Property
Growing Malaysian hotel brands abroad
Ang Hui Hsien 
Berjaya Eden Park Hotel in London
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The hotel business is huge and growing. According to market research and business intelligence portal Statista, the global hotel industry raked in revenue of US$554.64 bil (RM2,172 bil) in 2016.

With such great potential, it is not surprising many Malaysian hospitality groups, such as Berjaya Corp Bhd and Sunway Bhd, are busy growing their presence overseas via their respective hospitality divisions.

While the returns can be lucrative, operating a hotel business abroad is a different ballgame as the economic climate and regulatory requirements in the respective jurisdictions have to be carefully considered. The upside is a foreign environment gives homegrown brands opportunities to stand out from its peers, by offering Malaysian hospitality to a growing number of global travellers.

 

Strengthening global presence

The Sunway group operates hotels in Cambodia and Vietnam, with investments totalling RM875 mil via its hospitality arm, Sunway Hotels and Resorts, in 2016.

Under its three-year expansion plan, which is expected to be completed by the second quarter of this year, RM530 mil is for new assets with the rest to refurbish existing hotels, including the 138-room Sunway Hotel Phnom Penh and 143-room Sunway Hanoi.

“This substantial reinvestment is the largest expansion plan for the Sunway Group’s hospitality division in recent years.

“We are looking to support the region’s increasingly robust business exchange, corporate travel and leisure tourist markets,” says Sunway managing director of property development division (Malaysia and Singapore) Sarena Cheah. Her team used substantive data and consumer insights when planning hotel refurbishment and upgrading works.

Similarly, Berjaya Hotels and Resorts is also looking at spreading its wings further into new overseas markets. Its hospitality division owns and operates 20 hotels and handles about a million guests per year.

The group has some 4,000 rooms in seven countries such as the Philippines, Vietnam, Sri Lanka, Seychelles, Japan and the UK.

To break into new markets, it plans to leverage a new concept brand to attract guests.

Berjaya Hotels and Resorts CEO Hanley Chew says having good local market knowledge is key to success. “Accessibility, availability of resources and local market knowledge are key considerations. We will first expand regionally with our thelivingroom hotel brand in regional key cities.”

Chew says accessibility is one of the key considerations when it comes to operating hotels overseas

Targeted at corporate travellers, the thelivingroom concept is designed with an emphasis on space efficiency and features a similar layout for every room. By using furniture that can be tucked away and stored when not in use, each room can be customised to accommodate a solo traveller or up to four guests.

The construction cost for a thelivingroom hotel with 200 rooms is estimated at RM50 mil, or RM250,000 per key.

 

Growing room rates

As at end-2017, revenue contribution from Berjaya Hotels and Resorts’ overseas portfolio was 45%, but Chew is confident this will soon overtake domestic revenue.

“Room rates in the overseas hotels are growing faster than Malaysian hotels. As such, in the next two years, contribution from overseas hotels may equal or surpass Malaysian hotels.”

According to the Hotel Price Index, a twice-yearly report commissioned by hotel booking portal Hotels.com to track global room rates, Asia had the lowest index point of 99 among all six regions surveyed in 2016.

The Caribbeans topped the list with 139 points, with North America up a point to 120, due to continuous growth for the seventh straight year.

Chew admits that being part of a conglomerate with an established overseas reputation provides its hotels a head start and certain credibility. “Berjaya as a hotel brand has its advantages. As our parent company is involved in a multitude of businesses overseas, the Berjaya name is well known abroad,” he says.

He points out that many homegrown hotels with foreign operations tend to differentiate themselves from their international peers by riding on Malaysia’s renowned diverse cuisine.

“Malaysian hotel brands usually tend to differentiate themselves through food offerings. When you walk into a Malaysian hotel overseas, chances are you can find nasi lemak and nasi goreng on the menu.”

St Giles stamps its mark

NOT many are aware a leading local property group owns the St Giles chain of hotels operating in Malaysia, the Philippines, Australia, the US and the UK.

The London-based international hotel brand is owned by IGB Corp Bhd whose property stable also includes Mid Valley Megamall and The Gardens Mall in Kuala Lumpur.

The St Giles Hotels Group is headed by Abigail Tan, the daughter of IGB Corp group managing director Datuk Seri Robert Tan, who has an ambitious target of growing the group’s hotel portfolio to 20 by 2020.

The group owns and manages nine hotels, the latest being The Tank Stream in Sydney, which began operations at the end of 2015.

It uses a unique name, graphic and logo to distinguish the hotels’ three price tiers.

The top tier is packaged as St Giles Signature, the second sports red graphics and the lowest-priced hotels use a blue logo.

The group seeks to appeal to a diverse market from first-timers to seasoned guests.

Among the potential locations for the group’s expansion are Miami, Washington, New York and Los Angeles in the US, as well as Vancouver and Toronto in Canada.

European cities such as Madrid, Barcelona, Rome, Milan and Berlin along with Cuba in the Caribbean are also on its radar.

The group’s best growth markets are Europe, where it is headquartered, and Asia, where it has been operating hotels for years.

As part of its strategy to strengthen its image as a global brand, a Be Central, Be St Giles campaign was launched in 2016 to focus on the hotels’ central locations which enhance guests’ travel experience.

The St Giles website was also revamped and relaunched with a modern and sleek design, easier navigation and mobile-friendly version together with a seamless booking process.



This article first appeared in Focus Malaysia Issue 275.