SYDNEY — Construction costs, potential data breaches and brand differentiation are among the top concerns of hoteliers in Australia and New Zealand.
David Mansfield, managing director at The Ascott, said delivering a memorable experience for guests and accomplishing his brand's mission is his foremost priority. But one of the worries that keep him up at night is possibility of hackers targeting his company's private guest data.
“The second [consideration] is, heaven forbid, waking up to a data breach. That would just not be a great way of starting my day,” Mansfield said during the "Views from the Boardroom” panel at Hotel Investment Conference Asia-Pacific Australia New Zealand. “I wouldn’t be happy at all, but anyway, we’re ready for that, it’s just a matter of when unfortunately … given we’re all susceptible, and companies obviously have a responsibility to protect data, so we need to be ready for that.”
Sarah Derry, CEO of premium, midscale and economy brands in Asia-Pacific region for Accor, said there are many things management and staff cannot control, and that weighs on everyone’s minds.
“Whether it’s capacity, whether it’s the return of certain markets, whether it is ESG. ... The cost of living, cost of operating a business, foreign exchange, those are the things we spend most of our time talking about at the moment,” she said.
The cost-of-living crisis in Australia has left Derry walking a tightrope between “how to drive maximum efficiency while caring for staff,” she said.
Choe Peng Sum, CEO of Pan Pacific Hotels Group, said there is pressure for any business to outperform expectations.
“We’re part of a big bank, and as with all Chinese [profit and loss] if you do well this year, you’d better do better next year,” he said.
Choe said his chief concern is how to keep growing the business.
“The next 18 months, we’ll be adding about 18 new properties. That’s a good start, but it’s just got to continue. We really are gearing up for the ‘brand for growth,’ and one of the brands we have under our collection is about sustainability. And it’s not cheap. It’s never cheap to go into sustainability. It’s not just about removing straws and plastic bottles,” he said.
“And as we grow, people are important. It’s amazing, if you have a great team, you can do so much. It’s something that I really think about. How to motivate, and how to grow a high performing team,” he added.
For staff retention, Pan Pacific is investing a lot in training and development, Choe said.
As Ascott seeks to expand in key markets, with many high-end hotel projects, Mansfield said he is also wary of increasing construction costs.
“Just managing the various stakeholders we have in our network, our development partners, making sure that we make the right decisions in tandem to grow responsibly, not just for the sake of growth, but that we have sustainable businesses that are profitable and that we deliver to the customer.
“Because we just need to continue to grow no matter what, even though the circumstances we’re dealing with now, and the environment, are challenging. They’re very different from what they were during the pandemic. It’s just another opportunity to get through it,” he said.
Ascott recently “had probably signed the most keys in the history of our brand in Australia,” Mansfield said.
“And we believe we’ve had to go back to the table and just work with the developer and say, ‘Yes, we understand you say you need a better return; we understand you need a higher rent.’ Otherwise, they just can't build it,” he said.
“‘Responsible deals’ are a company ethos. Whereby, we can get liftoff, we can get cash flow coming, we can activate value in that local community in the right location that brings about the returns for our owner and impacts our builder to grow the network and grow our brand,” Mansfield added.
As the cost of development rises, “supplies are really a problem,” Choe said.
“We need to be very careful. One of the things I really suggest is that when you do a development property, try and go for the designer building strategy,” he said. “You work with the architect and the designer, and you really heighten up on everything you want to do. And then [the developer] gives the price, and [the developer] guarantees that price.”
Choe said this helps ensure against one of the “two things that really kill you — extensions of time and last-minute changes.”
On top of balancing all of those challenges, hotel brands must differentiate to stand out to potential guests.
“Differentiating is key to growth in a competitive environment,” Mansfield said. “We have a targeted customer, and it’s just delivering on that, being disciplined and aligned to what your target customer expects. How you differentiate, and how you activate that feeling of community in your property that actually delivers value for money.
“Higher room rates are great, but we’ve got to ensure value for customers. They need to see it. That’s not just for our company, but the industry needs to keep that going to sustain itself,” he added.
Pushing the Envelope
For Derry, delivering one-of-a-kind experiences is essential to stand out and stay competitive.
“Because people want more than just a great hotel room,” she said. “What makes us competitive going forward is really going to be around experiences at our hotels, and that our owners are investing in. A number of owners here are making great investments, not just in regards to the design and the feel of the hotel, but in incredible experiences people have, whether its food and beverage, whether it’s an ice-skating rink up in the Blue Mountains.
“In addition to that, it also has to be around brand. Brand is going to be what makes individual hotels stand out. What’s unique to the brand, how does that appeal to certain markets is going to be critically important,” she added.
Choe said “niche marketing” is very important for the hotel brands.
“Brands need to be very clear what they deliver ... and experiences are what people are looking for,” he said. “Even taking them on tours of our rooftop solar panels and explaining the benefits of the urban farms and the biophilic designs. The tours are booked up every day, and since it was so popular, we threw in a high tea and charged 78 Australian dollars ($50.27).”
One factor flattening these initiatives is that the airline industry has not recovered sufficiently and often has spotty service, Choe said.
“Singapore Airlines just announced record profits, but where is the service?” he said.
Recently, the Australian government’s blocked additional Qatar Airways flights, which hoteliers said is a hamstring for inbound tourism and hotel recovery.
“Government action is another of those things you can’t control,” Derry said.