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Families driving luxury hotel growth: Expert

While the luxury hotel sector faces challenges, including fiercer competition and difficulties in attracting and retaining manpower, industry veteran Christoph Mares is bullish about its prospects.

The chief operating officer of Mandarin Oriental Hotel Group believes rising demand for tourism and leisure, especially from families, will drive the growth of luxury hotels globally.

In March, travel trade show ITB Berlin and consultancy IPK International said the number of outbound trips worldwide had gone up 6.5 per cent from a year ago, reaching nearly 1.2 billion international trips last year. And global outbound trips are projected to rise by 5 per cent this year.

The Singapore-listed Mandarin Oriental Hotel Group plans to double its portfolio to 60 hotels worldwide by 2027 - a goal Mr Mares described as realistic in a recent interview with The Straits Times.

The hotel group is controlled by Hong Kong-based conglomerate Jardine Matheson and now comprises 31 hotels and eight residences in 21 cities, including London and Singapore.

Mr Mares told ST the group now has 17 hotels and 11 residences in the pipeline, and is making its first foray into Madrid and Hawaii.

Also in the group's favour is the rise of family travel, he said.

"The classic single corporate travellers will wish to be with their families to a much greater extent than in the past, and the joint travel of four to six people within the family of different age groups, multi-generational travel, will be, I think, an even faster growing trend than in the past," Mr Mares said.

About 20 per cent of the group's guests are families, he added, and this will double in the next five to 10 years. Hotels will have to reinvent themselves in design and activities to suit their needs, he noted.

Mr Mares said Asia, in particular, has been a key driver of demand for bespoke luxury hotels. Asian countries are not just a source of tourists, but some are also big draws for tourists.

Japan, for instance, welcomed a record 28.7 million visitors last year - up from 10.4 million in 2013.

The Mandarin Oriental Hotel Group's expansion comes on the back of strong growth last year, when its revenue per available room, a measure of a hotel's ability to maximise its room capacity and pricing power, grew 4 per cent year-on-year to US$419 (S$570) in Europe.

In Asia, this jumped 8 per cent to US$192 last year, while it remained flat in the Americas at US$331.

Mr Mares remained confident about the luxury hotel industry despite the rise of platforms such as Airbnb, noting that these have not been able to provide a full luxury service model.

Even if they do enter this niche market, Mr Mares doubts they will be able to provide bespoke services at current prices. "If they want to do an entire service infrastructure on top of that basic model, the pricing model for Airbnb even, might be very complex or far more complex than it is today."

He said recruiting, retaining and developing talent in the luxury hotel sector is a problem that "will be compounded in years to come".

"We're dealing with a far less patient generation potentially in terms of career evolution expectations than we ever have done.

"And especially financially, remuneration and benefits, in particular, hospitality is not known to be maybe the strongest of the pack, but we have other things we can provide - people interaction, skills... that maybe other industries cannot."

The group offers in-house training programmes such as an internal MBA course.