July 28, 2014 00:00 By Achara Deboonme, Suchat Srita
The international appeal of the Thai hospitality brand is opening opportunities for domestic chains to duplicate their success worldwide as space shrinks at home
Thailand is well placed to evolve into Asia’s hospitality centre, thanks to the rapid overseas expansion of its hotel chains over the past 20 years and a major shift in international perceptions towards its signature services and products, a leading hotel executive said last week.
Chanin Dhonavanik, chief executive officer of Dusit International, told The Nation that domestic hotel chains are comfortably competing against global brands due to accumulated experience and success stories.
“In Asia, key players that are still expanding overseas are now based in Singapore, Hong Kong and Thailand. Hotel companies from Thailand stand out for unique ‘Thai’ services. Thankfully, Thai cuisine and spas are also internationally famous, unlike 20 years ago,” he said.
Since securing its first overseas property in the Philippines in 1995, Dusit has expanded to 33 properties in numerous countries, including China, Egypt, Dubai and the Maldives.
Other brands, chiefly those of Minor International and Centara, have also expanded at the same pace. With its focus on the same segment, Minor’s portfolio contains about 100 properties. Centara, with properties in various segments, also has over 50 properties in Thailand and abroad. Trailing behind is Onyx International.
“The momentum should continue,” Chanin said. “We are now among the top 10 Asian hotel chains.”
In the beginning, going overseas was not easy. In striking management deals, fees were quoted below those of international chains. Years of brand-building have changed this.
While it looked to expand its holdings in the past, Dusit now focuses on the quality of properties to maintain its brand image.
Expansion has been driven by three factors, Chanin said.
First is political instability at home. Martial law, for example, is deterring high net income visitors and businessmen from visiting, blunting the success of the meetings, incentives, conventions and exhibitions (MICE) industry.
Second, the mushrooming of properties allows the penetration of international brands on the home front, which squeezes returns here.
Third, some problems that thwart Thailand’s tourism potential, like the mafia in some provinces and some unclear business rules and regulations, have been long ignored.
Through its offices in Bangkok, Shanghai and Dubai, which are staffed by some 300 personnel, Dusit plans to manage over 30 more properties in three years.
And the portfolio could double in the following three years, when more are being signed up. Other Thai chains could also prosper.
“Hotels managed by Thai chains could rise to more than 300, enough for us to claim that we are as big as international chains,” Chanin said.
Successful stories of properties under Dusit’s management and ownership are now persuading owners in several countries to approach the company for hotel management, including some that had used the services of global chains.
Deals signed in the last six months would build the portfolio with properties in faraway places like Los Angeles and Tunisia.
Dusit aims to grow through all possible means – ownership, joint ventures and management. Its pool of managers is being readied for the scale-up in business.
The Asean Economic Community should not particularly influence the company’s expansion in Southeast Asia. It has been the company’s plan to enter several markets in the region like Vietnam, Indonesia – Bali, in particular – Malaysia and Myanmar.
Dusit’s main focuses are on Southeast Asia, China and the Middle East, but it never stops looking for properties elsewhere. While Tunisia is the first in Africa, it hopes to set foot in Europe and Japan.
Some destinations, like New York, Paris, London and Tokyo, are hard to penetrate given high operating costs. However, the potential is huge given restrictions on new development.
“There are lots of opportunities out there, even in the next 10 years,” Chanin said.