6 Aug, 2001
Asian Hotels Alliance Plots Marketing Blitz to Take On Global Chains
MARKETING chiefs of the newly-formed Asian Hotels Alliance (AHA) are to meet in Pattaya today to work out finer details of how the newly formed group is to be financed, structured and operated as it strives to growing competition from multinational hotel chains.
The group, comprising of Dusit Hotels and Resorts (Thailand), Landis Hotels & Resorts (Taiwan), Marco Polo Hotel group (Hong Kong), Meritus Hotels and Resorts (Singapore) and New Otani hotels (Japan) was officially formed on July 27 and hopes to become a “powerful marketing association” that will help retain and raise its individual and combined market share.
The founding members are all more or less family-owned companies “committed to maintaining their independence,” says Dusit Hotels’ Executive Director Chanin Donavanik.
By pooling their resources, the AHA members hope to confront the rapid advances of the multinational hotel companies whose financial and marketing power could over the long term threaten the survival of the smaller local and regional chains.
All AHA members are strong in their respective home markets but relatively inconsequential players globally. The New Otani is the biggest with 21 properties, Dusit 20 properties, Meritus 13, and Landis and Marco Polo seven each. That is a total of about 24,000 hotel rooms, mainly in the gateway cities of 10 countries but also including a small number of resort properties.
The geographical distribution shows clear gaps in places like Malaysia, the Philippines, Korea, Indonesia, China, India and Australia. However, there are plenty of small and medium-sized hotel groups in these countries that are facing competitive heat from big-league hotel chains and could join the AHA as an additional source of international business, marketing and networking.
Multinational American and European hotel groups are hungrily eyeing the prospects of expanding their brands across the Asia- Pacific through a variety of options – franchise, management, marketing, reservations or even equity.
Many Asia-Pacific hotels owned by real-estate companies hit by the economic crisis are being gradually offloaded to international investors who will invariably turn them over to the global groups to run, which will put further competitive pressure on the local and regional groups.
Similar to the airline alliances, the AHA is hoping to leverage the brand names of each of the five members to boost their joint marketing profile and build profitability. This will involve setting up a joint reservations system, pooling loyalty programmes, joint advertising and joint participation at international trade shows.
However, like the airline alliances, none of this is going to be either easy or inexpensive.
One critical issue will be the division of budgets for the various activities and projects. At the moment, it has been agreed to do this on a pro-rata basis pegged to the number of rooms in each group. Hence the bigger groups will pay more.
However, costs of other marketing activities such as training will be shared equally. Others will be paid for by the hotels themselves – such as the 80,000 copies of the first joint brochure that was funded entirely by the Dusit itself.
Just setting up a reservations system could be hugely problematic. A check of the group’s website asianhotelsalliance.com indicated widely divergent booking methods.
Some of the AHA hotels have current reservation engines powered by groups like Calypso and Pegasus while others are less sophisticated and cannot provide instant confirmations. While webpages of some hotels came up in a flash, others yielded error messages or took excessively long to come up.
Things could get tougher as the group looks at other issues like pooling of loyalty programmes and sharing of benefits, all of which involve considerable administrative and technological costs. By comparison, opening overseas sales offices and joint advertising could be relatively simpler exercises.
At the moment, brand building is the top priority. Brochures have been placed in all the rooms of the AHA member hotels. Official company letterheads, name-cards and other publicity material are being rebranded to include the AHA name.
Mr Chanin said becoming an AHA member will not impede the growth plans of any of the hotels groups, so if the Dusit wants to expand in Japan under its own brand name, or the Marco Polo in Thailand, there will be no objections.
Quick decision-making will be important. However, even with the current size of the group, just finalising a date for the marketing meeting was not easy, Mr Chanin admits.
He said new members are welcome but each new member will need to have at least a few hotels under its wing. Individual hotels will not be allowed. The founding members have agreed to keep the group small but effective, at least in the initial days. It will also remain an essentially Asian group.
He said he worked on the project for about a year, based on an earlier group called the Prestigious Hotels of Asia which had a similar philosophy but was somewhat ahead of its time and didn’t last long. His initial approach was to Mr Stanley Yen of Landis in Taiwan, which was followed by Meritus, Marco Polo and New Otani.
“I like doing things that people say cannot be done,” Mr Chanin says. He set the Dusit itself on an aggressive local and global expansion course in the early 1980s. In 1994, he became the first Asian hotelier to buyout a major European brand-name hotel group, the Kempinski.
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