Asia's thriving economies are spawning new airline routes and more price options in hotels for visitors.
The jaded journalist, just arrived from London, leaned against the bar of the Hong Kong Foreign Correspondent's Club and sighed with relief. 'After 10 years of working in the wilderness of the Middle East and Africa it's nice to be back in Asia,' he says. 'Everything works. The world's best airlines and hotels are here. It makes the job so much easier.' Business executives working in the Orient share the sentiment, especially those who spend considerable amounts of time travelling.
The situation is likely to get even better, given the healthy economies of the 'economic tigers' (Taiwan, Hong Kong, Korea and Singapore) and neo-tigers (Thailand, Malaysia and Indonesia). While the rest of the world grapples with a lingering recession, China's record-breaking growth is helping fuel economies throughout the region. According to the Asian Wall Street Journal Weekly, the regional average growth rate - excluding Japan - is an impressive 7%, compared to a worldwide expansion rate of only 0.5%.
These thriving regional economies have spawned a vast, and growing, middle class who must travel for business but who also want to travel for pleasure. Intra-regional travel has increased rapidly in recent years to form the bulk of traffic movements within the Association of Southeast Asian (ASEAN) area. Last year, nearly 65% of traffic into Hong Kong came from within Asia, compared to 13.4% from Europe and 12.5% from North America. The International Civil Aviation Organization (ICAO) projects an annual growth rate of passenger services in the Asia Pacific region of up to 10% up to 1995. A recent International Air Transport Association (IATA) study predicts that the region will have more than half the world air passenger traffic by 2010, doubling its market share from 25.2% in 1985 to 51.1%.
Geneva-based IATA cites several reasons for the projected rapid expansion in Asian travel. The continuing strength of Asian-Pacific economies intensifies trade (and travel) with other regions and within the region. Economic growth increases the local disposable income, encouraging travel. And Asian-Pacific governments are relaxing travel restrictions on their citizens. New airlines are forming and older airlines are introducing new routes. Luxury hotels are opening in major cities, middle level and budget hotels in secondary cities, and resorts are appearing across the region.
International tourism consultants Horwath Asia Pacific held its annual Hotel Development and Finance Conference in Hong Kong in March. The working title was Confronting the Challenging Nineties but the recurring theme was the increased need for mid-market hotels to meet the growth of regional travel.
The market for hotels in Asia will be increasingly domestic. In addition, many long-haul travellers are looking for less expensive accommodation. Even expense account travellers are shopping around. 'This is partly due to the recession, but also because, in the early years of Asian travel, there was no choice,' says Horwath's managing director, Robert Stiles. 'There were no mid-market hotels offering international standards of service.' Rob Wilson, Holiday Inn Worldwide vice president for sales and marketing, noted in an opening speech at the conference that the five-star hotels of the '70s and early '80s were developed essentially for North Americans and Europeans. 'In Asia in the '70s, the mid-scale didn't really exist,' Wilson said. 'There were the locally operated hotels and the high-end luxury properties ... with nothing between them and the bottom of the market.' Asia is no longer an inexpensive area for travel. The enormous growth in room rates regionally has helped create the need for cheaper alternatives. Rooms that were $60 to $80 in Djakarta several years ago are now about $175, Stiles points out.
Brian Deeson of Century Hotels International told the Horwath conference that more than 90% of all travellers in Asia are mid-market travellers. They fly economy class, take bus transfers from the airport and stay in middle-priced hotels. 'I believe the middle market is only now starting its boom,' he said. That vast market is not yet well served. In Hong Kong, for example, 75% of rooms are high-tariff (four-and five-star) hotels, while the middle category (three-star) accounts for only 21%.
Hong Kong Hilton general manager James Smith says that while the city has many five-star properties in a small area, there are only so many five-star clients. 'There is a need for good business hotels without the marble and glitz, with smaller rooms, and not so many amenities,' Smith believes. According to Holiday Inn's Rob Wilson, Asian companies are beginning to fill the middle gap. 'It seems that there are a whole new set of players, mostly national in nature, entering the middle market,' he said at the Hong Kong conference.
