re all about the enhanced customer experience. We own our assets and wish to grow cautiously.”
On the question of the Hong Kong market: “Hong Kong is always good at bouncing back.”
On Day 2, Pro-Invest’s Ron Barrott and Jan Smits discussed the dynamic group’s current plans and outlook.
Both were understandably pleased with the recent exquisite Art Deco Kimpton Margot opening in the Sydney CBD in conjunction with IHG. “Kimpton has all the benefits of 5-star without the formality,” said Barrott.
On the asset managers’ panel, moderated by Baker McKenzie’s Roy Melick, it was acknowledged that asset managers have had a hard time of it these last couple of years enacting Covid-driven efficiencies on top of their usual, arduous duties.
THSA’s Rodger Powell, never shy in his predictions, observed that “the market has no more tolerance for paying more for less” with regard to these Covid-driven practices.
Appearing by video link, BWH Hotel Group and World Hotels’ Ron Pohl observed that while recovery had been stronger than expected and producing record returns in some markets, “rates and occupancies will soon stabilise”.
He went on to say that mid-scale, extended stay brand “Home” has proven popular with Americans and that the emerging Gen Z market was pushing new development in brands like Aiden (part of BWH).
Gilda Perez-Alvarado of JLL came all the way from Miami for her Q&A and was quick to point out that “we’ve been in a synthetic environment for the last couple of years and to get ready for some reality plugs to be pulled”. This reality is likely to manifest in more sales as more players and more capital become active in the sector.
Antony Ritch, CEO of TFE Hotels, offered the perspective of a hotel owner and operator. Whether owning, leasing or partnering, the key is
The market has no more tolerance for paying more for less.
- Rodger Powell, THSA
always the return to owners and moving with shifts in the consumer profiles is key to both building and maintaining loyalty, he explained.
Michael Brown, CEO of Travel and Leisure Co. touched the company’s aim to “fill the white space outside the brand” by moving into new sectors beyond the traditional timeshare model of Wyndham and to allow unrelated brands to enjoy the benefits of the hospitality industry.
“We have hopes for South East Asia and Japan with lessons mastered in the Caribbean,” he said. And as for timeshare in cruising? “Stay tuned.”
Leanne Harwood of IHG engaged diversity advocate Christopher Schiavello from his namesake construction company. Under the tagline of “getting shit done”, Schiavello wants to “make change by bringing ideas and conversations together” and by “making sure you are not cutting off your talent pool by not talking to all the people”. And if you are going to celebrate diversity “do it authentically and positively,” he said.
Tim Kobe, the designer of the first Apple Store, encouraged delegates to avoid the risk of commoditising the offering and deliver the experience in ways that matter.
The key takeaway was the reverse of most common value-creation actions. Beginning with human outcomes and working backwards to develop strategy and tactics, organisations can nurture and retain customers and employees using a similar template.
Marriott’s Sean Hunt lamented the absence of a strong MICE sector. “Enquiry is promising but we need to convert the leads.” And on the predicted headwinds? “It’s the availability of seats. We need more planes in the air.”
Luxury is a term never far from any hotelier’s lips and Robert Williams from Watson Farley and Williams, was keen to quiz his panel on their thoughts and aspirations.
An observation that arose early in the discussion was the apparent absence of luxury product on Queensland’s Gold Coast.
Accor’s Lindsay Leeser was quick to counter with “our Mondrian Residences shows that the Gold Coast has every reason to be a luxury market”, and “a Sofitel of the right size is a great example of how a hotel can lift an entire market”.
Marriott’s Richard Crawford was understandably excited to talk on Sydney’s forthcoming W Hotel “which will be the largest W Hotel anywhere in the world” with almost 600 rooms. He also pointed out that the planned $500m Ritz-Carlton at Mariners Cove will also include a superyacht marina.
On the subject of luxury hotel rates, Crawford also noted that $300 was once an “eye-watering” room rate for Australians. “I’d say the AU$500 is the new AU$300 and AU$1000 Average Daily Rate (ADR) is not out of the question.”
With glasses of wine gracefully received by the delegates, investors took to the stage to comment on ‘The Essential Outlook’ as a fitting finale to two days of intense hotel talk.
JLL’s Peter Harper moderated the panel with Paul Salter “going against the tide” saying “it’s going to be tough in the next 12 months despite all the optimism”.
Dave Baswal of Ovolo thought the focus should be on attracting more domestic travel while Vicki Chow of Stonewood suggested “regional is the way to go”.
Referencing the new Moxy property at Mascot, Maria Verner of RF Corval added “experience is the key. Be brave”.
In terms of the next five years the panel summed up not only their individual outlooks, but that of the entire event by reinforcing the importance of ESG (Environmental, Social, and Governance) in dictating the future for hospitality in all aspects of operation, not just construction and operation.
“We all must play the ESG game,” concluded Paul Salter.
