China hotel market set to recover within five years...

…and other dispatches from the China Hotel Technology Alliance’s Annual Conference

Jing Zhu, Chairperson of the CHTA
at the opening of the conference

Well attended and organized, CHTA’s third annual conference was held last month in Macau. The overall theme was ‘Creating Value’ and while there were the occasional dull spots, overall the event delivered on what it set out to do.

China Hotel Market is set to recover within Five years

One of the first keynotes dealt with the China market recovery which was pinpointed to occur sometime within the next five years (let’s hope it is earlier rather than later…). Singled out as one of the key factors to set the scene for recovery were international brands, which need to be more flexible in terms of brand standards in China, rather than pursuing a cookie cutter approach to be successful.  

Talking about Millennials - again

Chinese Millennials -
not so different

There is of course no event worth its money that would not bring up the mystical Millennials, and at CHTA’s conference, it was Sunny Wang, Executive Director at HFTP’s Asia Research Centre – herself a Millennial – who took the stage to give us Baby Boomers and GenXers a lesson in all things Millennial. The most interesting for me was her assurance that Millennials are generally happy to play with technology in the room as a novelty factor, even if the technology is not essential. While this shouldn’t tempt hotels to over stack their rooms with gadgets, it is an affirmation that IPTV, second screen, Airplay and Miracast do matter, and will matter even more in the future.

But unlike the Millennials in the Middle East which are unexpectedly brand loyal, Chinese Millennials don’t seem to have a specific trait that makes them different from their peers in other geographies. However, speaking with one delegate from Singapore on the sidelines, he professed that unlike Millennials elsewhere who are generally lone wolf travelers, Millennials in Singapore like to travel in small groups of friends. This type of information has great value to hotel developers as it guides what types of rooms they should cater for, so I hope that someone in due time will make an effort and dissect Millennials likes and dislikes a little more granularly along the geographic divide, rather than just focus on general habits.

With Millennials gradually coming into force, some predicted the hotels of the future will be more like real estate that happens to have some hotel rooms, with rooms being re-purposed as offices, meeting and events spaces and the likes, and sometimes as a place to rest your weary head. While this may sound far-fetched now, one cannot help but wonder what our world will look like once the Millennials have well and truly taken over. As I said before, the 5-star hotel as we know it, for one, will be a thing of the past. And so perhaps will the hotel as we know it, who knows…

Creating Value in a Hotel with IT

The 'Creating Value' panel at the

3rd Annual CHTA conference in Macau

Hotels are run in a very old fashioned way, forcing people to speak to staff for requests rather than fulfilling them through self-serve options. This was the consensus during a panel discussion featuring eminent speakers from the likes of Peninsula, Banyan Tree and Westin hotels. So whatever happened to the coveted ‘personalised touch’? Again, blame the Millennials, but it is undeniable that there is a push away from person to person interaction to self-service – and thank heavens for it, too, if you ask me.

But the far more interesting question posed at the panel was what is stopping hotels from implementing IT to create value? While cost of course is a major factor, blaming the rapid evolution of technology is somewhat less convincing. 

We are on a kind of plateau at the moment when it comes to underlying technology developments. The one thing that’s continuing to change fast is consumer electronics, so as long as hotels underlying technology infrastructure is robust, enabling guests to interact with the hotel’s technology using their own devices should not be a major undertaking.

Finding the right talent to implement and support technology and getting staff to embrace technology rounded off the list of challenges identified by the panel. Nevertheless, the audience vote on whether IT can be a direct source of revenue at the end of the panel was an encouraging 75% yes.

Do we need hotel brands for ethnic travelers?

“East is East and West is West, and never the twain shall meet,” Rudyard Kipling wrote more than a hundred and twenty years ago and it seems that, despite all globalization efforts, he may be right. At least if you look at the recent moves by international hotel groups such as Intercontinental to introduce China-centric hotel brands.