Many of the new, mid-level hotels have smaller rooms and simpler food and beverage outlets, but a full range of facilities. They are often technologically more advanced than some long-established, more upmarket hotels, with Nicam stereo televisions and computerised message and check-out facilities. Often rooms have the same amenities as luxury hotels, including in-room safes, electronic door locks, mini-bars, voice mail, fax hook-ups and coffee and tea-making facilities, which some top Asian hotels lack. Decor is simpler and the staff-to-guest ratio lower. Small hotels charge from $75 to $100, compared to more than $200 a night in many hotels in Asian capitals.
Singapore-based regional director of operations for Shangri-La Hotels and Resorts, Tay Boon Seng, sees the greatest opportunities for growth in the three-star range: mid-size hotels with 250 to 350 rooms, in the mid-market price range of $75 to $100. 'This trend shows that leisure travel is no longer the exclusive domain of the rich, and is a strong indication of the emerging Asian market,' he says. Stiles believes that while opportunities for mid-market hotels are significant, 'Many of the so-called mid-market hotels being developed today are pitched too high for the intended market, or at least unnecessarily high.' As high land costs limit the development of city-centre, mid-range hotels, budget hotels are appearing in outlying areas and 'secondary or tertiary' destinations. Stiles believes that the greatest need in Southeast Asia is for hotels pitched below the new wave of mid-market hotels, to serve the growing number of domestic and intra-regional travellers.
The major international companies continue to expand in Asia, too. Britain's hotel chain, Holiday Inn Worldwide, leads the foray into unexplored hotel territory. With 56 hotels in 14 countries and territories, Holiday Inn is the largest chain operating in the Asia Pacific region. It is currently established in the cities of Dalian, Kunming and Xiamen in China, Johore Bahru and Kuching in Malaysia and Bangalore and Hyderabad in India.
The company is especially prominent in China which has long suffered from inadequate accommodation. It now operates the only international class hotels in destinations such as Urumqi, the capital of Xinjiang, China's north western province, and Lhasa, Tibet. Outside China, the chain is expanding rapidly in Japan, Malaysia, Thailand, Indonesia, Australia and India.
Many other established hotel groups are also diversifying. The Shangri-La International, with 24 luxury hotels and resorts in primary locations in the region, is now looking at secondary locations, or building hotels geared for business travel. 'In certain destinations, there is a need for a good quality business hotel that is not in the five-star luxury category,' says Joanne Watkins, Shangri-La group public relations manager. This year Shangri-La will open a resort in Cebu in the Philippines, the Far Eastern Plaza Hotel in Taipei and a hotel in Djakarta.
The Asia Pacific region represents the highest growth rate for ITT Sheraton, too. The Boston-based global hotel chain is focusing on both business and leisure travellers to key gateway cities as well as resorts. It intends to open 10 hotels in Indonesia in the next 10 years. It also has plans for several three-star hotels in China.
Hyatt International Hotels still sees a market for four-and five-star hotels. The company has opened eight of its top-level Grand Hyatts since it launched the name with its flagship hotel in Hong Kong at the end of 1989. Hyatt is concentrating on Japan as a major growth area for the 1990s, with five hotels to open within four years. These will cater for both domestic and overseas travellers.
Leisure travel options are also increasing, as Asia's nouveau riche embrace the sort of resort holidays which were once associated with the Caribbean or the South Pacific. New resorts are opening from the Japan Alps to Indonesian beaches, from China's rugged mountains to Micronesia's clear lagoons. Golf resorts are proliferating even in China which banned the 'sport of aristocrats' soon after the 1949 revolution, and in Vietnam. Now that golf is again politically correct developers are scurrying to establish their links, with new courses popping up across the southern part of the country. Typical is the joint-venture Honey Lake Country Club, a $500 million multi-functional resort in Shenzhen, near Hong Kong. The complex comprises a golf course, entertainment, cultural and shopping facilities, a hotel, restaurant and accommodation.
