Asia & Middle East Market Insights

In the first of a series of conversations with hospitality industry colleagues, Robert Swade spoke to James Mabey, Managing Director, Asia & Middle East, and Chief International Business Officer about the current situation in Asia and the Middle East.

In your opinion, what can hotel owners and operators learn from Asia?

James Mabey: I feel it is already quite well-known in the industry that Asia excels at developing service culture. Asian hospitality has really set the bar in many ways for service. If you look at leading brands like Mandarin Oriental, Shangri-La, Peninsula, and Aman, it is hard to dispute that Asia is a world leader in service. However, I would also say that Asian hospitality is setting the bar in many other ways as well, especially in technology advancement and adaptation. The payment systems and guest communications systems that are only recently being introduced in the West have been used for years in places like China. Asian values of flexibility, evolution, pragmatism, and adaptation are present in all areas of business, including hospitality. Whilst, in my view, hospitality in the West has struggled to keep pace with the IT landscape, Asia’s embrace of flexibility and adaptation has helped it outpace its western counterparts in tech implementation and advancement.

What trends are you currently seeing in the Middle East market?

James Mabey: All eyes are on the mega projects in Saudi Arabia. They are putting in the resources and appear to be sparing no expense on execution on this point. On the hardware side, I have no doubt they will deliver some amazing projects. An interesting aspect to watch is the PR and how Saudi Arabia progresses overall as a brand. I know they have some very robust plans in place to build that brand, and they have already started that destination PR push.

An interesting comparison data point may be drawn from a more micro perspective. When a hotel is launched, approximately 5 per cent. of the total budget may be used on pre-opening expenses. Of those costs, approximately 30 per cent. might be budgeted for sales and marketing efforts. In other words, often 1.5 per cent. of the total hotel project budget is set aside for an opening sales and marketing push. Of the billions and billions of dollars that the Saudis are spending on building these projects, will they use a 1.5 per cent. equivalent on sales and marketing to launch the Saudi leisure destination as a brand? It will take a lot to dethrone Dubai as the go-to destination in the region for leisure travellers.

Hong Kong and Singapore have set up a travel corridor to re-establish overseas travel links and lift the hurdle of quarantine for visiting foreigners. Do you think travel corridors such as these have the potential to revive air travel, and provide a model for other parts of the world?  

James Mabey: The Hong Kong-Singapore travel corridor, by itself, will not significantly move the needle on neither air travel nor the travel and tourism economy in general. However, it is a huge step forward for regional recovery in that it is setting an example for other countries. This may be the injection of courage the region needs to encourage other nations to follow suit. The reality is that China is well situated to establish travel bubbles, if not nationally then at least by city. China’s outbound travel will be the only salvation of the region’s international travel economy in the near term. 

In your opinion, which international markets do you think will come out of the pandemic strongest – and why?

James Mabey: In May, I gave my perspective on this exact question and it was very clear even from those earlier days that China was masterfully positioning itself by the way in which the government handled the economy and politics both domestically and internationally. In the early days, the WHO came out early in support of Chinese action to combat the virus. As the situation escalated, the problem quickly became an international crisis, one that would require tough and decisive action. The exact kind of action China has nearly perfected over the years, and for which western countries are ill-suited. 

Fast-forward a few short months and the Chinese economy is coming back to life – and even seeing positive growth. In many markets, the tourism numbers are the same or better than last year. Compared to other countries (i.e. the US) the Chinese casualty numbers are very low and appear very well-managed. Are those numbers accurate? Who knows? However, it is difficult to disprove them and as far as Chinese domestic media is concerned, the numbers are right on.

The reality on the streets in China is that people are going about their business very much as usual without worry. The Chinese are proud of their government’s actions. The Chinese government decisively set out and executed a plan of attack, leveraged new high-tech solutions, controlled the narrative internally and managed, to a large extent, many aspects of international media coverage. Now China is rushing around the globe offering aid by way of medical expertise, supplies, and cash. 

James Mabey was in conversation with Robert Swade, Managing Director of Maze Hospitality, which delivers expertly crafted solutions for hotel owners, investors and hospitality companies, including, Operator Search & Selection, Asset Management, Brand Equity, Development and New Projects, Transactional Support and Project Management.