The Chinese rulers during the Shang Dynasty – well over 1,000 years B.C. – were very active and innovative in creating resting places for their armies and people on the move.
Ancient Greece encouraged homeowners and families to accommodate travellers and provide the basics.
And travel became a legitimate way to make money during the Roman Empire, when savvy ancient businessmen introduced lodging classifications – from the exclusive "Hospitium" (top of the line) to the so-called "Stabula" (lowest product).
Then, many shelters were created as resting places along the Silk Road from the Mediterranean to the Pacific Ocean. This introduced lodging in many places along the way, from the Mediterranean to Persia to the very Far-East.
Since then, the lodging industry within Asia has seen a constant increase in volume – and in quality.
Some interesting questions
The oldest operating hotel in the world is in Asia. Do you have any idea where it is located and how old it is?
The Nishiyama Onsen Keiunkan, Hakawa, Japan. Built in 705 and still operating today.
Do you know when the first Asian Hotel Group was founded, by whom, and where?
The Sarkies Brothers created a portfolio of 9 hotels from 1863, but this only lasted 3 generations then the group dissolved.
1863 the Adelphi Hotel in Singapore (closed).
1885 the Eastern and Oriental Hotel in Penang.
1887 the Raffles Hotel in Singapore.
1891 the Kartika Wijaya Hotel in Batu East Java, Indonesia.
1901 the Strand Hotel in Yangon.
1910 the Majapahit Hotel in Surabaya in Indonesia. And the Sea View Hotel in Singapore (closed).
The oldest operating hotel in China?
The Jing's Residence, Pingyao, China opened in 1756, still operating today.
The first luxury hotel in Hong Kong?
The Hongkong Hotel, on Queens Road Central, which opened in 1868, has been demolished.
The introduction of quality individual and heritage hotels in many parts of Asia can be traced back to the late 1800s. This includes India, Sri Lanka, Malaysia, Singapore, Thailand, Japan, China, Indonesia, the Philippines, Korea, Myanmar, and others.
Most of these historical hotels are still operating today.
Some remain independent, such as the Manila Hotel, Philippines; the Eastern and Oriental, Penang; the Goodwood Park Singapore; and the Grand Hotel Pekin, Beijing.
Others, meanwhile, are now affiliated with large hotel groups – like the Raffles Singapore, the Chosun Seoul, the Mandarin Oriental Bangkok, and the Metropole Hanoi, amongst others.
Pre- and Post-World Wars
Several hotel groups were formed before the first World War, around the late 1800s. Among the first were the Hong Kong and Shanghai Hotels (Peninsula Group), the Indian Hotel Company (Taj Hotels), the Imperial Hotel Group (Imperial Hotel), and the Okura Hotel Group in Japan.Then, after the Second World War, staring from the late ‘50s, a number of North American hotel brands entered the Asian market, first Intercontinental Hotels, Hilton Hotels, and Western International Hotels (now Westin), then Sheraton Hotels, Holiday Inns, and Hyatt hotels. Most hotel deals were under a management agreement with Asian owners and investors.
In the process, a number of Asian owners acquired hotel experience and operating/marketing skills from those global brands and gradually developed their own local and regional hotel groups.
From the late ‘60s, a number of Asian hotel groups were formed throughout Asia; Dusit Thani, Mandarin, Shangri-La, Oberoi, New World, Banyan Tree, Millennium, Pan Pacific, Nikko, Otani, Lotte, Shilla, and many others.
Then, as China opened its doors to visitors and promoted travel and tourism, we experienced an explosion of Chinese hotel brands that now are among the biggest (in no. of rooms) in the world – like Jin Jiang, China Lodging, and many more. Most of those hotels and brands are domestic brands and operate within China. Some have acquired foreign brands.
Characteristics of family ownership
It’s important to note that, besides Japan and China, most of the Hotel Groups/Brands within Asia are controlled by local families.
Is this positive or negative?
Looking at the positives, Asian families normally don't easily dispose of their assets (unless forced to do so). The owner-operated formula.
On a less positive note, families tend to micro-manage and be deeply involved in the day-to-day business. They don’t like to step out of their comfort zones, and, in general, have some challenges in attracting and retaining top professionals and leaders.
We also have seen short-term strategies applied by Asian owners to go after short-term gains at the expense and reputation of the brand. This is not healthy in the long term, and one must accept that the hotel business is a long-term business.
