#54 Asian Hotels going West
The times when Western hotel chains where the ones expanding in Asia seem to be over. As the International Herald Tribune reports, the latest trend is Asian hotel chains opening hotels in European locations. Raffles will open the Royal Monceau in Paris, where both Peninsula and Shangri-La Hotels will also be opening new properties soon. In addition, Shangri-La is looking into further projects in London, Moscow and Vienna. Banyan Tree will open hotels on Korfu and Santorini islands in Greece, while Six Sense is looking into the island of Milos. Given the growth prospects in Asia, the stagnating market in Europe and the increasing pressure hotel chains find themselves under, their moves seem counterintuitive at first sight. Considering, however, that an ever more affluent group of Asian tourists is and will be visiting Europe, their plans make perfect sense. Ultimately, these hotels will eat into the market share of European and American hotel chains. Will there be difficulties connected to the entry of these hotels into Europe? I am sorry to say, but I doubt it.
April 23, 2010 @ 5:42 pm
I feel the move for Asian hotel chains to move to the west is a very wise move, primarily due to the increase of Asian tourists traveling to Europe for both business and pleasure. Over the past decade the figure of Asian travelers as increased tremendously mainly from south Asia, Southeast Asia and China (A meta-analysis of tourism demand). With the high level of brand chain loyalty being a very strong market driver. Both of these factors and the addition of Europe wanting more Asian travelers in Europe, present a strong foundation for Asian hotel chains (Europe woos China’s tourists). Leading chains such as the Shangri-La, Raffles and Banyan Tree have made a name for themselves across the world through travels to Asia.
The move to take on Europe, starting small, gives a high potential to test the hotel chains success rate, before entering larger and more competitive markets – as the Shangri La is currently doing (Asian Hotels going West). Entering markets attracting a large amount of Asian tourists, with the brand awareness of these Asian hotel chains, will pave the way to their success.
As hotel chains are not related to “Born Global” companies, there is a eager need and requirement to expand and create worldwide brand equity, as mentioned by Banyan Tree (The brand imperative). As there is an increase of Asian culture and its ways through Europe and the West, the entry of Asian hotel chains will attract tourists and business travelers from Europe and the Americas (Be true to the Asian roots). From this, one can see that the external factors, combined with the potential market demand – from other sectors related to Asian business and culture, can be extremely profitable. Many European hotel chains are currently trying to enter the Asian market for these same reasons, as they want to be in front of the hotel industry, by entering the Chinese market (The challenges and opportunities of franchising in China’s hotel industry). But leads to a further point, as to how these hotel chains want to enter the market. This will depend on how much control they want to have over the European venture. They either enter the market with a wholly owned European subsidiary, or they can enter via franchising or joint ventures. The later two have much less control of the venture (Foreign Market Entry Modes).
But the above-mentioned hotels all have an unbeatable business model that has been time tested and proven to work in their originating country as well as neighboring ones. Due to this factor, my two cents to the matter would suggest that they take the initiative to open one or two locations each in Europe to test the viability of the project. Depending on the actual revenues and barriers witnessed upon entering the market, can later decided if they want to continue with their current mode of entering the market, or want to re-evaluate and consider franchising or entering into a join venture with local, profitable hotel chains (Foreign market entry mode choice of service firms: A contingency perspective).
January 15, 2011 @ 11:57 am
I think these hotels will be successful in Europe. Every year a host of Asian tourists come to Europe. The average UAI (Uncertainty Avoidance Index by Hofstede) in Asia is approximately 60. Therefore, Asians seek for more safety as other countries do. By booking a room in an Asian hotel the Asian tourists expect Asian standards. Also communication problems caused by different languages can be avoided. Tourists want to see as much as possible from the European culture. But why should someone travel to Europe if he then stays in an Asian hotel? Will there be a hotel for each country in Europe in the future?
I think this is only a way to enrich the hotel chain and definitely a way of damaging sooner or later the whole European tourist industry.