In another development, city-centre resorts are providing relief for weekend holiday-makers in Asia's most crowded capitals. Bangkok's Royal Garden Riverside opened last June with a fitness centre, squash and tennis courts. Its fleet of river vessels includes an authentic rice barge for wining-and-dining cruises. On the holiday island of Sentosa, now linked to downtown Singapore by a causeway, the Shangri-La Rasa Sentosa Resort offers a swimming pool, sea sports, health centre and outdoor barbecue pavilion. Hong Kong's first resort, with a beach, tennis, archery and golf, is due to open in June. The five-star Gold Coast Hotel, in the New Territories, is aimed at locals seeking relaxing weekends.
To meet the growing regional demand for holiday destinations, developers are looking further afield. Stiles identifies major emerging resort destinations as Langkawi and Tioman in Malaysia, Samui and Krabi in Thailand and Lombok, Indonesia. Batam and Bintan islands, less than an hour by ferry from Singapore, and Bangka Island off the east coast of South Sumatra, are also listed as likely for future development.
The airline industry is developing and evolving as rapidly as hotels and resorts. Flying around Asia has become more convenient in recent years, with more airlines flying to more 'secondary' destinations, saving travellers time and trouble. New Asian carriers are taking to the skies as fast as they can purchase aircraft. Airlines who have joined the Pacific Asia Travel Association (PATA) in recent years include Dragonair (Hong Kong), EVA Airways Corporation (Republic of China), Japan Air System (Japan), Mandarin Airlines (Republic of China) and PT Sempati (Indonesia).
New and established carriers are launching routes to secondary destinations, especially in China, Japan, Thailand, Malaysia and Indonesia. Many of these serve the growing tourism market. In December, Cathay Pacific and Philippine Airlines introduced a joint service from Hong Kong to Cebu. This seaside spot south of Manila now has international connections from Tokyo, Singapore, Sydney and Hong Kong.
Other routes are geared to business travellers. Dragon-air, partly owned by Cathay Pacific, serves mainly China, with its growing economy. Dragonair's flight from Hong Kong to Hainan, an island off the southern coast of China, is so popular it is difficult to get a seat. Dragon-air also links Hong Kong with Phuket, the popular Thai holiday resort area, and Kagoshima and Hiroshima, business and leisure destinations in southern Japan. Singapore Airlines Ltd (SIA) subsidiary SilkAir which was originally established in 1989 under the name Trade-winds, principally as a leisure airline, now also flies to business destinations on high-traffic routes such as Singapore to Kaohsiung, Taiwan. The airline recently launched a twice-weekly service to Kunming, the capital of southern China's Yunnan province.
Air services between Taipei and Ho Chi Minh City were inaugurated last September. Now four carriers - China Airlines, EVA Airways, Vietnam Airlines and Pacific Airlines - fly 10 round trips a week. Japan Airlines also wants to resume air travel to Vietnam.
Dragonair's chief operating officer, Simon Heale, notes that although the new destinations are termed 'secondary cities', they are large enough to justify direct services. 'These are big cities by western standards and we are just starting to scratch the surface,' he says enthusiastically. By the year 2000, Dragonair will have 20 to 25 destinations in China and a network of 12 to 15 secondary cities in Asia. SilkAir hopes to increase its network from 11 destinations to as many as 36 by 1997.
Meanwhile, Japan, Hong Kong, Taiwan and Korea are building new airports to meet the growing travel demands of business people and tourists in the region.
Not long ago, Asian airline services were established in just a few inter-connected hub cities, with routes spreading out like spokes on a wheel. Now a network covers the entire region. In a few decades, the Asian travel industry has become as sophisticated as any in the world.