What's a prom queen doing in the world's second oldest profession?
By Yeoh Siew Hoon ~ SHY Ventures
Wednesday, 24th May 2006
Yeoh Siew Hoon follows a panel discussion at the recent Jones Lang LaSalle Hotels' Investment Conference in Singapore.

For a moment I thought I had walked into a dating and sex counseling session.

There was Jeffrey Flowers, president of Marco Polo Hotels, looking like a wallflower on stage alongside his fellow hotel chieftains Patrick Imbardelli (InterContinental Hotels Group), Miguel Ko (Starwood Hotels & Resorts) and Koos Klein (Hilton International).

With the first part of the panel discussion focused on why the big three were selling their assets at this time, Flowers, with just 10 hotels in his pocket, was clearly outgunned by the three big boys who talked about why their companies were going asset-light and focusing on being management companies.

Klein said, "Hoteliers are not good asset managers, we put our heart and soul into it so that when it comes to selling, we find it hard to do so. Thus it's better we concentrate on our brands and distribution. The market is also confused – are you an owner or a management company?"

Ko said it was all about buying and selling at the right time and while Starwood had shed assets, "we are also looking at investing in Asia, so we are selling and buying at the same time".

Then just when everyone was wondering when Flowers would be asked for the first dance, moderator David Gibson, CEO Asia Pacific of Jones Lang LaSalle Hotels, turned to him and said, "You must be feeling like the prom queen tonight."

"Queen?" asked Flowers. "I am not sure about that."

Then he said to his fellow panelists, "I can't date any of you guys", referring to Marco Polo's strategy to focus on owner- operated assets and keeping it within the family.

When the discussion moved on to franchising, Ko said that although "we are the second oldest profession in the world – after construction", he said hotels hadn't yet found the magic formula when it came to franchising.

Noting that franchising was the best way to grow, he said, "We should all learn how to become a good franchise company in order to grow."

Ko said there was a perception that owners preferred franchising "when the wife or daughter wants to manage the hotel or when the owner wants to have his finger in the pot".

Imbardelli said InterContinental was not on a big franchise rollout in Asia/Pacific and had not signed any new franchises in the last few years. And he spoke of the "ultimate desire" by management companies to control their own destiny with their brands.

Flowers also ruled out franchising for Marco Polo. "We are owner- managers. We own 40 percent of our hotels. We don't see franchising as an option."

The next question – how many hotels can a multi-brand chain have in one city without raising the concern of owners – had Ko scratching his head.

"This is something I have never understood. If you as an owner were to say to McDonald's or Starbucks, you need another brand because there's another McDonald's or Starbucks across the street, they'd think you're crazy.

"Similarly with the soft drinks business – Pepsi or Coca-Cola – the more shelf space you get, the more successful your brand is.

"I cannot understand why investors or owners have problems with five Hiltons or five Sheratons in the same city – isn't it better than having a direct competitor? "This logic is anti-branding."

Asked to share the current concerns of owners, Imbardelli said what was new was owners taking a much longer-term view of their asset and showing a stronger interest in capital exit. "Before it was purely a hotel asset, now they see it as a strategic option – how to dovetail it with retail, for example."

Ko said the issue was not usually the owners but the owners' representatives "who have to prove that they provide real value to the owners".

And the next big thing? Branded real estate.

Whether it be Hilton Residences for long stays or Extended Stays or serviced apartments or St Regis Residences, such as what Starwood is managing in Singapore, the panelists agreed this was a future area of opportunity. Ko said a serviced apartment next to a hotel was a good business combination especially in cities with high expatriate population.

As for what keeps each of them awake at night, Flowers singled out human resources. "We are sitting next to Macau which will need 10,000 people in two years and a lot of them will come from Hong Kong."

Imbardelli cited "terrorism and bird flu" and "people concerns in China".

Klein also singled out "terrorism". "We have 20 hotels in Egypt. In the last 18 months, we've had three bomb attacks – one direct hit and the others collateral damage. That keeps me awake."

As for Ko, it's "accidents and incidents in our hotels when people get injured or die".

Citing a case of a three-year-old boy who wandered out onto a balcony and fell off, and the court's subsequent ruling that the hotel was not liable for his death, he wondered, "Can we do more, could we have prevented it?"

The SHY Report
A regular column on news, trends and issues in the hospitality industry by one of Asia's most respected travel editors and commentators, Yeoh Siew Hoon.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her company's mission is "Content, Communication, Connection".

She is a writer, speaker, facilitator, trainer and events producer. She is also an author, having published "Around Asia In 1 Hr: Tales of Condoms, Chillies & Curries". Her motto is ‘free to do, and be'.

Contacts: Tel: 65-63424934, Mobile: 65-96801460

Check out Siew Hoon's new website, www.shy-connection.com, which features a newly-launched e-zine with a difference.
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