An industry only makes sense if development is integrated into its genes and it dedicates an important share of its resources, energy and thought to the development of its working tool. The global hotel industry is no exception to this rule, although timely events might alter the course of the implementation of its growth strategy. This strategy is far from being linear and jolts or changes in direction are largely influenced by a series of factors, each of which deserves careful examination.
For the hotel industry, the current picture of the global landscape is instantaneous and part of a constant projection over a five- or ten-year period, and its change with the rate of alimentation of «growth pipelines». The manner in which the pipelines are filled is not insignificant. This need translates as both the appeal of the destinations concerned by the projects and the capacity of hotel groups to mobilize financial partners to accompany them. The will expressed by developers to strengthen their presence in one geographic area or another is not always responded to well by investors. Because of the widespread promotion of an economic model based on the «asset light» concept, hotel operators must rely on the goodwill of mostly local financial partners. In this context, international groups are not always the best prepared for facing national actors whose appetite was stimulated on underequipped emerging markets and who hold the keys to the local economy. A planetary battle is underway, it is being organized around the emergence of a national clientele with sufficient revenue to use commercial accommodations, and around international tourism flows that justify the building of new equipment in the most visited cities, countries and regions.
More than ever «Big is beautiful» because marketing, distribution, technology make it necessary to absorb unit costs on a very voluminous network. The complexity of economic cycles also makes it necessary to not weaken its operating account with too strong a concentration on a dominant market. Today, most hotel groups have only one urgency: complete their international diversification in order to capture the turnover where it is developing and limit the impact of local crises on their activity.
The goal of current hotel development is not to maintain the current market positions, but to fairly significantly modify the global hospitality map in order to rebalance distribution to the benefit of nations that are “young” in the hotel industry, regrouped in several circles that are more or less priority areas. While the BRIC countries (Brazil, Russia, India and China) continue to hold center stage, we may observe the CIVETS countries (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa) are beginning to take shape as the focal point of the attention of developers.
These two acronyms refer to groups of countries with growth rates that stand out in a relatively economically depressed landscape that feeds the hope for uncontrolled consumption and promising returns on investments. In the previous decades, the global economy had already banked, with a certain success, upon the Asian « dragons » or « tigers » (South Korea, Taiwan, Singapore and Hong Kong, to which Thailand, as well as Malaysia and the Philippines were already being added). All these countries are characterized by a growth rate that is higher than global growth, generating the rise in power of an active and extravagant middle class.
These countries are also particularly “young” democracies or have recently been opened up to foreign influences. This regularly goes hand in hand with chaos and political unrest. The stability of régimes is not guaranteed, and when stability exists it is at the cost of an energetic control of power over the population and economic instruments. It is understandable that Western hotel groups, while they are very much attracted by the growth potential, are much more reticent about investing their own money there.
The BRIC countries are now entering a more uncertain phase. For a decade, Brazil, Russia, India and China have made us accustomed to growth rates higher than 8%, or even double digit. The crisis in 2009 is also catching up to them and social unrest is getting stronger...
To read the whole report, connect to your Subscribers' Space or buy the article online: hospitality-on.com/les-dossiers
More than ever «Big is beautiful» because marketing, distribution, technology make it necessary to absorb unit costs on a very voluminous network. The complexity of economic cycles also makes it necessary to not weaken its operating account with too strong a concentration on a dominant market. Today, most hotel groups have only one urgency: complete their international diversification in order to capture the turnover where it is developing and limit the impact of local crises on their activity.
Horizon 2015-2020 : pipelines for their projects into emerging countries
The goal of current hotel development is not to maintain the current market positions, but to fairly significantly modify the global hospitality map in order to rebalance distribution to the benefit of nations that are “young” in the hotel industry, regrouped in several circles that are more or less priority areas. While the BRIC countries (Brazil, Russia, India and China) continue to hold center stage, we may observe the CIVETS countries (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa) are beginning to take shape as the focal point of the attention of developers.
These two acronyms refer to groups of countries with growth rates that stand out in a relatively economically depressed landscape that feeds the hope for uncontrolled consumption and promising returns on investments. In the previous decades, the global economy had already banked, with a certain success, upon the Asian « dragons » or « tigers » (South Korea, Taiwan, Singapore and Hong Kong, to which Thailand, as well as Malaysia and the Philippines were already being added). All these countries are characterized by a growth rate that is higher than global growth, generating the rise in power of an active and extravagant middle class.
These countries are also particularly “young” democracies or have recently been opened up to foreign influences. This regularly goes hand in hand with chaos and political unrest. The stability of régimes is not guaranteed, and when stability exists it is at the cost of an energetic control of power over the population and economic instruments. It is understandable that Western hotel groups, while they are very much attracted by the growth potential, are much more reticent about investing their own money there.
The BRIC countries are now entering a more uncertain phase. For a decade, Brazil, Russia, India and China have made us accustomed to growth rates higher than 8%, or even double digit. The crisis in 2009 is also catching up to them and social unrest is getting stronger...
To read the whole report, connect to your Subscribers' Space or buy the article online: hospitality-on.com/les-dossiers
