What new initiatives is Zinc InVision involved in?
BEAUVAIS: We are pretty excited right now with some new initiatives where our GLOW by Zinc brand at the mid-level is starting to see some great growth opportunity. We will open our first hotel later this year outside of Thailand in Penang Malaysia and next year we will open a hotel in Chitwan, Nepal. So we will go from the existing 3 hotels we have under GLOW today to 7 hotels next year in 3 different countries.Â Under our Zinc City brand, we have signed a joint venture where we will be doing 5 hotels in East Africa. The first hotel in Rwanda is already underway, the second hotel is in the final steps of the design stage, and the additional 3 hotels will be finalizing sites in the next 2 to 3 months.Â Under our Zinc Journey brand, we just opened our first in China. That was exciting because we not only got a Zinc Journey open, but we got a Zinc Journey open in China. So that opens the doors for us in China and our Zinc Journey brand will start to grow throughout more areas, including Bhutan, Nepal, and other communities where we can really build our boutique brand very strong.
Where are each of your different brands positioned in the market?
BEAUVAIS:Â We designed Glow by Zinc over 5 years ago now. We looked at a global perspective about what was important in the mid-tier segment. The mid-tier segment 5 years ago was predominantly mom and pop hotels locally managed and loosely franchised with very little standards. So we knew that if we came out with a highly standardized product, the surprise of the ordinary done well says it all. I think the key for GLOW is that we have 5 key pillars: we talk about great bedding, we talk about a great showers, breakfast, Wi-Fi, and fitness. In those 5 key components, we exceed the guest's expectation beyond what anyone would expect in the mid-tier. Our bedding standards, our Wi-FiÂ standards, our breakfast standards, and our fitness standards are the same really as most 4 and 5 star hotels. So we really exceed the standard of the customer when they come in. They see our pricing, so they choose us for the pricing, and then they come in and realize, â€œWow, I have better than home bedding, I have Wi-FiÂ everywhere and it is free.â€ So it is in those types of things that we are exceeding the guestsâ€™ expectations and we see that daily in our interactions with our guests, we hear it from them, we see it on TripAdvisor, and we see the results coming in. Bangkok has over 770 hotels on TripAdvisor, and this GLOW that we are in today is consistently ranked between 30 and 40 out of 770 hotels and that is pretty amazing. That tells you what a great job our staff is doing in taking care of the customer. It is about the facility first, but it is really about the soft services we provide with our staff.
We are now moving into our deluxe brand with Zinc City. Our objective there, no different than we did for GLOW, is to be able to get a couple open, let people see what they are all about, and then we will start our expansion plan. So East Africa is our laboratory there, where we will be building in Rwanda and Uganda initially, and then we will be going from there. We see that there are some other conversion opportunities throughout Asia where there are some hotels that can be brought to a Zinc City standard, but we are going to take what we learned from the mid-tier and upgrade what the guest expectation is for the deluxe level.
Our Zinc Journey brand is all about being unique, being indigenous, being small, and being boutique. The idea for us for Journey is really about taking an area and looking at the destination and managing that journey for our guest. A journey is not about going to a bunch of hotels in the same country. For us, our first Journey in Yunnan is going to highlight the Tea Horse Caravan Trail. An amazing story that weaves itself from Lhasa, and down through Li Xiangâ€™, leaving Tiger Gorge, into old town Shangri-La. We are going to have, in addition to the first hotel today, three or four more hotels coming online in the next 18 months and what we will be able to do is have our guests experience each of these areas in little bite sized pieces. None of these destinations are where people would stay for a week, but they might stay two or three nights in each location. So at the end of the day, I am going to get them for a week, but the key is that when I take them from one location to another, instead of just putting them into a traditional van by the travel company, we are just as concerned about how they are going to get from point A to point B. As we move people from old town Shangri-La to Li Xiangâ€™, they cross over Leaping Tiger Gorge, a stunning, beautiful part of China, but there is really nothing there. We are in the process of acquiring a small house that we are going to turn into a tea house. So half way through the trip, our guests can stop, have a delightful experience with proper bathrooms and a proper tea service, all done of course in the local Chinese-Tibetan fashion, which is part of the Tea Horse Caravan Trail. So we enrich the whole experience by being able to take a look at not just the hotel, but really much more about the experience in each location, and how we get you from one location to the next.
What are the factors driving growth for Zinc right now?
BEAUVAIS: One thing that is going to drive growth for us right now is the fact that we are trying to find a niche in a position. All too often, everybody is just trying to go along and do what everybody else is doing. We spend an awful lot of time and do an awful lot of research to make sure the brands that we are developing have a niche play. If we are going to be the same as everybody else then there really is not much point. So we are trying to find the niche, whether it is at the 3 star, 4 star, or 5 star level, to make sure that what we are doing stands out from the crowd.
How would you describe the level of competition in each of the main hotel segments in Bangkok?
