On
the first day of the Hotel Investment Conference Asia Pacific (HICAP), top
hotel executives discussed the industry’s hottest topics.
SINGAPORE — When asked about the
effects of overtourism around the world, Alan Watts, president of Asia Pacific
for Hilton, said what’s happening in Europe in places like Spain and Greece can
be considered an example of an outcome the hospitality industry doesn’t want.
“You’re talking about tourism
planning and government strategy and our roles in industry in liaising with
sensible planning,” he said. “Europe is sort of the test case for us, having
looked at stronger GDP growth, and having looked at encouraging tourism… Then
we accelerated it immediately, with unlicensed homestay rentals to triple the
size in some industry markets and, of course, infrastructure build hasn’t kept
up.”
Watts said tourism can benefit
hospitality, but it can also expand into a curse that will not go away. “Tourism can be a poison chalice
if the infrastructure build is not keeping up… and the opportunity for us on
stage and in this room, in general, is to make sure that the industry has a
meaningful voice in strategic planning and not be in the situation that we’ve
seen in Europe now where it’s just too little, too late,” he said. “If you do
end up with an anti-tourism sentiment, then all of a sudden you have an over
and under correction.”
Watts was speaking at a “View
from the boardroom” panel on the first day of the Hotel Investment Conference
Asia Pacific (HICAP) event at the Fairmont Singapore and Swissotel The
Stamford. The event is run by Northstar Travel Group's The
BHN Group. He was part of a panel including Peng Sum Choe, CEO of
Singapore-based Pan Pacific Hotels Group; Chin Fen Eu, CEO of Singapore-based
Frasers Hospitality; Yoshiki Kaneda, president and CEO of Tokyo-based Seibu
Prince Hotels Worldwide; and Jean-Jacques Morin, group deputy CEO and Premium,
Midscale & Economy Division CEO of Accor. The panel was moderated by James
Chappell, global business director for New York City-based Horwath HTL.
Choe said he is also worried
about overtourism (he mentioned Japanese authorities installing barriers to
block popular viewing sites of Mt. Fuji after residents complained about mostly
foreign visitors littering, trespassing and breaking traffic laws) but for a
different reason.
“I’m more concerned about how
governments react,” he said. “I’m sure we can build more infrastructure, which
is a government reaction and is important, or they can do worse things, like a
moratorium on building hotels.

If you just look at our numbers last year, the number of signings was flat in numbers, but the value in fees that would be generated in the future from what was signed was up and that’s what we try to provide — value generated.
Jean-Jacques Morin
“I like what Japan is doing, and
I don’t know how successful it is, but what they’re trying to do is say, look,
besides Tokyo, Osaka and Kyoto, there are so many other places to see in Japan… So, if they expand their marketing… if it is done right, we could solve this
problem rather than trying to stop it,” he said.
When the panel was asked about
large publicly traded hotel companies’ almost insatiable desire to show contact
net unit growth (NUG), Morin said he hopes the industry will try to move in the
other direction. He said Accor has been following that philosophy.
“We’ve been trying to shy away
from net unit growth. Why? Because net unit growth is not the translation of
value. It is just the easy way for somebody [to show growth],” he said. “If you
just look at our numbers last year, the number of signings was flat in numbers,
but the value in fees that would be generated in the future from what was
signed was up and that’s what we try to provide — value generated… I think it’s
going to take some time before people get there."
Morin also said companies with
an ESG mindset in development also face additional hurdles. “I would try to elevate the
discussion a bit on the ESG dimension. You may open all kinds of rooms, but
they may have no value because they were signed on the wrong basis in terms of
what the requirement will be, either by law or by practice on the various
places in which you develop,” he said. “Thinking this way, not looking purely
at the financial, but also looking at what we call extra-financial, and not
using the customer responsibility type of metrics, is something that the market
will have to [change] at one point.”
When the panel was asked about
dealmaking, Eu said ultimately, it comes down to how to best deliver value to
the stakeholders with the money. “Ultimately, we want to draw our
attention to the fact that this is a hotel investment conference. So, regardless
of what we do, I always tell my team it is all about delivering value to the
most important stakeholder in this equation, which is the capital stakeholder,”
she said. “Whatever brand, whatever operating models that they put in, it is
all about developing the P&L juxtaposed against investment costs… it’s
always about the transaction capital and how cash flow is priced in the market
based on your hotel risk profile.”
When asked about current hot
spots for growth, Kaneda didn’t have to look far. “Asia Pacific has the biggest potential to grow,
especially with people changing from spending money on goods to spending money
on experiences,” he said. “Talking about Japan, we are in a very good position
due to the increasing incoming visitors… Growth in Tokyo is about 20% more
than compared to before the pandemic, and that growth has been driven by rate
and not occupancy. In Tokyo, the rate is up 30% compared to the pandemic, while
occupancy was down by 8%, which means, I believe, we still have a lot of opportunities
[for growth]… that’s a good problem to have.”