Developing strong and competitive brands is not as easy as it looks. It takes commitment, motivated people, and product consistency. These are very important basics for family-owned hotel brands to embrace if they want to grow and expand.
Some family-owned brands, of course, have done very well. They have invested in people, in innovation/technology, and standards, and they are expanding very well. Others, however, are struggling to grow and be competitive.
It’s also important to note the different approaches and philosophies of the various family generations. In general, the founder (first generation) had a clear vision and style. The second generation, and especially the third generation, meanwhile, have totally different approaches to business.
Time will tell who is right, but we must accept that the basics of the hotel business have not changed.
What do Asian Hotel Brands have to offer?
Asian hospitality brands are regarded as having a world-renowned level of service and being good at welcoming customers, balancing between old-world and modern comfort.
With its unique look & feel, Asian hospitality is characterized by its warm, caring people who are deeply rooted in their cultural upbringing and beliefs.
In many cases, Asian hospitality is seen as the benchmark in the luxury sector and at setting high standards. This is all positive but must remember that investors and owners expect market position and return on their investment regardless of the brand standards.
From Local to Regional to Global
It is also interesting to see that a number of Asian brands are moving away from a capital intense/owner-operator model into an asset-light platform of management contracts, franchises, and some leases.
This, of course, will enhance brand presence in other parts of the world, in particular in the source of business locations.
Naturally, developers will always compare the volume of business – especially room business – that an Asian hotel brand can produce vs the production potential of global brands that have invested heavily in competitive loyalty programs and extensive marketing and sales support.
Hotel is a global business, and for Asian hotel groups to realize their potential, they have to move out of their comfort zone and become international players.
It is a fact that Asian brands are facing a very competitive environment from both regional and global brands, therefore a strong company culture and solid team of professionals are simply a must for a company to grow and expand.
It is essential for any hotel brand to clearly define their strengths, weaknesses, and competitive advantages, and to support a strong people's culture around this.
In the end, it is a people business. Developers of new properties will assess brands based on these very basics.
Asian hotel brands have to embrace the fact that investors, business partners, and stock exchanges (if applicable) expect transparency in all areas.
Business partners also expect that a brand knows its respective competitive landscape with the objective to achieve the desired market position.
Investing in Foreign Brands
A few Asian brands have been successful in investing/purchasing foreign hotel brands and physical hotel assets while others have totally failed.
During the so-called "Japanese Bubble", early/the mid-‘80s, a number of hotel assets were purchased by Japanese investors and by Japanese Hotel brands in several key places around the world. Those investments lasted a very short time and mostly ended up in losses. In addition to the burst of the "bubble", Japanese organizations tried to impose their own way of operating hotels and this simply did not work outside Japan. A clear lesson learned.
Over the past 10-12 years, we have seen a number of Chinese investments in foreign hotel brands and assets, some of those investments have been successful while others have failed. This is a business that requires visionary and focused leaders supported by a team of strong professionals with international experience.
Changing the culture or the DNA of a hotel or of a brand is never easy, it takes a long time and continuous investment/improvement.
Most Asian hotel brands have developed or are trying to develop multi/secondary brands. In principle, this sounds like a good idea but there are serious risks in doing so as it impacts the position of the main brand and can create confusion among the market/customers and the staff.
Ideally, a brand should achieve economy of scale before launching a new or a sub-brand as it is practically impossible for one team to do a good job of handling multiple brands and standards. Each brand needs its own team – and this can be very expensive.
In this part of the world, we have seen a few hotel brands focusing on their area of expertise, one brand (either deluxe, or 5 stars, or 4 stars) and it looks like the strategy is paying off in terms of volume of business, brand consistency, and positioning.
Other small-medium size hotel groups who have created a range of product lines/brands, however, are not achieving a competitive position and returns. They are at the mercy of the market and of the agents.
Small-medium size brands simply cannot be everything to everyone. It will not work, and the market will not take it.
They must be focused on what they do best. Clarity is imperative for both customers and internal people.
With the cost of securing business rapidly increasing, customer expectations continuously shifting, and difficult labor situations, most Asian Hoteliers are faced with some serious challenges. Anticipating change and identifying new business opportunities has become an essential part of operating hotel brands.With a clear and unique culture, a strong team of experienced professionals/ leaders, and focused strategies, Asia's luxury hotel brands have the opportunity to reshape hospitality in the West.
By Giovanni Angelini