BEAUVAIS: Having lived in Bangkok for quite some time, I look at the competitive set here, which has been very challenging with the series of crises and downturns that we have had, and I think if you can make it here and figure out how to move your business up and down as the markets go up and down, then you are going to do very well just about anywhere. The key is that you have to anticipate what is going to happen next. If you are just going along and following what everyone else is doing, then you are going to be in trouble. So you have to have your crystal ball out on a daily basis and say, â€œwhat is likely to happen next,â€ and when you figure out what is likely, then what are the scenarios, and how are you going to react. That way when something happens, then you are quick to move. We are doing very well with the cost of our goods going up because by and large, we are performing better than we anticipated, we are maintaining and driving average rates at the top of our competitive set, so as we are driving returns, some of the cost factors are not much of an issue. As long as you can drive your revenue, controlling cost becomes much easier.
Today, by my definition, I would say that we have 7 or 8 really great luxury hotels in Bangkok. There are not that many luxury travelers. So, therefore, they have to sell into the deluxe category, bringing down their rates and their unique point of difference, and that is unfortunate. But that is what happens when you over build. What we like about this mid-tier segment is that this is not a problem. There are plenty of customers in this segment.
On the people front, clearly it is the number one issue, it is my single highest priority. I know if we take care of our people, our people are going to take great care of our customers. So the issue is how do we hire, how do we train, how do we develop people for the future. What is exciting for us with our growth now is that we have enough hotels where we can start to move people around. People want to stay with us and stay with our group because they know our values and they know our systems. Whether it is a GLOW by Zinc, or a Zinc City, or a Zinc Journey, it doesnâ€™t really matter because our core competencies and the way we manage are all linked together. So from a human resources standpoint, we have great strength whether we are in Thailand today or in East Africa or Malaysia tomorrow, the same basic parameters hold true. The fact that we are now a true regional player makes people much more interested in working for our organization because they see that they can grow and they see the potential for the future.
How does Zinc InVision incorporate both ownership and management into a successful business model?
BEAUVAIS: Zinc InVision Hospitality is a management company. I am very fortunate in that we also have a capital company. ZI Capital Partners, our investment arm is supported and operates separately so that we can have that Chinese wall between the management company and the property company. But we have funds available where branding can be put in and we can clearly help grow our brands. We think it is important because it allows us the opportunity to be sure the standards are met at a very high level. If I am just a management company, I have to rely on everyone else to maintain the standard, and a lot of times that works, sometimes that does not work. But the reality is that if I can have funding support to be able to ensure our branding over the next 2 to 5 years, that means we are going to build a much more solid base than anybody before us in the history of hospitality. So we think that is strategically very important and will help build better, stronger brands that do not have a lot of sway. One of the things that motivates me is that when I see most brands, the brand standard is from here to here, but then slowly, for the sake of getting more flags in the ground, the brand standard creeps out. We want to have a brand standard that is here, and ten years from now is here, but I do not want to be here like every other brand in the world.
What is your breakdown between business and leisure travelers in Bangkok?
BEAUVAIS: The breakdown for us between business and leisure is really dependent on the location. Today, I have some hotels in Bangkok that are 80% business and 20% leisure. This hotel at Pratunam is literally 90% leisure and 10% corporate because of the destination of the location. For us, the key is to have an â€˜Aâ€™ location. If you have a â€˜Bâ€™ or â€˜Câ€™ location, you can still make hotels work, but it is a lot tougher. So by having an â€˜Aâ€™ location, whether it is in a high leisure market or a high corporate market, thatâ€™s OK. One of the keys for us surviving today in Bangkok, a market that has been over built and one where average rates are exceptionally low, is that we are not going after the same business in all of our hotels. Some hotels are after leisure business, some hotels are after corporate business, some hotels are after long stay business. By blending that, we are not jeopardizing our business, and more importantly, we do not have owners that feel like we are jeopardizing their business. What is important to me is that we do not get greedy and have 20 hotels in Bangkok. By having 4 or 5 hotels in Bangkok, every owner knows that we are dedicated to their specific focus and because we are delivering results at the top of the market, of course the results are very good.
What kinds of trends do you see taking place in Bangkokâ€™s hotel industry?
BEAUVAIS: When you look at the macro trends of what is affecting our business, the best news in the world is that tourist arrivals year on year into Thailand are growing, and that is great news. We are seeing more Chinese, we are seeing more Indians, and I think that is great. There has always been a push that the Tourism Authority should be doing more for the high-end tourist. The problem is not that we do not have enough high-end tourists. The problem is that we have way too many rooms and we do not have enough low-end tourists to equalize the market. Today, with 26m tourists, the markets have equalized. The bottom hotels and the mid-tier hotels have all filled up, driving everybody back into the deluxe and the luxury tier where they belong. At the end of the day, most markets can only handle one or two luxury hotels. Today, by my definition, I would say that we have 7 or 8 really great luxury hotels in Bangkok. There are not that many luxury travelers. So, therefore, they have to sell into the deluxe category, bringing down their rates and their unique point of difference, and that is unfortunate. But that is what happens when you over build. What we like about this mid-tier segment is that this is not a problem. There are plenty of customers in this segment.