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AccorHotels sees saturation giving it the upper hand

Singapore

DESPITE a slightly softer start to the year for the Singapore hotel market, AccorHotels said that its properties here are outperforming the sector, with both occupancy and rates doing well.

Chairman and chief executive officer for the Asia-Pacific Michael Issenberg said that, contrary to belief, having a saturation of hotels and brands in Singapore has given the group the upper hand.

"(It) enables us to cross-promote our hotels and brands and gives us an advantage over individual operators when it comes to distribution, purchasing and marketing. Having all or most of our brands present in the city, where we are headquartered, allows us to showcase all our brands in one place to investors and owners. We are not really seeing cannibalisation from the mid-scale hotels taking business away from the luxe tier," he told The Business Times.

Since moving its Asia-Pacific headquarters from Sydney to Singapore in 2008, AccorHotels has grown to become the largest hotel operator here, with 12 hotels offering 5,400 rooms.

In 2016, the group acquired the FRHI portfolio of hotels worldwide, including the Raffles Hotel, Fairmont Singapore, Swissotel The Stamford and Swissotel Merchant Court, catapulting it into the lead in the luxury and upscale sector not only within Singapore, but also globally.

This year, it is adding another 1,000 rooms to the island's tourism infrastructure with the opening of the 223-room luxury Sofitel Singapore City Centre in Tanjong Pagar in August and a combined Novotel and Mercure complex with 772 rooms on Stevens Road in October.

"We believe that our mid-scale brands are some of the best in the market and the main thing we can do to compete with other groups is to provide our guests with the best experience possible," Mr Issenberg said.

"We are investing enormously in technology that allows us to know our guests more deeply so we can deliver a more personalised experience. We are also constantly working to evolve all our brands including the midscale brands to offer services that typically were only available to luxury customers.

"While Singapore is the only Asean key city to have experienced negative RevPAR (revenue per available room) growth for the first quarter of the year, both rates and occupancy here are better than in most neighbouring countries."

Since moving its regional headquarters to Singapore to be closer to its main markets of China, India and Indonesia, AccorHotels has seen enormous growth.

In 2016, visitor arrivals and tourism receipts in Singapore hit record highs, with arrivals rising 7.7 per cent to 16.4 million and receipts growing 13.9 per cent to S$24.8 billion. Top visitor source markets were China, Indonesia and India.

The Singapore Tourism Board (STB) has forecast arrivals of 16.4 million to 16.7 million in 2017, while tourism spend is expected to clock S$25.1 billion to S$25.8 billion.

According to Mr Issenberg, there is room for more luxe and upscale hotels in Singapore "because there is growing demand for high-end accommodation from markets such as China, Japan, Indonesia and India".

So one of the group's key strategies to attract more Chinese visitors is its alliance with Huazhu Hotels Group, one of the largest hotel operators in China, with more than 3,000 hotels in China and over 80 million members on its loyalty programme.

"Currently, we have on trial a range of promotional offers to the Chinese market for our hotels in Singapore, with positive results so far," he said. "We were the first to introduce Chinese Optimal Standards into our hotels to make Chinese visitors to feel more welcome. We are also marketing to Chinese travellers on platforms such as WeChat and Weibo and ensuring that Chinese guests can pay using Union Pay and WeChat pay."

And Monday marked a new chapter for the group in Singapore with the launch of its subsidiary John Paul, a concierge and customer loyalty business to cater to customers' every request anywhere around the globe.

Citing a predicted 3.4 per cent increase in visitor arrivals for this year, Mr Issenberg noted: "I believe we will continue to see growth this year, although we expect it to be lower than 2016. To maintain growth in tourism numbers, STB needs to work hard to attract more major events and to bring more MICE (meetings, incentives, conferences and exhibitions) business into the country as these attract high-yield visitors."