Phuket out; Hi Hainan?

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Fox – sly. Trots – left-leaning (Trotsky) plus its more insalubrious meaning.
Foxtrots – leading the industry in a dance.

2006 July 10
Phuket out; Hi Hainan?

Sadly but understandably, business in Phuket has been bad since the December 2004 Indian Ocean tsunami. But perhaps one reason was not immediately foreseen – bad vibrations in a location where thousands died.

Also touched badly is Bali. Hit by murderous terrorist attacks aimed directly at tourists in 2002 and in 2005, the destination may not recover properly for the next two years – for fear of another attack.

These realities in particular, plus growth in demand, indicate that Asia will get another international resort soon. Which will it be?

Current ones are only Bali and Phuket. Others, such as Langkawi, Lombok, and Koh Samui, have not made it, and neither have Pattaya and Penang (which, in another era, was arguably Asia’s first).

Goa and the Maldives are in a region that attracts a different geographical market, but Sri Lanka, post-tsunami, may change. Longtime pretenders have been Hainan island (around Sanya) in southern China, and Boracay island in the Philippines.

I go for Hainan. Mainly because it seems likely to get a better image soon – instead of the current one of a tawdry sex cheap resort destination.

The clincher is announcements this year that two upmarket resorts are due – Mandarin Oriental and Ritz Carlton. They follow a few other upmarket brands, all in Sanya (except Sofitel, 90″ from Haikou), viz:

– Hilton, 500 rooms, opening this year

– Kempinski, 400 rooms, opening this year

– Mandarin Oriental, 292 rooms, opening this year

– Marriott, 455 rooms, opened

– Ritz-Carlton, 451 rooms , opening 2008

– Shangri-La (two, but may have been cancelled), opening 2008

– Sofitel, 436 rooms, opened

Airlines have long been an important element in making resort destinations successful. But it is now low-fare airlines that can now make a resort work, and not regular airlines. Hainan does not have LFA support, but may have when LFAs get properly into China – which surely will be before year-end?

In the meantime, Hainan Airlines – which has majority non-Chinese ownership – is more commercially aware than some other airlines in China.

The final factor is visas. China makes it easier than some destinations, but it is still a hassle. As Hainan is still legally a Special Economic Zone in China, it does have some flexibility. This could extend to lifting visa requirements, or providing visa-on-arrival, but this power is to be tested.


Travel advisories. What to do.

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 June 30


Travel advisories. What to do. 

The issuance of travel advisories is by nature an awkward business. 

On one side, governments are charged with protecting their travelling citizens as much as possible. On the other side, destinations are charged with ensuring that the advisories do not unnecessarily damage their visitor potential – or are limited in geographical and timing terms. 

The World Tourism Organisation has produced a handbook on the topic. We believe the WTO has some positive proposals, although many are ho-hum – viz, “…ensure warnings are accurate, relevant and appropriate”. 

Among the recommended guidelines (with our comments in italics) for those issuing advisories: 

– Use a wide variety of governmental and non-governmental sources for gathering information. Ho-hum. This is what is done today, and “wide” is meaningless. 

– Ensure their warnings are accurate, relevant and appropriate, and avoid ambiguous language and any bias or political considerations. The first part is ho-hum. The second is impossible, not just impractical. 

– Encourage travellers to consult, prior to departure, all sources of information, both governmental and non-governmental. ‘All’? That is just silly. 

– Be specific about the geographical location of problems and include maps and indications of distance. We know where the WTO is coming from with this proposal. It is a nice idea, but impractical if not impossible. Where, for instance, will be the next moslem/hindu clash in
India? So what is the point of pin-pointing the last one?

– [Edited] Show prudence and restraint in evaluating the threat and in the language used. Communicate in an accurate and consistent manner, by characterising the scale, probability or imminence of the problems. As above, sensible ideas, but impractical if not impossible to follow for reasons which should be obvious to all. 

– [Edited] Specify nature of risk – political, social, terrorism, environmental, industrial (such as chemical or nuclear hazards), health, transport. All indisputable, apart from ‘transport’. We assume this means safe planes, buses, etc, but a complex issue. For instance, the European Union recently published a blacklist of 92 banned airlines. Should this be included now on every EU’s advisory?  

