Intra-Asian phenomenon will force rethink by hotels

The biggest mega-trend is the rise of the intra-Asian market and that will have a profound change on the way chains develop brands, design their hotels, distribute and market, and look after their customers.

And with 50% of its secured pipeline in Asia/Pacific, Accor is one global company that’s thinking about how to put Asia first in the way it thinks about some aspects of its business.

Michael Issenberg, chairman and COO of Accor Asia Pacific (pictured left), agrees it comes down to asking questions such as  “should we still have Continental or American breakfast” to bigger issues such as what kind of brands and products are needed for a new kind of customer than the traditional guests chains are used to in this part of the world.

“The excitement of Asia is that it’s always changing and there are unique aspects of the market to consider – for example, mobile and tablet apps, more important here than anywhere else.

“What other services need to change? The whole bar element, Asians don’t go to bars as often as Westerners, private dining rooms are important, landscaping of pools has to change – people don’t lie in the sun as much here so we have to change the use of it.

“Hotels will also find it harder to compete with free standing restaurants – it’s already happening in China, it hasn’t hit India yet.”

Changes in workforce and products

Its workforce is also changing. Currently it employs 60,000 across Asia Pacific and with 300 hotels set to open over the next three years, it will need 30,000 new employees in the region.

“We need tools in the appropriate languages, we want diversity in our workforce, both gender and cultural. I told our general managers in China that as fast as you are growing, I need you to export people to our hotels because we need people to welcome Chinese guests.”

Its hotel products are being adapted to different Asian tastes. The Grand Mercure brand, for example, is a product customised for China, India, Thailand and Indonesia.

Pictured right: Grand Mercure Shanghai Zhongya

It is looking to bring Sebel, the brand it acquired in Australia, to the region, a move that will see it entering the apartment market to cater to changing tastes and preferences for accommodation.

A softer year than expected

It’s not all rosy though. Asia is softening. Based on recent STR figures, Issenberg said it was the only region with negative RevPAR – “due partly to supply and currency”.

“Australia and New Zealand are having a reasonably good year although there is impact on RevPAR and some impact on mining towns. India is having a tough time due mainly to supply outstripping demand. China has seen enormous increase in supply and demand but there are austerity measures in place. (China represents 10% of Accor’s business in the region)

“Indonesia, Vietnam and Thailand are having a good year, demand is flattening in Singapore, Japan is coming back while South Korea is slightly down due to the weakening Japanese yen.”

And as his team begins the budget process – the 11th under his charge, Issenberg said it has become increasingly difficult to predict the future. In the 24-hour news cycle, economic sentiment, which drives travel, changes very quickly.

“Twelve months ago, we wouldn’t have predicted the quiet year we are having,” he said. “We thought we’d have a better year. You have to embrace change as a leader. Change is fun, it causes anxiety yes, but it’s exciting.”

The room as “an enabler of your technology”

At heart, however, the hospitality industry hasn’t changed that much, he said. “When you travel, you want to interact with people – the most important thing is who you meet so that you can have a great experience. That’s what makes travel fun and keeps you travelling.

“Nothing else matters – making sure hotels are maintained, that’s a boring subject, people don’t want to read about that, but that’s crucial to the customer experience.”

Increasingly, he sees a hotel room as “an enabler of your technology”.

“My kids do everything on their devices. The only time they watch television is when they plug their devices into it. So it’s about enabling guests to use their devices.”

Then it’s about tailored experiences – knowing more about your guests and Accor’s putting a lot of emphasis on loyalty and CRM.

Will the telephone in the room disappear? Depends. “In Ibis budget, there are no in-room telephones but in India we had to put one in because people felt more secure. Lobbies are changing, your phone becomes your room key, self-check in kiosks – do we leapfrog that to new technology?”

Building loyalty and investing in CRM

In the area of distribution and marketing, it’s all about loyalty and CRM as Accor looks to build up direct ownership and relationship with its customers. In Singapore, 50% of its business comes direct through its website while the percentage is lower in China.

“OTAs have only replaced travel agents, there’s always room for some type of travel agent. On the other hand, people like the familiarity of the brand and we have to communicate the value of our brand.”

“Don’t generalise about free wifi”

And another thing that’s not changed – “The number one reason people choose a hotel is location, not wifi.”

Which brings us to a topic he feels strongly about. He believes the proposition that hotels should give free wifi is “too simple a statement for a complex subject”.

Pictured left: Pullman Jakarta Indonesia

“First my personal view – I don’t believe wifi should be free. You pay for it at home. Airlines will introduce wifi – you think it will be free? It actually costs the hotel a lot of money to offer quality wifi – so you need a balance, maybe it’s free in the public areas or free up to a level.”

Challenge him with the premise that it’s ironic that one gets free wifi in budget hotels but not in luxury hotels and he said, “Budget hotels are giving away their profitability. Every hotel is trying to maximize its profitability and you have to find the right balance.”

But surely, hotels have to consider the fact that free wifi has become a customer expectation? “Yes, of course, we want happy guests but there are many factors involved in that, it’s not just about free wifi.”

At Accor, the minimum for every brand is free wifi for all Le Club Silver members and above.

Too many brands? No, not enough

And while some of us may think that Accor has too many brands, Issenberg said, “We should have more brands. Some are scalable, some are not – Ibis is the most scalable.”

Asked for his personal favourite, he cites Pullman because he was part of the team that created the brand in 2007 and half of all Pullman hotels are in his region.

In terms of consistency of experience, he ranks ibis the highest. “The further up the star scale, the less product consistency and then it becomes more experiential.”

And if he had the chance to introduce a new brand, it’d be something mid-scale that’d be different. And no, he’s not saying more.

Intra-Asian phenomenon will force rethink by hotels