Seven thousand miles isn’t far enough to escape talk of the U.S. presidential campaign, as attendees of the Hotel Investment Conference Asia Pacific discovered at the conference’s opening session Thursday morning.
Halfway around the world, as the two candidates debated in Las Vegas, Robert Broadfoot, managing director of Political & Economic Risk Consultancy and a veteran of HICAP, painted a big-picture perspective of the region.
“The outcome of the U.S. election, fortunately, is that he” – that’s Donald Trump, hotelier and Republican presidential candidate – “is not going to win. What’s really important is why does he get the support that he gets?” Broadfoot made the connection to Asia’s own polarizing leaders and their followers, and asked the same question, then made the connection to differentiation among hotel companies and the demographics that drive branding.
Broadfoot pointed to Chinese tourists traveling twice as much domestically as they are internationally, even as they continue to head outbound. Where are they going? “If I were to invest somewhere in Asia, I would pick Japan,” he said, adding that Korea would also benefit from Chinese tourists.
Beyond China, other issues are taking up bandwidth in the hotel industry, such as the increasing need to manage security and environmental challenges, including cybersecurity; intra-Asian travel, particularly in India; and the opening up of new markets to Asian tourists, such as Myanmar, Cuba and Iran.
In the short term, Broadfoot predicted, the biggest growth would be in India and Vietnam, with “bubbles building” in the Philippines.
Longer term, the most important development would be the reassessment of globalization. “I think we have come to the end of a chapter,” he said.
Countries that were leading the breakdown of borders have populations that are loudly opposing it now, he said, citing Brexit and, again, Trump. In Asia, it’s places like Singapore and Thailand, which are pushing against foreign residents and mainland Chinese tourism and investment, respectively. China itself doesn’t like playing the globalization game when the rules have been written by the West, he observed.
Despite those issues, there are several important things keeping Asia together, Broadfoot said: “It’s still the fastest-growing region in the world, outpacing Europe and the U.S. Internal investment potential is rising faster. In the early years of HICAP, which began in 1989, Western financial institutions were leading the investment hunt. Increasingly, it’s Asian companies looking in the region and beyond. Intra-regional travel and trade is building momentum. And demographics, like the aging of Japan and a younger population in Indonesia, are changing.”
Jesper Palmqvist, area director of Asia Pacific for STR, called 2016 “another interesting year” and said that after seven years of continued growth, the cycle would end in 2017. Palmqvist’s quick hits on countries in the region:
- Asia Pacific demand for hotels is still growing at 5%; supply is growing at 3.5%
- Hotel performance in Australia is stable and growing
- The hit that central and south Asia took in 2009 hasn’t rebounded except for India
- Japan is growing, albeit more slowly; Korea, not so much
- New Zealand is growing international arrivals and seeing occupancy above 80%
- The “biggest surprise”: double-digit growth in Vietnam
- India’s countercyclical growth
- Lots of supply being added in Singapore
- Maldives seeing more European tourists – but they aren’t staying as long
- China is seeing growth in Beijing and Shanghai, but that’s not matched in the regions