IHG's Hualuxe... designed to offer a traditional experience
to Chinese travelers

At the recent ANZPHIC conference in Sydney this point was hotly discussed and it seems to me that both sides have a point. On the pro side, the arguments include that Chinese travelers crave cultural familiarity in everything from food to design and service. Given that China is expected to overtake Japan by 2013 as Asia's largest travel market and is set to become the world’s largest business travel market, after the US, by 2015, it seems a wise move to tap into this coming wave of travelers with a brand tailored exactly to their needs. And these needs, apparently, include anything from daily tai chi sessions, complimentary head and shoulder massages, a 24-hour congee menu, to specifically grand entrances and tea rooms rather than boozy sports bars. 

But does this craving for familiarity really warrant a completely different brand? KP Ho, Executive Chairman of Banyan Tree Holdings begged to differ during an interview session at ANZPHIC. He warned of the compartmentalisation of travel if hotels are specifically targeted at certain nationalities and I think he may have a valid point. The craving for familiarity is certainly not a Chinese monopoly but something that is woven deeply into our social fabric, no matter what nationality you are. And so the question is: do we really want to have hotel brands that only cater for Chinese, only for Russians, only for Germans, etc?

But this is of course a numbers game, and at least for now, China is the country with the most of everything: people, growth and travelers. This poses a natural attraction for anyone keen to grow their business and as a growing travel segment the temptation is to pander to them and them alone.

If we talk about ethnic segments with economies of scale however, what about religious groups? A new study shows that Muslim tourists globally represent a major niche market worth US$126.1 billion in 2011 which is set to grow to US$192 billion by 2020. The travel industry is already responding to this trend by providing Halal foods, prayer rooms and spas adapted to religious requirements. But would it also be worth considering building hotels that are built to strict Muslim standards? Incidentally, China has a sizeable Muslim population of around 20 million, or 1.5% of the total population, which just highlights how complex the whole issue of exclusively catering for individual groups’ demands can get.

But there are already examples out there where providing a familiar experience is handled in a very subtle way. Accor has been a champion of taking the French way of life to the world for a long time. Whether you check into a Pullman Hotel in Bangkok or a Sofitel in New York, you will be greeted with a warm “Bonjour” and can enjoy a croissant for breakfast that would do any boulanger back in Paris proud. That’s why Accor hotels tend to attract a lot of travelers from France, which in turn validates the whole French experience, but without alienating non-French guests.

But let’s get back to Banyan Tree’s KP Ho: his response to his peers’ push to open China-centric brands was that cultural preferences are much better served through electronic means such as CRM and PMS, and I have to say that I wholeheartedly agree.

The personalisation tools offered through intelligently integrating with the hotel’s PMS system which holds the vital customer data offer many more opportunities to provide an atmosphere that is not only tailored to collective ethnic preferences, but to a guest’s individual tastes, without sacrificing or alienating others’.

The way the China-centric brands tailor their hotels to make them more familiar to the Chinese traveler seems to me not very dramatic: grand entrance ways, the above mentioned tai chi and wooden floors instead of carpet, as one panelist at the Sydney conference mentioned doesn’t sound particularly Chinese to me. Plus, decent congee has been on the menu in all better hotels in the region for years.  

But a capable PMS and CRM system that is intelligently linked to in-room facilities can achieve a much more familiar atmosphere. Being greeted on the in-room TV in your preferred language upon entering the room, saving TV channel preferences in the system to have your personalised line-up ready whenever you check-in, or even tailoring the in-room dining menu to reflect your favourite choices are all means by which a hotel can make their guests feel more welcome and at home.

Just make sure you get it right: there’s nothing more annoying than being greeted in the wrong language or by the wrong name, something that happens to me depressingly often. Being addressed as “Mr” Anke Gill, instead of “Ms” smacks of laziness (I guess you’ll have a 50% chance of getting it right). But being addressed as “Gill” instead of “Anke” by the in-room entertainment system is pretty irritating when Google can give you a hint in less than 30 seconds. I guess the lesson here is that the technology is only as good as the people operating it and their respective understanding of target demographics.