Asian Chains Take Upper 'Upper-Upscale' Slots

<B> Asian Chains Take Upper 'Upper-Upscale' Slots</B>

By Maria P. Vallejo

All the hotels in the top five positions in the upper-upscale segment drew much attention from analysts for their limited U.S. presence, introduction of new survey players and position jumping this year.

Following the recommendations of industry analysts that we further segment the upscale category, BTN this year for the first time offered separate "upper-upscale" and "upscale" categories, resulting in unexpected results in the top five positions. The slots were filled by two chains new to the survey, Shangri-La Hotels & Resorts and Pan Pacific Hotels & Resorts, and three chains that leaped over more than seven positions to reach their current standings.

Input from corporate buyers with significant business in Europe and Asia greatly influenced the survey, highlighting little-known hotel chains--some with as few as two properties in this country. By concentrating their efforts on a smaller group of properties, they dramatically could improve service levels across their portfolios. The smaller number of competitors in the upper-upscale segment "makes it easier for these chains to score well or score poorly," said Robert Mandelbaum, New York-based PKF Consulting's director of research. "But you really have to commend the upscale hotels, because they have more distribution. It's more challenging than offering consistent service in one or two properties."

Improved international business relations between the the United States and Asia led to travelers having greater exposure to these Asian-based hotel companies (see story, page 39). "They're predominantly Pacific basin hotels, so they're not household words for the U.S. traveler," said Ted Mandigo, president of Chicago-based T.R. Mandigo & Co. "I think all the activity going on between Japan, Hong Kong and the U.S. is resulting in those Pacific-based hotels getting a lot of attention."

With no hotels in the United States and only one property in Canada, Hong Kong-based Shangri-La Hotels & Resorts snatched up first place and swept nine categories--ranging from best corporate rates to helpful and courteous staff.

Contradicting analysts' speculations, Shangri-La officials did not attribute this accomplishment to concentrated efforts on fewer properties. Rather, the company achieved its position through greater critical mass, officials said. Shangri-La added two hotels last year, increasing its portfolio to 36 properties scattered throughout Asia, primarily in China and Malaysia. "We're strengthening ourselves in terms of service and we have the critical mass," Hutchinson said. "They are recognizing us now."

U.S. business remained stable at 17 percent of the hotels' overall occupancy despite the increase of intra-Asian travel, he said. American business travelers buy a half-million room nights per year and account for more than 100,000 guests.

Shangri-La outshined the other companies in the corporate rate category, while many of its corporate customers opted to pay rack rate because of the plethora of amenities that rate includes, officials said. The rate program, which includes car service, free laundry and free local calls, was originally designed for travelers from small to medium-sized companies. "We wanted to take care of the individual travelers who didn't have a big corporate company behind them," Hutchinson said. "But the corporate accounts started using the program because it's more economical."

According to an internal survey, almost all travelers who used the rack rate program were corporate travelers, he said, and 87 percent of them plan to use it again. The company did not, however, eliminate corporate contract negotiations. Shangri-La routes U.S. corporate contracts through regional sales offices in Los Angeles and New York, offering one point of contact.

Shangri-La also won the individual categories for helpful and courteous staff, meeting facilities, business centers and business amenities. The exemplary staffing was attributed in part to a mandatory training program for which each property must set aside 2 percent of its salaries and wages.

<B>Pan-Pacific Debuts In Fourth Place</B>

Another newcomer to the list, Pan Pacific Hotels & Resorts, attained the fourth place position by actively seeking out corporate contracts in all of its hotels, including its three North American properties (in San Francisco, Vancouver and Hawaii). The Singapore-based company has been targeting key global business accounts in regions where they have properties."We placed a much heavier emphasis on marketing and have strategically put together key corporations that we wanted to go after," said Maria Dempsey, director of sales and marketing for North America. "We have really expanded the corporate market in the Silicon Valley and Los Angeles, and in the Midwest."

In the last two years, corporate contract accounts based in the technology-oriented Silicon Valley rose from three accounts to more than 20. In Bangkok, Pan Pacific is targeting financial companies located near its hotels.

Analysts said that name recognition may have played a large role in the positionings of the remaining hotels in the new tier. Peabody Hotels, with hotels in Memphis and Orlando and five franchised properties, pulled into second place, from fourth place last year. Company officials said it did not undergo major transformations last year, but rather reinforced ongoing projects and policies. Its policy of ensuring quick commission payments helped the small company win the payment category. "We value our relationships, and our commitment is that within 48 hours after a guest leaves, we send out the commission," said spokesperson Mohamad Haimian.

The plan for 1998 is to focus on renovations and launch a guest history program that will capture and store guest information starting from a traveler's first stay.

Swissotels took the third-place bronze medal, leaping forward from its former tenth place standings. "It is a good solid product," Mandigo said. "In the rest of the world, they've created a strong impression of hotel construction."

Inter-Continental Hotels moved up four notches to fifth place, based in large part on its long-standing reputation, analysts said. "Inter-Continental has been around forever. There's a lot of image and reputation in that," Mandigo said.

Marrying that reputation with multimillion dollar renovations and a focus on customer and employee relationships, surely didn't hurt. Inter-Continental renovated its San Francisco and New York properties in 1997, and other renovations are planned for Dallas this year. Before beginning, the company spent $2 million surveying more than 5,000 international business travelers about their preferences. Company officials attributed receiving the highest usage rate in the category to the launch of new programs based on the survey, including new meal, airline miles and family programs, said Scott Boone, Inter-Continental's vice president of sales and marketing of the Americas.

Eight new hotels opened last year, raising the chain's total to 203 worldwide.

Inter-Continental concentrated its sales efforts on global customers. It enforced continuous sales staff training to ensure thorough knowledge of its corporate accounts, and developed a database to capture account information. "The corporate rate program has been better communicated," Boone said. "We are able to track performance and production on an ongoing basis. This is enhancing our ability to negotiate win/win situations with our customers.