We see high revenue contribution from Asian hotels: Four Seasons<\/p>\n
In line with an upward trend in economic growth over the past few
\nyears, tourism and business travel have started to grow as well,
\nresulting in positive implications for the hotel business here.
\nThe Jakarta Post's Tubagus Arie Rukmantara talked recently to
\nPaul Iacovino, Four Seasons vice president of marketing for Asia
\nPacific, on the outlook for the hotel business in Indonesia. The
\nfollowing are excerpts from the interview:<\/p>\n
Question: How do you see the hotel business here in the wake of
\nthe terror attacks that have taken place in recent years?
\nAnswer: I see two distinct types of customers that come here. One
\nis those who are particularly going to Jakarta. They have
\nbusiness reasons that require them to come here. But,
\nunfortunately, in the last two or three years, there have been
\nvarious incidents that are particularly worrying to Western
\ntravelers.<\/p>\n
However, these travelers are staying away from Indonesia for less
\nand less time. Two years ago when the bombing at the Marriott
\nhappened, people stayed away for the whole month. But after that,
\npeople have been coming back very quickly. These people have to
\ncome here for business reasons because the country has so much
\npotential for growth in every sector.<\/p>\n
In fact, in Jakarta, the return of foreign travelers has been
\nstronger than ever. Our statistics show that hotel occupancy is
\nstronger and total numbers of travelers are up quite
\nsignificantly year over year.<\/p>\n
Meanwhile, those who go to Bali are the travelers who come
\nbecause they want to come. After the Bali bombing, it was only
\nthe Asian travelers who stayed away for a short period of time,
\nwhile European and American travelers remained reluctant to came.<\/p>\n
The U.S. travelers still have a traveler advisory from their
\ngovernment and that has been very significant for the Four Seasons
\nbecause, although we are a Canadian company, our single biggest
\nsource of leisure business heavily depends on U.S. travelers. So
\nwhen they stop coming, that really hurts the Four Seasons more
\nthan any other five-star hotels.<\/p>\n
That's why on a business level, we are recovering much more
\nslowly.<\/p>\n
In the past few years, many international chains have opened
\nhotels here. How do you see the competition between five-star
\nhotels?
\nIn a market like Jakarta, I think the hotel business here is
\noverbuilt compared to the demand in the market. When you look at
\nthe hotel business now, hotels are not extremely busy. Besides
\ntwo or three very well established hotels, of which two are
\nIndonesian brands, the other hotels are really fighting for
\nmarket share.<\/p>\n
Hotels are not seeing big enough growth, although this year's
\ngrowth has been quite good.<\/p>\n
So, to me, I'm not so sure that I would be keen to see
\nadditional hotels in Jakarta.<\/p>\n
What is the impact of the Jakarta market being overbuilt? Will we
\nsee hotels being closed down?
\nNo, I don't think so. I think the operating costs here are low
\nenough that people seem to be able to run hotels at less than the
\noptimum level but still keep their businesses running.<\/p>\n
I think the major impact is on the profitability of the
\nexisting hotels. The question will be, can you charge a price
\nthat is really more competitive.<\/p>\n
For us, our strategy is that we build urban hotels in
\nfinancial centers. So you will find our hotels in the major
\ncapitals in the world, but you won't find us in remote cities.<\/p>\n
We look at Jakarta as a significant world business capital, a
\nregional business capital. Therefore, we need to be here because
\nwe know our customers will come here.<\/p>\n
But the prices that we charge our customers here are far lower
\nthan what we charge in most other Four Seasons hotels in the
\nworld.<\/p>\n
If you compare Jakarta and other capitals of Southeast Asian
\ncountries, like Singapore, are we lagging behind in the
\ndevelopment of the hotel business?
\nI don't feel that way. Every major brand is here in Jakarta. Most
\nof the international players are here. I don't think Jakarta is
\nlagging behind. But I do think that we need more business
\ntravelers to come. The good news is, that it is happening.<\/p>\n
What I see from the oneness of your new government with
\nbusiness, I would be optimistic that the city will match other
\nSoutheast Asian business centers.<\/p>\n
Do you have any expansion plans here?
\nFrankly, no. We have opened our hotels in Bali at Jimbaran and
\nSayan. Now we have over 200 guest rooms in Bali, which for us is
\na lot. We are a company that focuses on small-size properties. In
\nTokyo, we have only 57 rooms, but in Jakarta we have 365 rooms.
\nThis is a large hotel for us.<\/p>\n
Therefore, our business development plan for now is to get
\nthis one to work well.<\/p>\n
In your company's first-half report, you mention that revenue
\nfrom Asia has boosted the Four Seasons overall revenue. How do
\nyou see the revenue outlook from this county?
\nEven though the Jakarta hotel is not running full, we have
\ntripled our business over the years. We could double it or triple
\nit again in future years.<\/p>\n
I think we are optimistic that our Asian hotels will
\ncontribute a lot to our revenue. In 2004, Asia's growth led
\ncompany growth. And we've opened hotels in Mumbai, Beijing and
\nShanghai, and Hong Kong. We've set ourselves up for really strong
\ngrowth from 2005 to 2007.<\/p>\n
However, Jakarta will see slow growth because of pricing. When
\nwe opened in Hong Kong, pricing began at around US$300 per night,
\nbut here our pricing begins at around $150. Therefore, the
\nJakarta hotel won't have a significant impact on revenue. But
\nagain, its existence is important. We have invested $10 million
\nto improve our facilities, which it is expected will attract
\nIndonesian travelers to come on weekends because we expect more
\ndomestic customers to come.<\/p>\n
In Bali, the return of American leisure travelers, who are
\nless price sensitive than most travelers, and they're also very
\nfamiliar with our brand, will boost our revenue. But we need the
\nU.S. government to take Bali out of their travel advisory.<\/p>",
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"sponsor": "Okusi Associates",
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