Starwood Hotels & Resorts Worldwide in May will open its first property in Vietnam, the 382-room Sheraton Saigon Hotel & Towers in Ho Chi Minh City. Similarly, in June Ramada International Hotels & Resorts, a division of Marriott International, will open its first hotel in South Korea, the 380-room Ramada Plaza in Jeju, a one-hour flight from the capital city of Seoul. Meanwhile, Hilton Hotels Corp. in January opened the latest property of its deluxe Conrad brand, a 392-room hotel in Bangkok, Thailand.
As these projects suggest, interest remains high on the part of U.S.-based hotel companies in developing full-service properties throughout Asia. While the development pipeline may have slowed in gateway cities in the United States and Western Europe, opportunity still exists in Vietnam, South Korea and Thailand, as well as Malaysia and other Asian markets. The high barriers to entry that can inhibit new construction in the United States and Western Europe are less of an issue in many Asian cities, where desirable sites in existing and emerging business districts still can be found. These business districts often will be among the cities' most heavily trafficked locations.
Up to now, China has been the biggest success story in Asian hotel development as U.S.-based hotel companies vie to establish a foothold in what is the region's single largest market. While China remains a development powerhouse
(see story), the pace of development is growing in these other destinations as well.
Travel managers whose companies are building businesses in these Asian markets may not yet have established hotel relationships. They are more likely, therefore, to fall back on the hotel companies they work with in the United States and Europe, such as Starwood, Marriott and Hilton, to help provide the room nights they need. Travelers certainly recognize the brand names. Hence, they're more likely to trust that the guest room and service levels will meet their expectations as Western travelers. Buyers benefit too if the additional room night bookings increase their negotiating leverage with these multi-brand providers.
At the same time, however, Asia-based hotel companies also are expanding their portfolios in the region and are eager to broaden the number of U.S.-based corporations with which they work. Consequently, they may be more willing to negotiate favorable rates as a way of building trial usage with these accounts. Hong Kong-based Shangri-La Hotels and Resorts, for example, in February opened a 120-room hotel in the Putrajaya district of Kuala Lumpur, Malaysia. Putrajaya is the administrative capital of Malaysia's federal government. Reflecting the depth of inventory that local hotel companies have in these markets, Putrajaya is Shangri-La's seventh property in Malaysia.
For Starwood, the intention is that the new Sheraton Saigon will build visibility for the Sheraton name. "The property no doubt will help create the brand equity that's so important in an emerging market like Vietnam," said Miguel Ko, Starwood president of Asia/Pacific. "Our plan is to leverage this hotel to quickly grow in other Vietnamese cities, including Hanoi and Danang."
Noting China's strong economic showing in recent years, Ko said such other countries in the region as Vietnam benefited from a kind of halo effect. "We expect Vietnam's growth in the next decade and beyond to dovetail with the progress China has made and we want to be ready with the quality of lodging that will be required," he said. "As Vietnam's popularity grows as a business destination, the demand for upscale hotel accommodations expands as well."
The Sheraton is located on Dong Khoi, one of Ho Chi Minh City's main thoroughfares. To ensure Western travelers are comfortable, guest rooms average 430 square feet, which is considered large by Asian standards. Marble bathrooms, onsite tennis courts and a rooftop wine bar are other luxury features not typically found in hotels in the region.
Similarly, South Korea's growth has mirrored China's. "Some of the same forces driving growth in China are driving growth in other parts of the region, such as South Korea," said Richard Oakes, vice president of sales, marketing and reservations for Ramada International. "There's a lot of Western investment at the moment, a lot of joint ventures. We aspire to be a company without borders and right now there are great opportunities to establish the brand in many of these markets." Ramada is part of Marriott outside the United States and Canada. In the United States and Canada, the brand is part of the Cendant Hotel Group. Other Marriott brands are building a presence in the region as well.
The Jeju property is a Ramada Plaza, which is the top tier of the Ramada International brand. Brand standards include guest room televisions with English language channels and concierge service in English as well as the local language. To accommodate international travelers, who frequently arrive on night flights, checkin is available starting at 7 a.m. Likewise, the health club and room service operate 24 hours a day.
The Conrad Bangkok is part of a multi-use development called All Seasons Place that includes office, retail and residential components in addition to the hotel. According to Greg Meadows, the hotel's general manager, the staff has been especially trained to assist international business travelers. "Not only the service ethic, but the technology in the guest room are designed to allow the business traveler to be as productive as possible."
Assuming that many international business travelers will be in the hotel attending meetings, conference space at the Putrajaya Shangri-La comes with access to videoconferencing facilities. "In addition, the hotel's business center has three adjoining meeting rooms to accommodate more impromptu meetings," said Giovanni Angelini, Shangri-La CEO and managing director.
In terms of building all-important visibility for Shangri-La in the Malaysia market, Angelini said the latest addition to the portfolio "reinforces our position as the country's leading luxury hotel group with almost 3,000 rooms."