A round-up of Asia’s top hotel development destinations in 2013

At the recent World Hotels and Resort Development Conference in Bangkok, almost every panelist during the conference session was asked various iterations of the same question: if you had just one destination where you could build a hotel in Asia, which would it be?

Myanmar - huge potential,
big challenges

The answers were just as eclectic as the region itself, but there were a number of destinations that got more than one vote. Not surprisingly, this included Myanmar, a country that pretty much dominated the first day of this event. Delegates seemed to be in agreement that the opportunities that sprung up with the government’s sudden opening will outstrip the challenges. And challenges there are aplenty. Starting with the huge infrastructure inadequacies, the expansion of tourism also requires an upgrade in standards of service and leaves the hospitality industry facing a large need for quality staff that will likely outstrip availability. And while the Asian Development Bank is preparing a tourism master plan for Myanmar, there are no quick fixes and these issues are likely to hamper the country’s development into a major tourism destination for some years to come.

Looking elsewhere across the region, there were some predictables as well as some surprises when it came to nominating dream destinations.

Singapore, the champion of ADR in Asia, is of course the one market everyone would love to go into but the high entry barriers remain a deterrent for all but the deepest pockets. That said, with the container terminal being moved away from its current location and thus freeing up valuable land, we will definitely see another phase of high level development in the near to medium future. And as the government continues to set the pace in the region in terms building up Singapore as a tourist destination, I think we can see very solid ADR and revPAR numbers even with significant new supply in the market.

Other destinations the delegates at the conference pointed out as moving ahead in Asia included the Philippines, which was cited more than once as a substantially underserved market. With the simultaneous opening of The Raffles and Fairmont hotels in Manila in early December and many more projects in the pipeline, including casino hotels, this view is obviously shared by others.

Palwan - the new Bali?

But what about outside downtown Manila? One speaker pointed to Palawan, an island in the south west as a potential “new Bali”. Previously known mostly for viscous tourist kidnappings, the island now claims to be relatively safe, boasts UNESCO Heritage Sites, world class scuba diving, beaches and an ecologically diverse environment – certainly a perfect mix for creating an attractive tourist destination. But while its airport has been classified as international and is being fast tracked to becoming one of the primary gateways to the Philippines by the government, it remains to be seen whether an ambitious project like this will take off. It has been tried before in Cebu, and while that particular island doesn’t have Palawan’s natural pedigree, it shows that putting in an international airport and clustering some soulless resorts around it doesn’t make for a great destination. 

Phu Quoc - great beaches,
but still hard to get to

Opinions were very much divided about Vietnam, where on one hand development has recently been stifled due to high interest rates, but at the same time is seen as still having a lot of areas that could become premier destinations for their pristine environment – Phu Quoc, Vietnam’s largest island off the western coast got a particular mention here. But, just as in Myanmar, Vietnam is still plagued by substandard infrastructure, and unless the government commits seriously to improving this, I tend to agree that Vietnam remains a rather difficult country for the tourism industry. 

Markedly absent from the list of dream destinations for hoteliers was China. Not even “China’s Hawaii”, Hainan Island, which has long been tapped to become a leading international tourism resort destination, got a mention. While hotels continue to pour into this island on the Chinese South Coast, including a 337-room Shangri-La Hotel which opened in Haikou in early December, there seems to be some doubt that the island will be able to live up to its hype in the near future.

Phuket - still plenty of room to grow

When it came to beach resorts, delegates saved their enthusiasm for Bali and Phuket as still being the prime development markets in this category, despite a huge number of new properties being developed or already on the market. These two destinations are still viewed as the only world class beach resort destinations in Asia and with the predicted influx of Chinese middleclass travelers in the coming years, it seems there is still plenty of growth to be had – cop that Palawan!

Last not least, Sri Lanka got a fair share of positive sentiment from the delegates for its tourism friendly combination of beaches, history and all-round physical beauty as the "The Pearl of the Indian Ocean". This is of course another country that was only recently hauled back from the tourism wilderness after ending 30 years of civil war in 2009. However, unlike Myanmar, Sri Lanka nurtured a burgeoning tourism industry throughout the conflict in the far south of the island, far away from the civil war zones in the north, making the re-building of the tourism industry a lot easier.

