“Small enough to care for every single hotel yet large enough to compete on a global stage“ is a motto Jakarta-based Archipelago International is proving true, as despite the pandemic, it continues to grow in Indonesia, breaks through in Saudi Arabia, grows in Cuba and launches Collection by Aston, using its flagship brand to attract independents now in need of support.
In its home country with a stable economy, a rapidly growing middle class, infrastructure upgrades, Archipelago has added 17 new management agreements.
In Cuba, it has added three hotels (1,704 rooms) to its Cuba portfolio, reaching six hotels with 3,562 rooms. To support its growth in Cuba, the great Caribbean and Latin America, Archipelago is in the process of opening a corporate office in Havana, which will be led by Sr. Jose Luis Leonardo, Archipelago’s director of operations in The Americas.
The last year and a half in the Kingdom of Saudi Arabia has been a breakthrough for Archipelago, working with some of the largest owners and developers there, including Jabal Omar Development Co., Al Othaim, Samama Real Estate Development Co. and Al Rajhi Endowment Co. It has added three new hotels in Makkah, including the 5-star Jabal Omar The Royal Alana Makkah with 581 rooms. In Madinah, it has two new projects, including the rebranding of a 404-room hotel located directly adjacent to Al-Masjid an-Nabawi. And in Jeddah, it has another two new projects.
HOTELS recently spoke to Archipelago International President and CEO John Flood to get more details on the group’s growth. Today, Archipelago has 154 hotels (11 franchised and two owned), with close to 21,000 rooms, with another 42 active projects.
HOTELS: What brand(s) have the most traction, and why?
John Flood: Aston and Fave are the two brands which give us the most traction and have done really well for us and owners over the years.
Aston does well in the mid- to high end, while Fave does really well in the economy class.
Both brands are well known in Indonesia, while Aston will also grow considerably once the Saudi and Cuban markets open up again. We have several very large Astons in those countries.
H: What region, location has delivered the best results for growth, and why?
JF: Indonesia is our home turf, and we’ve operated here for more than 20 years. In any given year, we sign more HMAs here than our two largest competitors combined.
Indonesia has one of the largest domestic tourists markets in the world with over 250 million travelers, so it’s really big and diverse – plenty of opportunities for growth.
With our 10 core brands offering a full range of hotel types, we’ve been able to build our customer base and expand in all the main cities and tourist destinations across the archipelago. Our 3 million engaged Indonesian members give us a good base of business and we have great relationships with the biggest travel partners here.
H: How is performance holding up this year and what is your near-term forecast (rest of ’21 and into ’22)?
JF: We had seen a good pick up from January to June where we achieved 60% occupancy across the group. Unfortunately, July has seen a new wave of the delta variant, so things are a bit slow at the moment. But we expect this to be a two-month wave and for things to pick up again from September onwards.
With the vaccination program now running well with two million vaccinations some days, Indonesia should have most people vaccinated by mid-next year.
Into 2022, we expect business to pick up substantially and we’re ready to take advantage of the up-tick.
We spent the down actually super busy re-jigging our organization, updating brand DNAs and developing new systems and procedures, so we’re really looking forward to putting it all into play.
Overall, we expect next year and 2023 to see a good pick up, while from 2024 onwards we expect a boom time for travel.
H: Biggest challenge moving forward, as well as biggest opportunity?
JF: Our biggest challenges moving forward will firstly be the lack of airline capacity, which will take some time to come back around.
Secondly will be the expected COVID waves, which will also impact hotels and destinations in general – opening and closing all the time until things really settle down. Hopefully, things settle down by mid-next year. We’ve been fortunate enough to get almost all our corporate office and hotel staff vaccinated.
Building confidence in people so they feel safe staying at hotels and traveling will be something the whole travel industry will need to work on.
The biggest opportunities will firstly be at home in the large numbers of hotels, which will be bought and looking to rebrand, as well as the many hotels that will be looking to get connected to an established online distribution system like ours.
Secondly will be the overseas projects, as we look to pick up and expand our footprint across the globe.
H: Explain the longer-term strategy of the company?
JF: For Archipelago, we’ll continue to look for HMA’s while also constructing our own hotels – our third hotel is currently under development. We will also continue to look to expand overseas, especially around Southeast Asia.
We also just started offering a ‘one-stop-shop’ for hotel connectivity and online distribution called ‘Powered by Archipelago.’
When business returns following COVID-19, the hotel industry will see an acceleration of online business. Many independent hotels lack the staff, tools, systems and expertise to take advantage of this – and even more are falling behind their competitors. Without proper systems in place, this will continue to get worse, while opportunities are missed.
To fill this gap, we’re offering the first all-inclusive plug-and-play solution to these problems. So, instead of shopping around for a booking engine, channel manager, rate shopping tool, rate parity checker, metasearch integrator and so forth, we arrange all these and set them up for hotels.
On the tech side we’re also developing our own PMS, which is quite far along, and we’ll add this to other tools we’ve developed, such as our payroll system and inventory system.
Our team of 20 developers and our AI people are flat out at the moment – very exciting times.