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Just returned from Hong Kong after attending the HICAP conference – good to see how the event has grown since its early days when it was held at the Kowloon Shangri-La.
Intellectually though, Suchad said he’d invest in Papua New Guinea because after a stay there where he was forced to pay a very high rate for an average hotel plus he had to pay an exorbitant amount for wifi. “It’d be a good place to own a hotel”.
These investors are in a good place. According to STR Global’s March 2012 report, Asia Pacific’s RevPAR growth is at 23.0% year to date, far outperforming all other regions in the world. With a region-wide aggregate RevPAR of just over US$86, Asia Pacific also comes out ahead of both Europe and the Americas in absolute performance.
The region is also teeming with new development – over the next three to four years, some 330,000 new rooms are likely to enter the market – more than new supply in Europe, Middle East and Africa combined.
So other than those main cities, where are the hot spots? Maldives came up a lot. It’s the only place in the world where there are 15 resorts commanding higher than US$1,000 average rate. And 60% of the world’s seaplanes are there, which explains why Blackstone Group bought two seaplane companies there. Said Headley, “We see positive numbers in arrivals and there is good customer satisfaction.”
Yeo said that he always thought of the resort business as cyclical but not any more in Maldives where, thanks to China – accounting for one in four visitors to the islands – the seasonality has evened out.
It was interesting to later get another perspective because while it is clear these four men pick hotels for their returns, James Sherwood, founder and chairman emeritus of Orient Express, picks them for their romance. And over the years, he’s proven that romance does pay off.
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Sherwood (left), who was bestowed the HICAP Innovation Award yesterday, recalled how, in his early days in the navy, he’d travel out to the Far East and stay in the best hotels – Manila Hotel, the Raffles Singapore, the Royal Hawaiian in Wakiki …
While in shipping, he thought he should diversify beyond containers and so bought the Cipriani in Venice. Within a decade, the hotel division had become bigger than the shipping arm and so he created an independent company, Orient Express.
“In every city I visited, I always took a few hours to look for possibilities. I always had a target of 10 each year and we would buy two or three, until the financial crisis,” he said over video.
He confessed he almost bought the Raffles which was then controlled by OCBC but “the wily CEO decided to do it himself”.
He was also offered Holt’s Wharf in Hong Kong for US$10 million. “What a mistake I made,” he confessed, because that later became the site of the Regent Hong Kong, now the Intercontinental.
And even though his company is very capital-intensive, he said it was much more profitable than an asset-light company. “Five years prior to 2008, we were more profitable than Four Seasons. We had general managers who ran their hotels like their own businesses and usually we achieved higher rates than uniformly branded hotels. Brands work better for new builds than grand old ladies.”
Today Orient Express runs six luxury trains, seven river cruises in Myanmar and France and about 50 top-end hotels. And he said there were no limits to expanding the collection. He still has in his pocket his list of 10 hotels.
In a media interview, he said, “I think there is a demand for the best. In life today we are confronted with so much mediocrity. In an age when everyone is deluged with homogeneous brands, I have liked to create the special. There is a real unfulfilled need and desire to experience it.”
Thank you Mr Sherwood for reminding us of the heart of hospitality, not just the assets of hotels.
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The one that got away – Raffles Hotel, Singapore
and (below) the “mistake” – Intercontinental Hong Kong
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