HotelsWorld Day Two: Issues include M&A, authenticity
 
HotelsWorld Day Two: Issues include M&A, authenticity
26 JULY 2017 9:04 AM

Hotel merger activity and an influx of international visitors to Australia were top of mind during the second day of HotelsWorld. 

SYDNEY—From global mergers to hotels with authentic experiences that attract new waves of travelers, there was plenty of guarded optimism on the second day of the 2017 HotelsWorld conference.

A leadoff panel discussion called “The urge to merge” produced a number of revelations from hoteliers, but the bottom line from the participating industry leaders is that there’s an expectation for further consolidation in the global hotel space.

“Given the trends toward consolidation and the limited amount of opportunities, I think (consolidation during the next 12 months) will be about the same (as it was during the previous 12 months),” said Rachel Argaman, CEO of TFE Hotels.

Choe Peng Sum, CEO of Frasers Hospitality, and Michael Issenberg, chairman and CEO, Asia Pacific for AccorHotels, said they have loftier expectations.

“It’s going to be quite feverish,” Choe said. “There’s going to be a different playing field. … It’s going to be big.”

“There’s going to be an increase in pace,” Issenberg said, adding that it’s difficult to see what deals could be struck during the coming year.

The appetite for deals is almost as big as the appetite for hotel rooms in Australia’s largest cities.

“In gateway cities, it really is a squeeze,” said Bob East, CEO of Mantra Group, during a plenary session called “The changing face of the international visitor.” “Cities are nearly full. … How do we start positioning for the international market; do we have the capacity for that?”

Developers are doing their best to fill the void, as the country’s hotel pipeline has reached 2% on the heels of a five-year period during which occupancy and average daily rates have steadily increased (see chart in “Slides of the Day” section), according to Jesper Palmqvist, STR’s Area director for Asia Pacific, who presented data during the “HotelsWorld data digest” opening session.

“It doesn’t feel like too much, but the last time we had 2% supply growth was before the Olympics—in 1998,” Palmqvist said, noting that some of the people now working in the hotels that sprang up during that wave of new supply hadn’t yet been born when they were built.

That supply could be needed as the number of international visitors increase. According to data presented by Karen Halbert, executive general manager, government and industry for Tourism Australia, international visitors in 2017 should reach 8.4 million—up from 5.9 million in 2007 and up from 253,000 50 years ago. China will account for 1.2 million of the 2017 visitors, a 12% increase from 2016.

East said Chinese travelers to Australia are rapidly becoming more adventurous with their itineraries.

Drew Bowering, senior director, market management-Oceana for Expedia Lodging Partner Services, said during the “International visitor” session that hotel companies must quickly gear up for even more Chinese travelers.

“If you don’t have the technological readiness by the time it comes through in that wave, you might miss out,” he said.

Barry Robinson, president and managing director for Wyndham Hotel Group South East Asia & Pacific Rim and Wyndham Vacation Resorts Asia Pacific, said the importance of keeping experiences authentic to the Australian continent can’t be underestimated.

“(Hoteliers must) empower the staff to make those connections straight from the heart,” he said. “Those are the ones that (visitors) tell stories about.”

Developers and owners need to keep that in mind when building and operating properties that cater for specific international travel groups, such as the Chinese, East said.

“Because 10% of our market is Chinese, we don’t need to try to spread that through,” East said. “If we tailor our product too much … there’s a great danger in that. … We want to be a destination of choice to handle international travelers and still remain authentic.”

Stat of the day
Thirty-nine percent of Australia’s tourism expenditure in 2017 will come from international visitors, according to Tourism Australia. That is expected to climb to 45% in 2020.

Slides of the day

Dean Dransfield, director of Dransfield Hotels & Resorts, provided an in-depth look at revenue-per-available-room growth in various Australian cities during Wednesday’s opening session at HotelsWorld. (Slide: Dransfield Hotels & Resorts)
Australia as experienced a 5-year run of occupancy and ADR growth, according to data presented by STR’s Jesper Palmqvist. (Slide: STR)

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