What are Accor’s new initiatives in Thailand?
BASSET: Today, Accor has a network of about 50 hotels in Thailand and around half of those hotels are based in Bangkok. The latest initiative we've taken in the country is to develop the middle sector and the economic profile of hotels. Our aim is to continue developing in all the key destinations in Thailand and perhaps look at some new destinations that will be coming up in the future.
What destinations in Thailand have the most potential for growth? What new destinations is Accor looking at in Thailand?
BASSET: A very popular destination outside of Bangkok is definitely Phuket. There were over 10m visitors to Phuket last year. Then you have Pattaya, which is an extension of Bangkok, and also Chiang Mai. But other destinations are Hua Hin, Rayong, and I think islands like Koh Samui. I think Koh Samui is driven towards the upper level of the market. Places like Koh Chang and Khao Lak are coming up very strongly. Also, places like Nan in the northeast, which are not very well known, are developing. The north of Thailand in particular very much interests the Chinese market. There are direct connections now from Hong Kong, so we can see the numbers increasing dramatically in the north of Thailand.
If we look at tourism in Thailand as a whole, how does it contribute to the country’s overall economic development?
BASSET: Tourism is definitely important for Thailand in terms of a foreign currency earning industry. Today, the tourism industry is around 7% of the Gross Domestic Product, and it is increasing probably faster than some other industries in the country. It is also a strong provider of employment for the people of Thailand. So tourism is very important for the country.
What geographic markets is Accor currently targeting?
BASSET: Well, because we are present in every level of the sector, we are really looking at all markets. We are looking at the fast moving markets. In the past few years, the strongest developing market has been China, with over 60% growth over the past 2 years. I think there are around 2.7m Chinese visiting Thailand. Behind this, there are strong Russian and Indian markets. Overall, the Asian market has been very strong for the past year. Europe has probably been the most stable. Australia has also been a strong market in the past year. Overall, I think what is important is to be present in all segments of the sector. One segment that has started developing in Thailand last year is the MICE market. We've recently opened hotels that are ideal for this kind of segment, Sofitel Bangkok and Sofitel Sukhumvit, as well as the The Pullman, especially the Pullman King Power and the Pullman G in Silom. Those properties offer an ideal structure to welcome this kind of market. Of course, we have the usual type of customers that we cater for, both in the 5 and 4 star market hotels. Then the leisure market goes across all levels of comfort, whether you want luxury accommodation, all the way to the Mercure and Ibis where you can get value for your money. In the recent years, the Ibis brand in particular is where we have had strong development, and where we continue to develop. This goes along with the development of the low cost carriers, which are making the numbers increase drastically in Thailand. The number of tourists was 22.4m last year and I think this year we can be looking at 25m.
How does Bangkok compare to other Asian cities in terms of Occupancy Rates and Revenue Per Available Room (RevPAR)?
BASSET: In terms of RevPAR, Bangkok is the lowest in RevPAR in all of Asia Pacific. This is due to the fact there that has been a lot of development of the past 5-10 years and to this day the offer exceeds the demand. Therefore, people have been going by volume rather than rates. I think the situation has been affected also by the irregular growth of the number of tourists over the past 5-7 years because of political issues in Thailand that have affected the number of visitors coming in. Last year was a turn around, with very strong growth in the number of arrivals. In the past 10 years, Thailand has added more visitors; 22.4m last year, and probably around 25m this year. I think we are looking forward to 30-40m people in the future. I believe very strongly in the future of Thailand. I think this country is ideally located in the heart of ASEAN. It is popular for many reasons besides the foreign direct investment being made from the Japanese and Korean nations. You have tourist attractions like the natural beauty and the arts for example. There are many aspects of Thailand that make it very popular and make it one of the prime destinations for the Asian market. Around 65% of our customers are from Asia, this has grown up from 40-50% percent over the last year. Overall, I think that even though there is more to develop, we will be able to maintain a healthy growth. However, the average occupancy in Bangkok last year was around 70-75%. This is the real occupancy. Our own occupancy at Accor is ahead of that, which we should be because we have very strong distribution channels and the location of our hotels are successful. I think that if we have the growth that we are planning to have, it will be another double-digit growth of RevPAR this year. Hopefully for the market, we can see more confidence in the market because of the growth and for the first time we can start to see healthy growth rates, which the market needs to show to investors.
How profitable is the hotel industry from an ownership perspective?
BASSET: The Return on Investment for the owners really depends on many aspects. It depends on the location, and the level of investment. What I can give you is a number that is being communicated by the marketing companies like JLL (Jones Land LaSalle). Recently, I was at the HICAP (Hotel Investment Conference Asia Pacific) conference in Singapore, and the numbers that I was given for the average Return on Investment in the hotel industry in Bangkok is around 7-8%.
In terms of RevPAR, Bangkok is the lowest in RevPAR in all of Asia Pacific. This is due to the fact there that has been a lot of development of the past 5-10 years and to this day the offer exceeds the demand. Therefore, people have been going by volume rather than rates.
Where do you see the tourism sector and the MICE segment growing?
BASSET: Bangkok is a very well equipped with meeting and conference facilities like the Queen Sirikit National Convention Center, and large 5 star hotels. The rates are making the destination very attractive for the MICE business. The packages that can be offered are definitely very comparative to Hong Kong and Singapore. I believe this segment will have strong growth in the next 4-5 years. I was recently speaking to a CEO of a low cost carrier, and I was asking him how he sees the prospects for Thailand for the next 5-10 years and he told me they are transporting 10m passengers domestically. He is thinking they will be able to transport 30m passengers. There are issues, but the market has real potential. Also, with the opening of ASEAN, the country itself is embarking in huge investment in infrastructure; airports, roads, and rail links between East and West, and North to South. In the future, Bangkok will become a center for business and leisure and a meeting point. I believe the MICE segment will benefit from that.
Which of Accor’s brands have seen the most success in this market?
BASSETT: It depends on how you measure success. I think definitely in terms of occupancy the Ibis brand is a standout among all the competition. We recently opened an Ibis near Siam. The first month’s occupancy was 87% and the second month was 97%. This is remarkable occupancy for opening a new hotel. Usually in the industry you need a year to 18 months for movement. Sitting at the top of the market in the first couple of months shows that there is a strong need for this type of accommodation in the city. Our success over the last 20 years has been with the Novotel brand. Novotel is a mid-sector brand. We have a very good network from Bangkok to Phuket, and to all the major destinations here in Thailand. I think this corresponds to a need in the market to offer a level of comfort and service which suit the business traveler. They want more comfort but at the right price.