How Hotels can Replace Dwindling VoD Revenues

Using smart in-room technology to increase revPAR post VoD

I don’t think anyone would disagree with the statement that new technologies, when used creatively more often than not maximise revenue-generating opportunities for hotels. It’s a logical expectation and a simple premise, yet so seemingly hard to put into practice.

The first time hotels felt the pinch of diminished returns from technology investments was when the meteoric rise of mobile telephony dented IDD revenues in the 90’s. Fast forward to today and the new culprit – no surprises here – is the Internet and its wider ecosystem. Since the Internet started to morph from information to entertainment medium a few years ago, it has created a vortex that draws in and transforms almost anything associated with everyday life. Think about how consumer technology devices evolve and multiply with enormous speed while doubling processing power with each new release, making consumer preferences, such as interactivity, on demand and control, ever easier to fulfil. The content delivery world has responded to this pull by transforming itself towards an on demand, interactive and, most importantly, online delivery service.

How should hoteliers react to these developments? Some hotel managers I have spoken to have seen VoD returns falling so sharply that even switching off the entertainment system for a day or two to test its popularity resulted in zero complaints. That’s some hard evidence that cannot be ignored when it comes to deciding on future IT investments. However, these hoteliers have also been busy thinking about other services they could introduce in an effort to entice their guests to spend money while they are in their rooms to replace the VoD revenues of old.

There are a number of options hotels have to intelligently use technology to replace this erstwhile lucrative revenues stream. For hotels, competition drives the need to differentiate, so the key is to opt out of simply adding easily replicable technology gadgets that may add to guest experience but don’t actually contribute to revPAR. Technology is at the heart of a lot of value added, revPAR generating services but for them to succeed, aside from being relevant for a hotel’s specific clientele, they have to fulfil three essential conditions: they need to be convenient to access, easy to use and, from the hoteliers’ perspective, have to add to the bottom line.

Let me give you two examples. Firstly, room service. The usual in-room dining menu may be printed on high quality paper embossed with golden scripture, but what it doesn’t show, is a picture of what you will be served. Now you may argue that you don’t get a menu with images in a five star restaurant either but that misses the point entirely. When I go to a five star restaurant I have usually made up my mind that I want to eat there. I may have researched the menu online, and if I have any specific questions regarding the menu my waiter will hopefully be obliged to be of assistance. On the other hand, when I look at the food menu in my room I am far from having made up my mind of where to eat, particularly if I have a myriad of choices right outside my hotel. So in other words, giving guests a bland in-room dining menu is a missed opportunity.

I often tell the story of when I travelled to the Middle East for the first time and was confronted with an in-room dining menu that listed, among other items, Foul Medames. Now if you are new to the country and culture you probably neither know what it is nor would you be too enticed by the name of the dish. Even the printed English translation, “Stewed Broad Beans”, may not sway you. But if you have the chance to study an image, or even a video of the chef preparing it on your in-room entertainment system, you may get an idea of how delicious this specialty actually is and it may just convince you to place your order - even more so if you can order the dish directly via your TV screen without having to pick up the phone and deal with staff who may not speak your language very well.

The other revenue opportunity that is attracting the attention of hoteliers is using technology to provide a vehicle for in-room shopping. Shopping on the in-room entertainment system is an entertainment option that taps into travellers’ predisposition towards opportunity buying. Many hotels have a shopping annex or Duty Free emporium attached to their premises. This makes it comparatively easy to aggregate appropriate content for an in-room, on-screen shopping catalogue, combined with a simple fulfilment processes that would suit even the shortest of short stay travellers. The limitations of the remote control as a navigation tool can be overcome by turning either a hotel-provided, or the guest’s own tablet or smartphone into a touch-based selection tool. Having all transactions linked with the hotel’s PMS system enables timely delivery and convenient payment options upon check out.

