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Eye on AsiaFebruary 9, 2011 By: Meagan Drillinger Travel Agent
|Temple of Heaven, Beijing was visited by members of the Ming and Qing dynasties.|
|Marina Bay Sands’ rooftop infinity edge pool towers over Singapore’s skyline.|
Led by China, the region has piqued the interest of travelers looking for the next exotic frontier.
In January when Starwood Hotels & Resorts Worldwide announced that more than half of its 70 to 80 new-build and conversion hotels this year would be in the Asia Pacific region, it was the latest in a series of significant industry investments in an already hot travel region. At the same time, U.S. consumers were starting to listen to all the buzz in the news about China and its strong economy. Asia’s transformation of services and infrastructure has gotten the travel industry to stand up and take notice, and now the traveling public is starting to do the same.
Seemingly untouched by the “Great Recession,” Asia has become the next exotic frontier for your clients who have done the Caribbean, Europe and South America. After the doom and gloom of 2009, when hotel development in most destinations had to halt operations, development in Asia not only continued but surged in some markets.
China Shows Off Its Best Side
No doubt the heavy hitter in Asia is China. “It is an interesting market,” says David Loeb of Robert Baird & Co, an employee-owned wealth management, capital markets, asset management and private equity firm. “We have seen a lot of demand growth out of China, Beijing in particular, which overbuilt for the Olympics. That market absorbed that new supply in the glut that followed.”
“The Olympics certainly played right into their master plan,” Kathy Burns Lamphier, president of Posh Travel in Greenland, NH, tells Travel Agent. “China had to apply for the Olympics years ago. It gave them the opportunity to show their face in a positive way. They got tremendous positive coverage during that whole Olympic period and they got to put their best foot forward.”
Wendy Wu, owner of Wendy Wu Tours, a tour operator that has gained tremendous success in the UK and Australia and has recently launched in the U.S., believes that there are three reasons why China’s tourism was able to recover so quickly. “First, China is always at the forefront of people’s minds because of its economic strength. The economic boom makes it standout,” says Wu. “Everybody talks about China and that brings more and more awareness about the destination. Second, China had tremendous tourism growth from 2003 to 2007. By 2007, China was already the number-five tourist destination in the world by number of visitors. People were fascinated. The third thing is that the Chinese government put a lot of effort into the industry. They made it their mission to make China the number-one destination by 2020.”
|The Shangri-La Suite aboard the Victoria Jenna|
China’s economic strength can be attributed to the number of foreign investments going on in the nation, and that strength has spilled over into neighboring countries in its orbit like Hong Kong, Singapore, Vietnam, Thailand and Macau, all who stand to reap the benefits. “Economic growth in China leads to foreign investment and that brings international travelers and tourists to China,” says Loeb. “This leads to an increase of wealth, an increasing middle class and an increasing upper class within the country itself. That class is going to start traveling in their own backyard.”
|Seoul, Korea, has developed into a modern business and cultural center for Asia.|
Loeb explains that the more wealth that the Chinese themselves have, the more likely they are willing to travel not only within their own country, but to international destinations. Large hotel companies like Starwood and InterContinental Hotels Group see this emergence of a new market and are jumping on the opportunity. “These companies look to plant their flag in as many places as possible, not to just tap the inbound travel market, but to build loyalty among Chinese travelers who are looking to travel outside the region,” he says.These brands will also expand their empires to other Asian destinations as the outbound China traveler explores nearby countries. Meanwhile, American travelers arriving in Asia are appreciative of the comfort and security of hotels they know.
China is now Starwood’s second largest hotel market outside of the U.S., and in December Sheraton Hotels & Resorts announced it would open three more hotels in the first quarter of 2011. InterContinental Hotels Group has a plan to up their numbers in China to over 250 hotels. Currently the company operates approximately 130 in the region, with plans to debut approximately another 150.
Other brands like Marriott, Shangri-La, Langham, Wyndham and Regal have major plans to establish themselves in China. According to Lodging Econometrics’ Fall 2010 Asia Pacific Real Estate Trends Report, there are 986 projects currently under construction in China, with 1,248 projects in the total pipeline. This will bring an additional 336,349 rooms to the country.
“Fifteen years ago no one wanted to deal with China because of its bad infrastructure and lackluster accommodations. Now these destinations stand with the finest cities in the world. It is changing so fast. So many hotels are being built that it’s staggering, and there are more on the agenda. They aren’t done building,” Lamphier tells us.
The rest of the region is on an upswing, as well. Hong Kong is gearing up for next month’s debut of The Ritz-Carlton, which is being touted as the tallest hotel in the world. Last year Singapore saw the opening of Marina Bay Sands as well as the luxury property Fullerton Bay Hotel. Shangri-La Rasa Sentosa reopened there in January. Agents can expect to see the Park [email protected] open this year, as well as the W Hotel, Singapore, which is slated to debut in 2012.
