During the next decade how will the Western brands fare in Asia Pacific versus the rising local players, particularly from China?
In 2003 there were no Chinese companies among the largest 25 hotel companies globally by total guestrooms — in 2013 there were five, as the most recent HOTELS 325 published in the July/August issue shows.
Given Asia Pacific’s growing middle class, what moves will hotel companies make with their brands to instill customer loyalty from this new wave of travelers?
To get an expert view on the Asia Pacific market’s outlook, HOTELS spoke with Thorsten Kirschke, Carlson Rezidor Hotel Group’s president, Asia Pacific.
HOTELS: The Chinese brands have been growing very rapidly. Looking ahead, do you see most of their growth continuing to be inside China or do you anticipate they will begin large-scale expansion overseas?
Thorsten Kirschke: Currently, most of the branded rooms are largely in tier one cities in China. We have seen the Chinese brands entering into tier 2 and tier 3 cities as these cities grow in size, some of which have population of over 10 million. Apart from rapidly expanding in their own country, many Chinese companies have ventured overseas to Europe, U.S. and Australia in search of organic growth or brand acquisition. They will continue to do so as their ambitions grow.
HOTELS: Looking ahead, do you expect to see increased consolidation among hotel companies? What about brand proliferation?
Kirschke: We are not seeing much consolidation at the moment. However, there is an increase in joint ventures and strategic partnerships among hotel groups to accelerate growth in key markets, supporting the theory that there is still enough growth potential out there without larger scale consolidation.
According to STR Global’s 2014 report, there are 53% of unbranded hotels in Asia Pacific. Opportunities abound for hotel companies to establish more branded hotels in this region, especially in emerging markets. This augurs well for Carlson Rezidor as we are launching Radisson Red and Quorvus Collection to capture new market segments.
HOTELS: In what countries/segments do you see the most growth potential in Asia Pacific?
Kirschke: China has the largest hotel pipeline in the world, followed closely by India. These two countries will become the powerhouses of middle class consumerism by 2030, driving unprecedented tourism growth especially in the mid-scale market. We are also very excited about other emerging markets such as Indonesia, Thailand and Philippines, where we see an increase in government spending on infrastructure and tourism, which will boost international and domestic travel. We are also expecting increased stability in post-election countries such as Indonesia but also including Thailand to further support increased deal activity.