While the world’s attention is focused on North Asia, spare a thought for South-east Asia whose potential is immense and is developing at a rapid pace fuelled by a growing middle class whose behavior will be shaped differently by technology.
Fraser Thompson: Social media strategy is core to growth.
Fraser Thompson, director, AlphaBeta, speaking at the HICAP Update in Singapore last week, flagged the opportunity in the ASEAN region and said that contrary to popular belief that growth would only come from the capital cities, the reality is it’s the secondary cities that will provide the spurt in the regional bloc comprising Indonesia, Malaysia, Singapore, Brunei, Thailand, the Philippines, Myanmar, Vietnam, Laos, and Cambodia.
ASEAN, he said, is relatively late to urbanisation with only 30% of people living in urban areas. This means the middle cities, with population ranging from 500,000 to 5m people, will provide a huge tailwind of growth.
“Don’t think of countries, think of cities,” he said, citing names like Cebu (Philippines), Karawang, Bandung and Makassar (Indonesia) and Chiang Rai (Thailand).
In these middleweight cities, tourism is one of the key drivers. At the conference, Vietnam was flagged as a hot market – with international visitor arrivals growing 27% to 10 million. Domestic tourism is also huge with 57m visitors spending US$7.5b a year.
And while most may think China is a huge source of visitors for the region, actually the region is its own best customer.
Intra-ASEAN makes up 46% of total visitors in the region, and if you throw in the rest of Asia, the intra-regional share goes up to 76% – which explains why if you want to succeed in Asia, you’ve got to have intra-regional networks built into your business.
Several initiatives also augur well for ASEAN tourism around easing of visa regulations and huge infrastructure projects planned for the region, from airports to ports and rail.
Since 1995, there’s been talk of a pan-Asia rail connecting the 10 ASEAN nations – which will connect Singapore and Kunming, in southwest China, passing through Malaysia, Thailand, Cambodia and Vietnam before reaching China. Spur lines would link Thailand to Myanmar and Laos.
With this region, Thompson also believes tech disruption will play out differently in ASEAN as opposed to the rest of the world. Social media is huge in the region – with Jakarta the Twitter capital and ASEAN, one of Facebook’s biggest markets.
“A social media strategy becomes core to growth and the Internet of things allows transformation of the fragmented supply chain,” he said.
New technology will also allow upskilling of workers and there’s the opportunity for digital leapfrogging with less than 50% broadband penetration in all countries except Singapore.
Beyond Vietnam, other hot hotel markets were called out – Australia, New Zealand, Japan and India rule this year. Singapore’s in for a rough ride the next two years with RevPAR down 4.6% for the first time in 13 years, Phuket was called out for best yielding rates and Japan’s inbound tourism is soaring, opening up opportunities for hotel development.
In terms of pipeline of hotel rooms, Asia Pacific is seeing a shift towards more upper midscale properties being built while luxury, upper upscale and upscale are seeing a slowdown in development.
Photo: Cebu, Philippines. Credit: istock
