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November 2022, Virtual
21 November 2022, Hilton London Metropole
ABTN speaks to Mark Edleson, president of Alila Hotels and Resorts, about the soon to open city centre property in Bangalore, plus the future of the Asian brand and why the region is leading growth in the hotel industry.
How is the new Alila Bangalore hotel coming along?
The latest I've heard is it will officially open on April 1. It's quite an interesting property in the Whitefield area of Bangalore, where there is a high concentration of technology companies. It's quite a unique hotel in that area. It's not tucked among the high tech office buildings, it's on the main road, with the back facing out over some agricultural area and a big lake. It's quite luxurious, in the sense it has a lot of space around it. It has greenery and water and almost feels like a resort. First and foremost it's designed as a business hotel, but it's going to be warm and friendly with space to breathe around it. It's really going to give people the chance to work efficiently, but at the same time relax their minds, relax their vision, and hopefully stay for the weekend to visit Bangalore. It's kind of a lifestyle hotel in the city.
Are there many new openings in Bangalore? How has the city fared during the global recession?
Bangalore suffered during the early part of the global financial crisis. Rates dropped as business travel dropped off. Occupancy fell quite a bit. Hotels took a bit of a beating during in 2008 and the early part of 2009. Now they seem to be recovering quite steadily and business is very strong in Bangalore. We think as business travel continues to recover, our refreshing new product should do quite well.
So the timing is good?
Yes. Of course you don't always control these things with the business cycle. Projects get started at one point and many things impact what happens to them when it's time to open, but in fact I think it's a pretty good time to open.
It seems an interesting choice for Alila to open a business hotel – many of the other properties are resorts in holiday locations...
In spite of the fact that our very first hotel was the Alila Jakarta, which today is a 250-room business hotel in the centre of the city, most of our subsequent hotels have been resorts – in Bali, Thailand, the Maldives, Goa... We have been known primarily as a resort operator, but because of the Jakarta experience we do know how to operate city hotels.
We think, particularly in places like India or Indonesia, where there are large domestic markets, it's good to have city hotels together with resorts, because it increases the visibility of the brand in the cities, which is where the people are.
Take Goa for instance. I don't have the official numbers for 2010, the hotel's first year of operation, but I suspect around 60% of our clientele were domestic Indians. We think that it is very synergistic to extend brand recognition into the cities, where people will become aware of the brand and want to go on holiday with the same brand. We don't yet have properties in Mumbai and Delhi, but we would certainly welcome them.
Do you have any other projects in India?
We have a couple of resort projects in Kerala. I think our next opening in India will be in Calicut, a very beautiful riverside resort in the backwaters, set amid a coconut plantation and lots of water. I think that one is going to be quite stunning.
Can you tell me about Alila's other expansion plans?
We do have a development pipeline, but again as the global financial crisis bit in 2008 and early 2009, and as that spread around the world, we had quite a few projects region that sort of died during that time of financial difficulty, particularly in the Gulf. We had some other projects in China and India that slowed down, but that pipeline is growing very fast now. We're working on projects in China, Vietnam, Cambodia, India, Oman and Portugal at this moment.
Research has shown a growing number of travellers are heading out of Asia for the first time...
The travel market is changing dramatically as perhaps the balance of wealth in the world is shifting. Principally we are an Asian-oriented brand today – our roots are in Asia and most of our properties are in Asia – but in our properties like Bali we have had a large European clientele. Even that's changing. In Bali the last two years have been stellar for tourism. We have seen substantial growth year-on-year since 2008, but we're seeing a shift in regional business, with more Koreans, more Australians, and many more Chinese. The market before was European, Australian and Japanese. The Japanese were replaced last year by the Australians as the number one market.
Australia has had a very strong economy over the past few years, because it's been commodity driven. Japan is fading as a force in regional tourism. And we're seeing more and more guests in our Bali resorts from Taiwan, Korea, Singapore, Malaysia, China and India. Within Asia the regional traveller is becoming a more and more important aspect of our market.
The same thing is going to be happening in North America and Europe. In Asia, because of the large numbers and because of the rapid growth in wealth, there will be huge outbound numbers coming from Asia to the other markets. The whole industry is changing quite dramatically, as is the global economy.
A number of US-based global hotel brands seem to be targeting china and Asia. Can they catch up with the local brands?
As Asians are gaining wealth and beginning to travel domestically, they are attracted by their ability to stay in what they see as a global brand. Perhaps it's the same reason that Louis Vuitton is doing 40% of its business in China now. As they gain wealth, they want to have access to brands that they've been aware of. Newer wealth is generally more attuned to brand and status. I think the big brands certainly appeal as people start moving around, plus they have an international quality of hygiene and standards, that the new middle class of, say, China will appreciate as it travels around China. But also by the same token, Indians in India. I think they have a good advantage there. The big brands are well positioned to benefit from the growth of travel in domestic Asian markets.
I think where an Asian-origin brand like Alila can benefit is that when we start to move out of Asia, we will be known by Asian travellers as they travel to other places they may be. We're small and we're trying to grow slowly geographically, because travel is taxing on executive time and staff time, but we do have our first project in Europe. We're working on a resort property in Portugal at the moment.
I think we will be well positioned as Asians start travelling increasingly out of Asia. Their vision of international standardisation may be brands that are attuned with Asian aesthetics and an Asian sense of service. Whether or not we can provide the kind of service that we do in Asia in more developed markets where labour costs are very much higher, will be the challenge. Of course, labour costs are increasing rapidly in Asia, too. We need to make that adjustment over time as well.
Does the Asian business traveller look for anything different from the Western business traveller?
I don't think they're very much different than any other traveller. I think in the middle classes and above there is a globalising culture. They're looking for maybe different food, but good food, plus work spaces, living spaces and sleeping spaces in their business hotels.
In terms of aesthetics, I think there is some great architecture being done in Asia. There are rich histories of design and decoration in Asia. We have very much enjoyed taking those rich traditions and adapting them to the more contemporary cultures of the youth of Asia. It makes for wonderfully designed hotels.
As a hotelier, can you feel the economy improving?
Asia slowed down briefly in 2008 and then has picked up much faster than the rest of the world and is really awash with cash these days, it seems. The pace of hotel development and the pace of growth in economies in China, India and Indonesia has been very rapid.
Where do you hope to be in 10 years time?
We've had an amasing ride, considering how long hotel development cycles are. It's not easy to grow fast and we haven't, but our brand development and our brand awareness has been very extensive. The growth has been fast. When I visit Japan and Europe, the awareness of our brand has been very gratifying to us.
Now that we have the brand well established, our challenge is to create more product under the brand. That's more difficult because that's real estate business and we don't build our own resorts. We are purely hotel management. We depend on third parties to engage us to manage properties. It's not really organic growth. We have to go outside and find properties and like-minded owners. So it takes time to grow.
Our brand has a clear definition. Now the challenge is to keep opening new hotels. In terms of numbers, where 10 years ago I might have said 20 hotels would be enough, now I would say 30 to 50 hotels would be a better business foundation. If you ask me in 10 years from now it might be 50 to 75. It's hard to say. We enjoy being small, creating a strong culture and giving a strong identity to our hotels. It's harder to keep that as you get bigger. It's like any business trying to create a brand, then maintain the brand and the momentum of the business. Those are our challenges.