ASTON Int'l sees chance to expand in Indonesia

By Devi M. Asmarani

JAKARTA (JP): The Honolulu-based ASTON International hotel chain, a newcomer to Indonesia, sees wide opportunities to expand its operations in the country despite the current downturn in tourism.

The company's president and chief executive officer, Charles E. Brookfield, said the crisis had made Indonesia a more attractive place to expand into.

"The market has potential and there's good room for dramatic improvement," Brookfield said in an interview with The Jakarta Post on Friday.

A new affiliate of ASTON Hotels and Resorts, a 50-year old Hawaiian hotel chain, ASTON International entered Indonesia last year.

It has had two operations in the country since the beginning of this year -- Lippo Sudirman Grand Suite in Jakarta, which consists of five-star serviced apartments, and the five-star ASTON Resort and Spa in Bali.

Two other properties -- a five-star serviced apartment complex in Surabaya, East Java, and a boutique hotel in Bali -- are expected to open before the year ends.

Brookfield said the company had an ambitious target of obtaining three properties in a year and 30 over 10 years before the monetary crisis hit Indonesia last year.

But even after the crisis damaged the economy and led to political unrest which caused a downturn in tourism, Brookfield said ASTON did not abandon its ambitions in the country.

"Back then, I expected most of them (the new hotels) to come out of new properties, but with the collapse, that's no longer realistic," he said.

But Brookfield said he believed opportunities now existed for the hotel chain to sell its product and services to local hotel owners who are disappointed by the low returns generated by their current management teams. He said hotel owners may now entertain the idea of bringing in a new operator to boost profits.

In some cases, hotel owners might be unable to finance the operations of their hotels and in this case, he said, ASTON would be able to both manage and finance daily operations.

"We can come in as an operator and say we'll fund the sales and marketing for your hotel for the next year with our money," he said.

He said his company could also give certain incentives to hotel owners, such as charging no reservation or royalty fees for the first two years to cut operating costs faced by hotel owners.

But Brookfield said he would not rule out the possibility of acquiring hotels which are still in operation and whose owners could no longer afford to keep them running.

"We will target certain areas and if we can get a good buy, we may go in and buy all the stake or part of the hotel, " he said, adding that several property owners had recently put hotels on the market.

"The tip of the iceberg is starting to be seen now. There are a lot of deals being negotiated," he said.

The company would look for independent hotels that have not yet been awarded stars but which have the potential to be rated, he said.

Wide range

ASTON currently owns about 40 hotels throughout the Asia Pacific region. Thirty of the properties are located on the four islands of Hawaii.

The hotels cater to a variety of segments in the market and range from 5-star serviced apartments and boutique and resort hotels, to three-star budget and condominium hotels.

The wide variety of choice it can offer enables the chain to attract customers from a number of different classes.

"When you're selling or marketing a hotel, you have to study the distribution channels," Brookfield said.

"In places like Bali, for example, the distribution channels are dominated by tour operators, which are wedded to the airlines," he said.

What the tour operators want are many choices to meet the needs of a diverse array of customers.

"What we do is to give all the inventory they need, different levels, prices -- more choices than companies with less property are able to," he said.

This is the strategy ASTON plan to pursue in Indonesia, he said, adding that in the future he hoped to have 50 properties throughout the country.

He stressed the importance of flexibility in the company's sales pitch, pointing to the Lippo Sudirman Grand Suite serviced apartments as a example. He claimed the complex, which has 300 units, was not typical of serviced apartments, saying the company preferred to call in an "all-suite hotel".

"People's perception of serviced apartments is that you have to sign a one-year lease, but an all-suite hotel caters to short- staying as well as long-staying guests," he said.

He admitted that the company does tend to cater to the upper end of the market.

"The reality is that it's always better to have superior products in a superior location, because then you can compromise your prices and gain a larger share of the market," he added.