Even a destination as small in size as Macau is booming with hotel buzz. Last year the Wynn Encore and Mandarin Oriental had their debuts. The next major opening will be Galaxy Macau, including three hotel brands: Hotel Okura, Banyan Tree and Galaxy. Steve Wynn has plans to open a third property in the Cotai Strip area. Shangri-La and St. Regis are also on deck to open in Macau.
Regent Hotels & Resorts is also planning on making its return to Asia, looking to develop in gateway cities like Hong Kong, Shanghai, Bangkok, Kuala Lumpur and Phuket.
Loeb also tells us that India is a destination that ought not to be overlooked, as well, especially for its over-the-top luxury services. “The fact of the matter is that India has fewer hotel rooms than New York, Las Vegas or Orlando, but I think it is another very large source of growth for the major hotel brands,” he says.
Arrivals Are Up
The Pacific Asia Travel Association's numbers for October and November 2010 travel to the Asia and Pacific region show year-over-year growth of 9 percent and 8 percent, respectively. Growth momentum remained strong heading into December, and a full year growth of 10 to 11 percent is expected for the entire area in 2010. For South Asia ( India, Maldives, Nepal and Sri Lanka), the months of October and November showed 12 percent and 19 percent growth, respectively. The whole region is looking at a growth of 13 percent for 2010.
Southeast Asia (Cambodia, Singapore and Vietnam) saw growth of 12 and 8 percent for October and November. North Asia, including China, Macau, Taipei, Hong Kong and Korea is looking at an 8 percent increase for both October and November.
With all this new interest, China stands in the forefront. “We have seen an increase in inquiries that has been higher than previous years,” says Lamphier. “A lot of customers who wouldn’t have given you the time of day for China maybe 10 or 15 years ago are now recognizing that China has an infrastructure and luxury base. They have become a world contender in the luxury product. People are ready to go there.”
This is reflected in the booking increases that are surprising tour operators and other suppliers. Larry Kwan, president of Pacific Delight Tours, tells us that bookings for 2011 travel to Asia is up 30 to 40 percent, the majority for China itineraries, when compared to this time last year. Similarly, Wendy Wu is reporting record-breaking sales for 2011. Victoria Cruises, a leading luxury river cruise supplier, reported that due to the economy in 2009, bookings were down 50 percent, but in 2010 bookings went back up 30 percent. Projecting into 2011, the company is reporting an increase of 10 to 15 percent.
Global visitor arrivals to Singapore from January to August 2010 registered a 22 percent growth, reaching over 7 million. The Vietnam National Administration of Tourism reports an increase of 34.8 percent compared to 2009. Even with the political turmoil that struck Thailand last year, the country ended 2010 on track, reporting a 12.6 percent increase in visitor arrivals from January to November. Macau says it welcomed 25 million visitors in 2010.
Opening up the Skies
Seeing this demand for Asia travel has prompted airlines, both international and domestic, to bulk up their service. In the fall of 2010 Air China opened up intra-China routes with the addition of service from Beijing to Manzhouli, Chingdu to Urumqi to Korla Sinkiang and Chongqing to Qingdao. EVA Air and its regional subsidiary UNI Air added three new gateways in China to facilitate connections with North America. Regularly scheduled flights to Zhengzhou debuted on December 10, and UNI Air began service to Ningbo on December 20. EVA also initiated service to Jinan on December 18.
Meanwhile, American Airlines has also applied for nonstop service between Los Angeles’ LAX and Shanghai’s Pudong airports as of April 5 of this year.
Vietnam is opening up it southern Mekong region to international air travelers. State media reported in January that the country opened a new international terminal in Can Tho. Service began on New Year’s Day and the runway is able to accommodate long-haul jets. The terminal is an expansion on the domestic airport, and is designed to receive up to five million passengers per year.
Korean Air reported an increase of 22 percent in terms of operating revenue year-on-year for 2010. The international passenger segment recorded a year-on-year growth of 1.6 percent and 6.5 percent in passenger carrying capacity and traffic. As of June 2011, the airline will launch its A380 service to Japan and Hong Kong. It will gradually expand that service to Bangkok, New York and Los Angeles later this year.
Filling A Void
Asia is the new frontier and has played its hand very well in the face of a very challenging situation, and we all should keep our attention on China. The Olympics, combined with the enormous success of 2010’s Shanghai Expo (which pulled in about 74 million visitors), the rise of the Chinese traveler, and the luxury U.S. traveler needing a new destination, have combined to put China in perfect position for the next few years.
“You feel the pulse of China tourism,” says Wu. “People in the U.S. may have been waiting for the past couple of years. Now they feel, ‘what’s the wait?’ You need to do it sometime. They are really crying out for a destination and China is the one.”
|This ancient temple in Northeast Thailand is a UNESCO World Heritage Site.|