Hotel Online Special Report
Impact of Asian Crisis Highlighted 
at IH&RA Congress in Manila
Paris, 13 November 1998 - Asia will not be on a solid road to recovery until 2003, according to the predictions of a well-known futurist at the annual congress of the International Hotel & Restaurant Association (IH&RA), which convened in Manila last month.

Robert Broadfoot, managing director of Hong Kong-based Political & Economic Risk Consultancy Ltd. set the scene for the conference by presenting various scenarios for business development in Asia-Pacific.

Asia will still comprise four main regions, he anticipated, although Greater China will enjoy an enhanced position.  In addition, "as markets open," he said, "technology is set to play an increasing role and the Internet will develop a greater Asian dimension, overcoming its current English-based status."  He also forecast that some businesses, like computers and telecommunications, will eventually move out of Asia.

Broadfoot foresees the resumption of infrastructure development, for which Asia was estimated to need US$1.3 trillion in the past but did not have the financial structure to support, although he sees this as depending more on internal financial resources than foreign money.

He stressed that the region's economic well-being is contingent on Japan and China "getting it right," and the Japanese government in particular instituting substantive reforms.  He pointed to three major signposts for the future: China's possible devaluation of the renminbi; whether the Chinese government acts on the huge need to improve its housing situation, and the outcome of Japanese banking reform, which has so far been inadequate.                                                        -

"The various big picture forces that are pushing and pulling within Asia are internationalism and nationalism, and decisions on whether to take a gradualist approach to economic reform or administer shock-therapy to asset values," said Broadfoot.  Sorting the winners from the losers, he predicted, would "depend largely on whether reforms are served as hot as they are cooked."

Providing a shorter-term perspective of the impact of the Asian economic crisis on hotels, Claas Elze, vice-president of international hotel development planning for Marriott International (Hong Kong) expects it to result in "less ego-driven hotel development and more market-oriented products". The existing oversupply of hotel rooms in many markets will result in the survival of the fittest, he said, with the older hotels - often overstaffed and lacking capital investment - suffering the most.

With work on many non-viable projects halted due to the crisis, Elze forecast that budget and economy segments of the hotel market will gainin importance.  "Independent hotels and small and regional chains will face increased difficulties, opening up the possibility that they may have to tie-up with international chains to survive," he said.

He cited joint marketing strategies between tour operators, hotels and airlines as a solution to the setback, listing the Bali Promo, Amazing Thailand and Singapore Promotion campaigns as examples of the kind of joint efforts that work. “One hotel or even one chain cannot make a difference,” he said.

He pointed out that currently, virtually the entire Asian region is an emerging market. Kuala Lumpur and Bangkok in particular will require substantial increases in demand to fill the newly-built rooms, and among the resort destinations, only Bali and Phuket have the critical mass of hotels and air access to provide a truly international profile.

Foreign investors are interested in picking up many of the for-sale assets around the region but have been disappointed by continued legal uncertainty and the gap in the perception of asset values, said Elze. “What’s for sale is often just a mortgage which can’t be foreclosed on easily,” he said.  As more hotels come on to the market, it remains to be seen if owners have more realistic price and value expectations.

According to Imtiaz Muqbil, executive editor of Bangkok-based Travel Impact Newswire, blaming the crisis entirely on nepotism, cronyism and corruption in Asia was inaccurate. "Currency speculators are equally responsible and need to be reined in to prevent them from attacking Asian currencies in the future," he said.

Echoing Broadfoot's analysis, Muqbil warned of the stirrings of nationalism, fanaticism and racism emerging in Asia and the potential impact this would have on Travel & Tourism as a promoter of cultural understanding, friendship and peace.  He predicted that religious faith would make a comeback in Asia, and that the Travel & Tourism industry was well-placed to build bridges between people’s beliefs and their economic livelihoods.

The Congress, which took place from 22-26 October 1998, attracted more than 330 participants from over 40 countries.  The speaker line-up comprised 40 hotel executives, industry experts and futurists, who assessed the impact of the new marketing revolution under the banner "One-to-One: Marketing in the Interactive Age".  Next year's event will convene in Durban, South Africa, from 17-21 October 1999.

The International Hotel & Restaurant Association (IH&RA) is a global network of independent and chain operators, national associations, hospitality suppliers and educational centres in the hotel and restaurant industry in more than 150 countries.  As the voice of the industry it represents, protects, promotes and informs its members to enable them to achieve their objectives.

Caroline Harvey
Tel: (33 1) 44 89 94 07
Also See:
Global Tourism Growth Slows Due to Asian Financial Crisis / PATA / Mar 1998 
Asia - Favorable opportunities exist, but.. / Horwath Landauer / May 1998 
Opportunity Amidst the Turmoil…Industry Leaders Remain Positive on Asian Growth Story / Arthur Andersen / Summer 1998 

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