– Keep under constant review, and specify date of publication. Yes. Although ‘constant’ is not possible; better to say ‘review monthly’. But see next, which would resolve all these problems. 

– Publish information on a central, easy-to-use website, and update all warnings regularly. 

This is WTO’s most-sensible proposal, but we are not sure WTO realises the obvious conclusion. And that is that the WTO itself must create this “central, easy-to-use website” in the way that many websites operate – with information provided by others, not the operator of the site. 

The WTO can notate entries – which would be official from the governments concerned – with date of the advisory, dated response/reaction to the advisory from the destinations, and perhaps comments from actual travellers such as “We found it safe, except downtown in the evenings”. 

To go further, until the WTO operates something like this, which would necessarily say “Do not visit ()”, then all its proposals are hollow. Unfortunately, we doubt the WTO, despite its United Nations status, has the backbone to solve the problem of travel advisories this way. 

For instance,
Nepal was a topic in a recent issue of WTO’s newsletter. Some edited comments – “
Nepal ready for receiving visitors”, “The latest political uncertainty should not have any serious consequences for the country’s tourism industry”, “tourism has survived and produced good results”. With comments like this, will the WTO have any credibility with the travelling public?



Vietnam. Piano lesson.

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 June 20

Vietnam. Piano lesson.

Once upon a time, there was a hotel in a city in
Asia (let’s call it the Renaissance Riverside in
Ho Chi Minh City, Vietnam) that planned a small piano concert in its lobby.
 Nice, because , perhaps surprisingly, there is lots of unsung musical talent for western music in the country. 

The authorities, via the staff member with a link to those authorities (all sizeable hotels have such a person), said that a licence would be needed to operate a concert. No problem, said the hotel’s management; how do we get such a licence? We don’t know, came the reply, we have never issued one before. This went on, backwards and forwards, until the scheduled day for the concert arrived – and still no licence. Management decided to push and said the concert would go ahead without the licence. Horrors, said the go-between. That could mean the police would enter the hotel, stop the concert, and presumably arrest anyone who had been listening illegally. 

In effect, as communism can also be pragmatic, the aforementioned authorities duly issued the licence that day, and the concert went ahead happily and legally. Patrick Imbardelli, now running InterContinental in Asia Pacific, will probably be disappointed that not much has changed.  

When he was general manager at the Floating Hotel (no longer there) 20 years ago he went through the same experience – he was told he needed a special licence to operate a floating hotel. There were hotel licences, but no floating hotel licences. Unsurprisingly, no one knew what was required because no floating-hotel-licence had ever been issued.  end

Hotels. Equality.

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 June 10

Hotels. Equality.Waldorf=Astoria is the new top-level brand of Hilton. I thought the ‘=’ was a mistake, but no, it’s real. Do the brand people (who get paid for thinking up this sort of thing) know that although that might be cute, Waldorf=Astoria actually means Waldorf-equals-Astoria?

Which is not only wrong, but a bit silly. 


Sickening trend. Or Unhealthy growth?

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 May 30

Sickening trend. Or Unhealthy growth? 

I refer to what is called medical tourism, but I will resist any more puns, and continue with the facts. Dr Ridzwan Bakar of the Asian Hospital Federation says that there were over 2mn visitors in
India, Malaysia, Singapore, and Thailand in 2005 who combined their trip with some sort of medical procedure at a hospital or clinic. That would be near-6% of the total (depending on who’s counting), and probably a higher share than most thought.

Bakar also said health tourists spent an average US$362 daily compared with US$144 for leisure travellers. But none of his data was sourced, and so for the present should probably be considered just an indication. But the business seems likely to grow at a rate faster than general travel. Although as with VFR (visiting friends/relatives), it may be difficult to clearly measure. 

Some may be related to general leisure travel, but more likely not. After all, the head of Bumrungrad hospital in Bangkok – which has been successful at attracting patients from outside Thailand – says ‘Sun, Sand, and Surgery’ is a myth. “The first thing a doctor tells you after a procedure is ‘Don’t go in the sun, don’t swim, don’t go in the sand, don’t drink, and don’t over-exert yourself.'” 

