Globalizing Businesses Raise Profile Of Asian Chains

<B> Globalizing Businesses Raise Profile Of Asian Chains</B>

By Maria P. Vallejo

Financial crises aside, the Asia/Pacific region received much attention last year from corporate traveler managers as international business shifted east. This movement helped propel four Asian-based hotel companies into the top ranks of several categories in the 1998 Business Travel News U.S. Hotel Chain survey.

In the deluxe category, Peninsula Group, Shangri-La Hotels & Resorts and Pan Pacific Hotels & Resorts, which were excluded from previous surveys because of low usage rates, captured the attention of international business travelers, who in 1997 increased their interactions with Asia. Those travelers brought back with them idealized impressions of service in these foreign-based hotels, analysts said. Suprisingly, these hotels attained their positions despite their limited U.S. presence.

Meanwhile, Mandarin Oriental remained within the top five in this category after losing ground from second place in 1997's survey.

"It doesn't surprise me that any of these hotels are in the deluxe category, except for Peninsula and Mandarin because they don't have such a large presence," PKF Consulting vice president Robert Mandelbaum said.

Analysts and consultants attributed the hotels' positionings to increased business in Asia, superior guest services based on high staffing ratios and reduced expectations.

U.S. business travel to Asia significantly increased in 1997 versus previous years with a primary focus on China, said Bill Fontana, vice president of international human resources at the New York-based National Foreign Trade Council. The Council is a not-for-profit research facility that conducts surveys on relocation trends, opinions of travelers on overseas assignments, international trade, taxes and human resources.

Robert Hutchinson, Shangri-La's senior vice president of marketing, said he has noticed an increase in U.S. guests and has been able to maintain his 17 percent U.S. guest occupancy, though he expects this percentage to drop given a spike in intra-Asian travel.

Increased international business interaction with Asia led to more U.S. travelers and travel managers noticing the continent's high service ratios between guests and hotel employees. Cheaper labor costs and less restrictive laws allowed for this advantage, analysts said. Unlike most hotels in the United States where one employee is allocated per guest, some hotels in Asia provide the services of three to four employees per hotel guest.

These countries supposedly hired interns at little or no cost for services commonly performed by higher paid staff members. "They have the ability to hire far more staff members than we do," said Linda Novey, president of Sarasota, Fla.-based Linda Novey Enterprises Inc. "These people consider it part of their education and the hotels do not pay a dime. They should have better service levels."

Some hotel company officials disagreed with this assessment, noting increasing labor costs over the past five to 10 years. In some areas of the continent, labor costs surpassed those in the United States, they said. If stated 20 years ago, the analysts' assumptions would have held validity, but currently some Asian hotel companies are reducing their staff sizes, Hutchinson said. Shangri-La plans to continue reducing its staff by concentrating on general training for all positions, he said.

Rather than staff size, hoteliers said "exceptional" staff performance was attributed to "Asian ethics" instilled in employees as part of their cultural upbringing.

In the upper-upscale category, Shangri-La Hotels & Resorts won first place overall and in several categories, including helpful and courteous staff. Pan Pacific Hotels took third place overall and in the helpful and courteous staff category.

Supporting hoteliers' opinions, Fontana said the level of service in Asian hotels surpassed most U.S. hotels because of the continent's different service mentality. The Asian culture commonly views the service industry in a positive light, while the same field tends to elicit a different response in American culture, he said.

"There is an importance Asians place on service," Fontana said. "People take pride in what they do. Don't compare them to U.S. hotels. They are far superior--superior primarily in service."

During a Shangri-La meeting, employees described their work ethic as emphasizing humility, respect, courtesy and sincerity, Hutchinson said. The theory embodies a mindset of employees treating hotel guests as if they were honored guests in their homes.

"The status of being a service person and that role in society is probably held at higher esteem," PKF's Mandelbaum agreed. "It's honorable to service other people. In the United States, it's not that honorable to do so."

The supposed Asian mentality, in conjunction with U.S. travelers being more understanding of international hotels, helped these Asian-based hotels gain ground. Travelers tended to reduce their expectations of international hotels because of unfamiliarity with the region or country, Novey said.

These travelers would stay at U.S. hotels with preconceived expectations of facilities, service and amenities. If the hotel did not fulfill these expectations, the property would witness a greater backlash compared to international hotels that provided travelers with the same level of service.

"I think they hold American hotels to a higher standard," Novey said. "When you're traveling to a foreign country, you're going there with a presupposition that it's not going to be the same. The presupposition will allow you to forgive them for something you wouldn't do back at home.