The rise and rise of interregional travel in Asia is part of a bigger success story backed by both the region’s diversity and strength in numbers, delegates heard recently at IHIF Asia in Hong Kong.
“Around ten to fifteen years ago, we were a long-haul market for Europe,” said Alan Watts, president, Asia Pacific, Hilton. “There was no Asia for Asia. Now, if you look at in-Asian travel, we see Chinese, Japanese, Indonesian and Indian outbound travellers across the region. Interconnected Asia is big news.”
Added Kenneth Macpherson, CEO, Europe, Middle East, Asia and Africa, IHG: “You can look at the performance of individual markets – Japan and India are booming, China is flat – but that’s not the whole story. The macro picture is where it gets interesting. Asia boasts 54 percent of the population and 100 million people in Asia join the consumer class every year.” He added: “We are deploying our brands to capture their attention.”
China as a sleeping giant
Gary Rosen, CEO, Accor Greater China, said that while China’s recent economic issues had been well documented, this “sleeping giant” still had a lot to contribute to the region as a whole and was likely to return to dominance in the coming years.
“This is the first time the economy in China has really taken a hit and people are reacting to it,” he said. “But in reality. when you look around the world, the next China is China.” He said that there was no question that it was currently a difficult market but said that people were still booking trips. “While many industries are suffering, travel is not suffering and people are still passionate about discovery - it’s part of the DNA of their culture,” he underlined. “But how people travel is different and that’s reflected in what you see - they are visiting new places rather than going where they have gone before.”
Rosen called attention to China’s “enormous domestic market, which is still set to be the largest tourism market in the world”. Even if outbound travel figures had slipped a little compared to 2019, he identified an “affluent customer” who was still making reservations.
Major market potential
Watts agreed that China’s size alone meant that it should be taken seriously. “China is the second largest tourism market on the planet today,” he said, noting that its pipeline of new hotels was bigger than the rest of APAC combined. “While those outbound numbers might not be back tomorrow, we should think of it as a delayed return”, he said. “Even a slow Chinese economy registering 4-5% annual GDP growth is still a big economy. We’re just seeing a decidedly flat performance in an environment that has had a lot of new supply.”
Added Rosen: “What is interesting with China is that the travel patterns changed so quickly. So, while we are currently seeing a huge amount of outbound travel to Japan, that could change at the drop of a hat. Keeping on top of that is important: the market is so dynamic, you can’t write rules for it.”
Said Watts: “Despite the fact that some markets are flat, we’ll open more hotels this year in Asia than we ever have at any time in our history. And part of that is down to new investors.” Watts noted that for real estate investors seeking significant returns, hospitality had a lot to offer. “The biggest shift we have seen in the post-pandemic environment is real estate investors turning their attention to hospitality, whereas in the past they always looked at retail, offices and residential first.”
Watts described the hospitality segment as they “only industry which supplies income on a daily basis” and said it was an effective foil for the uncertainty surrounding other parts of commercial real estate. “Despite it all, it does feel like travel and tourism has enjoyed a resurgence when it comes to investment returns and that is key going forward. Just look at adaptive reuse trends – more and more people are buying obsolete offices, retrofitting them as hotels and making great returns,” he concluded.