But there may be medical business for hotels. Bumrungrad owns two small hotels in the grounds of the hospital, although it manages these itself. But – just as some hotel groups, mainly in the US, actually run the service sector of hospitals – there will be opportunities to run pure-hotel operations where the main or only clientele is related to the hospital.  end

Budget hotels. My room is smaller than yours.

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 


2006 May 20

Budget hotels. My room is smaller than yours. 

I am not sure whether Yotel sounds like a hotel in the Swiss Alps or another type of ‘cool’ place. (From ‘Yo!’ – for those of you who are not cool.) In fact Yotel is a new-type of hotel, launched at the World Travel Market last year in London. Yotel says its rooms were inspired by British Airways first class cabins and Japan’s capsule hotels – which I presume means having all facilities needed in a small space. 

Yotel’s rooms have air conditioning, television, (rotating) bed, and bathroom. And they Measure just 11sqm. Compared with other small rooms, Easy Hotel (which has just opened in London) rooms are 6-7sqm – yes, really – and Accor’s Formule 1 are 12sqm. The difference is that Yotel’s windows are internal, looking into corridors, which in turn are lit by the practical equivalent of magical mirrors. 

That should allow Yotels to be built into locations difficult for standard hotels – city centres, airports, and even underground. That seems like a good idea. However, Yotel is quoting a room price of US$133 (at US$1 to £0.53) in London. That compares with US$38 (plus one-off US$19 service charge) for Easy Hotel, and under US$50 (€40) for Formule 1. 

Working that out to an equalising measure – say US dollars-per-square-metre – then Yotel comes out at about US$13, Easy US$6, and Formule 1 US$4! 




Hotels. Priced out of the market?

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 May 10

Hotels. Priced out of the market?

We are in a period when price is an important factor in the travel business. That sounds obvious and not new at all. But the newness is that most every traveller now wants a discount, and is ready to pay prices only if they are greatly below what they were. 

Surprisingly, hotels have generally been able to avoid negative comment about high prices. Yet – admittedly over a long period, at least 25 years – the hotel cost share of a trip has changed. From being about half the cost of an air fare, to about the same, and to today – where they can be twice, three-times, or even five-times the cost of an air fare. Part of the reason is that over this period, air fares have come down hugely (even before the arrival of low-fare airlines, which have lowered fares even more but which have also had the affect of lowering air fares of the full-service airlines. And hotel rates (certainly rack rates) have gone up over the same period. 

How have hotels escaped the pressure in the travel business to lower rates? I believe it is because they are individual properties, and therefore not such easy targets. Although it seems easier to attack ‘Japan Airlines’ and ‘IATA’ for high air ticket prices, it does not seem to same to attack ‘Hilton’ and the International Hotel Association for high hotel rates. My point (Ed; finally) is that all this is changing with the internet. The ‘merchant’ (ie contracted) product that many online agencies are negotiating with hotels is based on the demand for lower prices. The fear about ‘commoditisation of hotel rooms’ is a factor related to price. As the head of Orbitz told me recently, the customer has a choice between brand and price, and he is choosing price.  

As I have said before, the hotel business needs to work out a way to make as much money (or even more) from charging a lower price.  end

Hotels/cruises. Help from maths.

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Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

2006 April 30

Hotels/cruises. Help from maths.

I am now trying to sell the idea to hotels at how to increase occupancy at a stroke. 

I got the idea from the sea cruising business. Cruise companies calculate their passenger capacity by multiplying the number of cabins by two beds to get to 100%. That way, a 400-cabin ship would always be assumed to have 800 berths. But many cabins actually have four berths. Yet when the cruise companies look at occupancies, they divide cruise passengers onboard into that 800-berth total. So Royal Caribbean, for instance, tell me happily that they are getting 107% occupancy. 

Now all that hoteliers need do is to assume their 400-room hotel has only 400 beds, then calculate occupancy on the actual number of guests that have checked in.  That way if half of a hotel’s rooms have double occupancy and half single on what normally would be 70% room occupancy, under this new scheme that would be…er…105% occupancy! Who needs consultants when you’ve got mathematics?