5/6/2010. Innovations in the Hotel Industry: The Asia Perspective. A Little Background
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1 Innovations in the Hotel Industry: The Asia Perspective Qu Xiao, Ph.D School of Hotel & Tourism Management The Hong Kong Polytechnic University A Little Background Recognition of Asia s Hospitality and Tourism Industry for Service Excellence Hotels Shangri-La Hotels Peninsula Hotels Mandarin Oriental Hotels Nikko Hotels ANA Hotels Aman Resorts Banyan Tree Six Senses Resorts Okura Hotels Oberoi Hotels Shilla Hotels and others Airlines Cathay Pacific Singapore Airlines Asiana Airlines Thai Airways Korean Air ANA Japan Airlines Dragon Air and others 1
2 Asia-ness Unique, distinctive or specific characteristics peculiar to Asia and Asian society Driven by socio-cultural cultural values and history The Asian Waves: Driving Forces Huge size of population as potential consumers Growing economic mobility of population Rapid industry development Entrepreneurial culture Expansion of Asian brands Unique cultural advantages Innovations in services Global Travel and Tourism Demand 16,000 Travel & Tourism Demand (US$ billion) 14,000 Travel and Tourism D emand (US$ Billion) 12,000 10,000 8,000 6,000 4,000 96% Growth 2, F Source: World Travel & Tourism Council #6 2
3 World Tourism, 2020 World s Top Destinations, 2020 World Tourism Organization Country 1. China 2. France 3. United States 4. Spain 5. Hong Kong 6. UK 7. Italy 8. Mexico 9. Russian Fed. 10. Czech Rep. Tourist Arrivals 130m 106.1m 102.4m 73.9m 56.6m 53.8m 52.5m 48.9m 48m 44m Market Share 8.3% 6.8% 6.6% 4.7% 3.6% 3.4% 3.4% 3.1% 3.1% 2.7% % Growth Rate p.a % 2.3% 3.5% 2.6% 7.1% 3.4% 2.1% 3.6% 8.5% 4% 1 HVS Asia Hotel Valuation Index Source: HVS HVS Asia Hotel Valuation Index Hong Kong Singapore Kuala Lumpur Beijing Shanghai HVI Asia Source: HVS 9 3
4 10 Caring is the Spirit of Asian Hospitality Attention to Details Attention to Details is a key Characteristic of Asian Hospitality 4
5 Quality Orientation - Star Rating Is Everywhere Creativeness is everywhere 5
6 Entrepreneurial Culture The mini-bar story Is mini bar a profit center or cost center? Probably neither but a commonly expected guest room amenity Free mini bar Mini Mart in Hotel More Systematic in Asian Hotels? View of Industry Leaders: Key challenges to implement service innovations Cornell Hotel School Roundtable (2008): What delights customers? Whether a technological innovation will be liked? How to establish employee reward and motivation system to encourage innovation? How to measure service innovation s effects on profit? How to make innovation a sustainable competitive advantage? 6
7 How to Assess an Innovation? 3 Questions by Johannesen et al. (2001): What is new? How new is it? New to whom? Conceptual Framework before Stories Innovation Dimension Technological Non-Technological Product Langham Place, HK Mira Hotel, HK Pennisula Tokyo OCT Hotels, China 9 Hours, Japan Mandarin Oriental Process Langham Place HK Marco Polo Hotels Venetian Macau Market OCT Hotels, China Venetian Macau Banyan Tree Organizational/Mgmt Marco Polo Hotels Banyan Tree Marco Polo Hotels..\the Butler 90s.mpg Can a hotel chain position itself as both Historical, legendary, elegant, and Hi-tech, hip, stylish, contemporary? 7
8 *) Langham Place Hotel, Mongkok, HK 665-room hotel opened in 2004, Immediately become the most innovative hotel in Asia: Cisco Color IP phones (weather forecast, free SMS, info center etc.) High-tech NXTV movie system (largest selection of movies in the world) Wireless in the whole hotel and fastest internet in HK I-Home device, allowing you to play music from your i-pod *) The First Mover Advantage may last longer than we thought Asian Most Admired Knowledge Enterprises * Astra International (Indonesia) * Honda Motor (Japan) * Korea Water Resources Corporation (South Korea) * Langham Place Hotel, Mongkok (HK, China) * LG Electronics (South Korea) The Mira Hotel - Hong Kong s most recent high-tech, lifestyle and design-driven driven hotel, with 492 rooms renovated and reopened in 09/2009 8
9 The Mira Hotel Sony Entertainment Centre A 500GB state-of-the-art PC Blu-Ray DVD Streaming Internet Radio Wireless throughout hotel My Mobile phone More Technologies Outside of HK Peninsula Tokyo 9 Hours Capsule Hotel /5/6 26 OCT Hotels in China The Creation of Experience in Theme Hotels 9
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11 OCT HOTELS INTRODUCTION 11
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17 The Innovation Strategy of Banyan Tree Hotels and Resorts 49 Market in early 1990 s Asia - home to several indigenous luxury hotel chains and resorts: Mandarin Oriental, Peninsula, Raffles, Regent and Shangri-La hotel groups. Four Seasons and the Ritz-Carlton also in Asia. Aman Resorts occupied the ultra-high-end resort niche. 50 The idea In 1994, Asia s leading five-star hotels were charging US$120 to US$140 per night for a standard room, while Aman Resorts was charging US$400. There seemed a huge price gap between Aman Resorts and the rest of resorts. So. something totally different - a really beautiful, unique, small property. Exploit the price gap and set an initial average price around US$
18 Beginning of Banyan Tree A sanctuary for the senses Developed 4 resorts in Phuket between , all operated by other management companies including a Sheraton. In 1994, Ho started Banyan Tree Phuket. It began the trademark pool villa concept, which was an innovation at that time. Today, the private pool villa concept has proliferated to other resort groups. 52 Beginning of Banyan Tree Banyan Tree spa unique experience then, a must now. Banyan Tree gallery - indigenous artifacts and handicrafts. A flat organizational structure. Management team at the resort level was made up of relatively young and ambitious people. 53 Branding of Banyan Tree Banyan Tree resort would become a romantic escape for couples. -Exotic locations -Independent Villas An environmentally sensitive and socially responsible organization
19 By combining the Asian culture and heritage with world-class service and luxury, Banyan Tree has been able to build a brand that has appealed to people across countries in Asia and beyond, and successfully capitalized on the pan-asian sentiment. 55 Banyan Tree Today Grow to the #18 among Asian Top 50 Brands in only 5 years. 20+ resorts & hotels, 60+ spas, 60+ galleries Vision to grow into a global business Strategically expand the operation into city hotel, condo and service residence markets. 56 Everything flows, nothing stands still. 19
20 Nothing is permanent except change. Change is the only constant. Lives of the Philosophers by Diogenes Laertius INNOVATION IS CONTINGENT THANK YOU! hk or Visit: 20
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