There are many more examples of how this type of online interactivity adds to revPAR, from direct booking of hotel restaurants and facilities, to local maps where local businesses in the vicinity can advertise their trade. Provided hotels are using a capable IPTV system, the technology is certainly mature enough to so the key is for hoteliers to get creative and find the type of service that suits their hotel’s and their guests’ identity and requirements.     

The Problem with Predicting Future Technologies for Hotels

While science fiction movies routinely deliver the inspiration for technology innovation, it's what they don't predict that's really interesting

Being able to peek into what the future will bring has been at the forefront of human desire for as long as we have existed. It’s the basic foundation from religion (heaven and hell come to mind) through Nostradamus and right down to the more recent fascination with all things futuristic, that probably started when H.G. Wells published his novel “The Time Machine” in the dying days of the 19^th century. A few years back, the science fiction movie everyone loved to quote in our industry was Steven Spielberg’s Minority Report, released in 2002, which was a marketer’s dream for its depiction of a world in which advertising is so tailored, targeted and ubiquitous that it merges seamlessly into everyday life, to do its work of subtle (or not so subtle) persuasion. It seemed all so very plausible and within grasp then, not least because digital signage technology had just made an entrance into the advertising world in a major way.

Fast forward nearly 10 years and we haven’t really moved on that much. According to film lore, Spielberg consulted numerous scientists in the lead up to the film in an attempt to present a more plausible future world for the year 2054 than usually imagined in science fiction films and many articles have been written over the years about how many of the film’s imagined technologies have become reality. But let’s not get too carried away. Yes, companies have invented a lot of things that make an appearance in the movie, such as electronic paper, facial recognition advertising billboards and 3D televisions, and some were most probably even inspired by the movie to do so.

The thing is though, that precious few of these inventions have entered the main stream (3D TVs being the exception), not even facial recognition technology, which has been hailed as the holy grail by digital signage providers for years now. But then you can reasonably argue that with the movie set in 2054, we haven’t done so bad after all, given that we have another 40 odd years to make all the other technologies mainstream.

However, far more interesting than what science fiction movies from the Jetsons to Star Wars and yes, Minority Report, did predict, is what they did not predict: the Internet, for one. Or Facebook  Or Twitter, in fact the whole social networking phenomenon. These technology-driven trends have, and continue to shape our lives at almost every point like no other and yet every single look into the crystal ball has missed mentioning them.

So it was with some trepidation that I consumed the recent predictions of what the hotel room in the year 2030 will look like by Ian Paterson in the study “Travelodge Future of Sleep”.

There are a lot of technologies in there that sound great and believable, being connected in our own virtual reality through a visor or contact lenses and interactive video panels are two that instantly come to mind. This and other useful innovations I can actually imagine making my hotel stay more pleasant, but others seem more appropriate as home applications, rather than additions to the guest experience in a hotel. For example the “Dietary advice from night time monitoring”, which may be a great help when I’m at home and in my weekly routine, but the last thing I want when I wake up in a hotel room is a reminder of the banquet meal, pub crawl and karaoke marathon with my customer the night before. Not the least because it will probably require something a lot stronger than is on offer on the breakfast menu to get me back on my feet.

I am also slightly puzzled by the various home-upload features, particularly the 3D room re-skin home away from home upload, where lonely business travelers will be able to choose from a range of layouts including ‘virtual family’. The incredibly sad image this produces in my imagination aside, unless I suffer from pathological homesickness I think I’d rather not have that appearing on my hotel bill.

But then that’s just my preference and this is exactly the problem with trying to predict the future: technological ability and readiness does not equal ubiquity of adoption. The road to innovation is littered with plenty of brilliant ideas based on technological innovation that never got off the ground for one reason or another. What these failed innovations neglected to take into account is something that will be near impossible to quantify for generations to come, maybe forever: human behaviour, which is complex, irrational and variable.  As much as generations of marketers have tried to predict human behaviour through market research, the cold hard truth is that it cannot easily be squeezed into bell curve modeling.

Think about the phenomenal success of Groupon, which left the business world speechless for the simplicity of its premise, even though it is based on satisfying one of the most basic of human instincts: to get a good deal. So for my part, the next time someone asks me what I predict the next killer-app for a hotel to be, I think I opt for a good bed.