HICAP UPDATE 2013

Summary for Hotelier Indonesia Magazine

April 2013

www.hotelier-indonesia.com

Hotelier Indonesia is a proud media partner of HICAP (Hotel Investment Conference Asia Pacific) Update,  a two-day hotel investment event featuring a prestigious lineup of speakers focusing on current issues facing the industry.

This year’s conference was held at Singapore’s Pan Pacific Hotel on 12-13 March, and was

Hotelier Indonesia Magazine
April 2013

literally a “who’s who” of the SE Asian hotel industry.   Like prior HICAP sessions, it brought out the industry’s A-List executives which provided both an outstanding seminar series and great networking opportunities. 

A few of the highlights included:

The focus on Indonesia:

The capital region of Jakarta continues to grow and warrants further investment, as does Lombok and a few other regions within Indonesia.   In total, sixteen destinations were highlighted for development, which also have a need for accommodation. The Indonesian government had designated Bali, West Nusa Tenggara and East Nusa Tenggara as tourism gateways as part of a 2011-2025 master plan.

Though Bali has been a very hot market in recent years, there was some consensus that the Bali hotel market has been saturated.  The Indonesian  tourism authority had pointed hotel investors and operators beyond Bali, in tandem with the government's drive to improve infrastructure and facilities in these destinations.

Focus on Thailand:

With internationally respected levels of service and a hospitality structure to match, Bangkok is able to  push up APRs with the proper strategies.   With Average Room Rates around the US$ 90 rate, there is room to push upward, nearer to Hong Kong and Singapore where ARRs are around US$ 240USD.  More room for growth in Bangkok is expected.

Panelists mention that statistics demonstrate the tourist numbers for Phuket are well in excess of the numbers in Bali. That infrastructure is being improved, but to date will always naturally lag behind the tourism demands and growth. Mass tourism will continue to influence hotels managed; average room rate suppression. There is room for more high-end international properties in Phuket.

Focus on Myanmar:

Myanmar has been going through a remarkable journey of Change and Reforms with the leadership of President U Thein Sein.  2012 has been such a remarkable year for Myanmar, with the a significant surge in interest.  Regional experts have warned however,  that those keen to invest should do so with their eyes wide open.  Hoteliers would be wise to go in with “patience and education”.

There are a lot of people anxious to get into the Myanmar market now, and they should know that it is still a challenge inside. Many owners will run into problems if they do not understand what their investment really means, for instance how to get their money in and out of the country.  Some have cautioned that it may be too early for investors to enter the market as there were still issues like telecommunications and infrastructure that have yet to be ironed out.

Focus on the Philippines:

Following China, the Philippines has the largest pipeline of luxury and upper upscale rooms in Asia-Pacific, but panelists mention what is needed is more branded accommodation that cater to a growing domestic market.  The country had about 35 million domestic travellers looking for affordable accommodation, with the figure growing by eight per cent every year and expected to hit 56 million by 2016.

Roughly 50 per cent of the Philippines’ pipeline is in luxury and upper upscale, 30 per cent in upscale, 15 per cent in midscale and the rest in economy. This contrasts with other ASEAN countries whose planned growth of upscale and midscale rooms are as high as 70 per cent. The economy segment has the smallest pipeline in the region.

The Fall of Hotel transactions in Asia:

A surprising statistic provided at HICAP was that hotel transactions volume in Asia in 2012 was roughly half  of 2011's, dropping from US$3.7 billion to US$1.9 billion.  The main drops were attributed to Singapore and China, with possible reasons being the “cost of real estate and high pricing that needs to be paid” to enter these markets.

Asia remains a small market for hotel transactions volume compared to other regions. In comparison, hotel transactions volume in the Americas grew seven per cent from US$16.3 billion to US$17.5 billion, and Australia expanded eight per cent from US$1.3 billion to US$1.4 billion. Europe, the Middle East and Africa registered an eight per cent decline from US$11.9 billion to US$11 billion.

Its always a pleasure to attend HICAP conferences, as the information shared is typically form the well-connected, well-informed A-List hoteliers.   Hotelier Indonesia wishes to thank HICAP for the continued affiliation.