ITB 2024 Special Reporting
Airlines Go Low Cost, Hotels Go Luxury – Will the Twain Meet?
By Yeoh Siew Hoon
Monday, 27th August 2012
At the HSMAI Asia Connect held Wednesday in Singapore, one thing that stood out is the disconnect between what's going on in hotel development and aviation.

According to the Centre for Aviation, Sydney, half of all air seats in Asia will be low cost in 10 years time. At Singapore Changi, low cost is now 26% of all air traffic. Japan's gone from zero low cost to nine registered entities and that looks ready to shake up the market.

As AirAsia proved a decade ago, low fares allow everyone to fly. In Singapore, I heard that Australia has seen a spike in visa applications from Filipino service workers and taxi drivers, thanks to Scoot's low fares to Sydney and Gold Coast. And it's not only the budget travellers who are flying Scoot. I had lunch with a fairly affluent businessman today who told me he was flying with his family of four to Gold Coast on Scoot this December – for S$2,500, he can buy four return tickets instead of just the one on a traditional premium airline.

"I'd rather spend the money on the ground," he said.

A friend who runs an inbound tour company in Sarawak, Malaysia, is also seeing good growth in travellers and a good percentage are longhaul visitors coming in on AirAsia which is the only low cost airline with flights to Kuching. "They are good customers and they are spending a lot on tours," he said.

So flip over to hotels and according to STR Global, of the 1,871 hotels (421,331 rooms) opening in the next 3-5 years, luxury accounts for 25%, upper upscale 27%, upscale 31%; and mid/economy 19%.

Jonas Ogren, who shared these statistics at the event, agreed there's a disconnect between hotel development in the mid/economy segment and how airlines are changing. "Budget hotels are not as sexy, but their performance in terms of returns is often better," he said.

By the way, of the new hotel pipeline, 58% are in China and 17% in India.

It was interesting thus that on the panel moderated by myself, there was Campbell Wilson, CEO of Scoot, alongside Stephane Laguette, Vice-President Sales, Marketing & Distribution, Sofitel Asia Pacific and Rosmalia Hardman, director of sales & marketing, W Singapore-Sentosa Cove.

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